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Provisions of RERA Act, 2016 to prevail over the provisions of SARFAESI Act, 2002 in case of conflict, affirms Supreme Court

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A Division bench of the Hon’ble Supreme Court of India (SC), comprising of Hon’ble Mr. Justice MR Shah and Hon’ble Mrs. Justice BV Nagarathna, in their judgment dated 14.02.2022 in Union Bank of India v. Rajasthan Real Estate Regulatory Authority and Others, agreed with the view taken by the Hon’ble Rajasthan High Court (HC), and reiterated that the provisions contained in Real Estate (Regulation and Development) Act, 2016 (RERA) would prevail over the provisions of SARFAESI Act, 2002, in the event of any conflict. The SC also reiterated that: –

  • RERA would not apply, in relation to the transaction between the borrower and the banks/financial institutions, where the secured asset had been mortgaged prior to enactment of RERA, unless such mortgage was created fraudulently.
  • The adjudicating authority under RERA can entertain a complaint filed by an aggrieved person against the bank, if the bank takes recourse to any of the provisions contained in Section 13(4) of the SARFAESI Act. However, the SC clarified that this will only be applicable in a case where RERA proceedings have been initiated by the home buyers to protect their rights.