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Thursday, February 20, 2020

Bombay HC stays auction of Mulund plot by MahaRERA to repay homebuyers

The HC order came on Tuesday, a day before the auction was set to be held, on a petition filed by SREI Equipment Finance Limited (SREIEFL), which claimed the plot was mortgaged to the company.

Written by Neeraj Tiwari | Mumbai | Published: January 26, 2020 1:56:46 am
Bombay High Court, Mulund plot auction, mumbai news, maharashtra news, indian express news The 2597.40 sq m plot belonging to the Nirmal Developers group near Jawahar Talkies compound in Mulund West was valued at Rs 40.25 crore. (File photo)

The Bombay High Court has stayed the auction of a 2,600 sq m plot by Nirmal Developers to repay 120 buyers who had bought flats in Nirmal Olympia project at Mulund in Thane.

The HC order came on Tuesday, a day before the auction was set to be held, on a petition filed by SREI Equipment Finance Limited (SREIEFL), which claimed the plot was mortgaged to the company.

The 2597.40 sq m plot belonging to the Nirmal Developers group near Jawahar Talkies compound in Mulund West was valued at Rs 40.25 crore. The proceeds of the auction were to be used to repay 120 homebuyers of Rs 23 crore, as per terms signed between MahaRERA and the builder.

In its petition, SREIEFL had claimed that it had advanced credit to Nirmal Developers and the property sought to be auctioned was mortgaged to the company. Therefore, as a mortgagee, SREIEFL should get priority of interest over dues of flat buyers, it said.

Finding that due legal process for the auction was not followed, a bench comprising Chief Justice Pradeep Nandrajog and Justice Bharati Dangre, in its order, pointed out that if an immovable property is to be sold to recover dues, the proposed buyers have to be informed about the lien of a third party or the charge over the property. The court also observed that if an immovable property is to be sold, a notice of the sale date has to be given 30 days earlier, but while the auction notice was published on January 9, it was scheduled for January 22. It further noted that while SREIEFL had filed its objections before the collector on January 13, and the collector had not decided on the issue, still the auction was scheduled.

The bench observed that the outstanding dues of SREIEFL were Rs 168 crore while the property has been valued at Rs 40.25 crore. “The dues stated to be of Order XXXIV of the Code of Civil Procedure, the priority of interest would require the sale proceeds to be first appropriated to clear the dues of the petitioner and if there is any surplus to be paid over as per the order passed by the competent authority under the Real Estate Regulation and Development Act, 2016 to the flat buyers,” the order said.

The court directed the collector to give a personal hearing to SREIEFL before taking a decision on whether it can proceed with the auction or inform MahaRERA that “in view of the priority claim of the petitioner, the collector is prohibited by law to proceed with the sale of the property in question”.

Advocate Sanjay Chaturvedi. who represented the homebuyers in MahaRERA, said: “We are working on what kind of legal solutions can be worked out.”

A senior MahaRERA official said, “Before the auction, a public notice should have been issued asking if any other party had a stake in the land. Only after that the auction notice should have been published.” Usually, MahaRERA is expected to check the records from the collector’s office if there is any lien on the property to be auctioned, said officials.

Milind Borikar, the collector Mumbai suburbs, said: “In cases that come up before MahaRERA, we don’t go for public notices seeking third party concern… As per HC directions, we will first finish hearing the objections raised by SREIEFL and then will take the help of the legal department on the next course of action.”

Calls and messages to the offices and representatives of Nirmal Developers went unanswered.

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