Odisha Real Estate Appellate Tribunal Upholds Homebuyers' Rights in Housing Dispute

Bhubaneswar: The Odisha Real Estate Appellate Tribunal (OREAT) has dismissed appeals filed by a public sector bank seeking to auction a real estate project in the city where buyers have made substantial investments. The bank had filed the appeal while challenging an earlier order of the Odisha Real Estate Regulatory Authority (ORERA) after the promoters defaulted on loan payments.

The tribunal held that the bank, after invoking provisions of the SARFAESI Act, 2002 to auction the mortgaged project, 'stepped into the shoes of the promoter' and must cooperate in completing the stalled housing project. The dispute arose from two separate complaints filed by allottees of a housing project in Sampur, on the city’s outskirts.

They alleged delayed construction and non-delivery of flats despite paying substantial amounts more than a decade back. Both cases revealed that the promoter mortgaged the project land to the bank in 2014 for a Rs 4.6 crore loan, which later turned into a non-performing asset, prompting the lender to take possession under the SARFAESI Act or Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, and publish auction notices in 2020.

Rejecting the bank’s contention that SARFAESI overrides RERA, the tribunal observed, 'The appellant bank, after taking recourse to Section 13(4) of the SARFAESI Act, is certainly an assignee of the promoter and has stepped into its shoes. The RERA Act, which prevails over the SARFAESI Act, will apply even though security interest was created prior to the introduction of the Act as the mortgage is the result of ‘collusion’.'

Disposing of the appeal, the tribunal directed ORERA to explore the completion of the project through an external developer or association of allottees, in consultation with the bank. The tribunal also barred the lender from auctioning flats allotted to buyers.

Affected buyers expressed relief with the verdict. 'We have waited for more than 10 years, paying rent and EMIs. This order gives us hope that our homes will finally be delivered. Banks cannot ignore our rights. We invested our life savings, and this judgment restores our faith in the system,' said Prakash Mohanty, one of the complainants.