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Claim of debenture trustee being a secured creditor would prevail over claim of flat purchasers under RERA: Bombay HC

June 28, 2021[2021] 127 taxmann.com 780 (Bombay)
5 Views

COMPANY LAW/RERA : Dues payable by a promotor of a real estate project to flat purchasers under orders passed under the provisions of RERA cannot be governed by Section 169(1) of Maharashtra Land Revenue Code, 1966 ("MLRC") . Thus, where immovable properties in question were mortgaged by respondent No.4 - Builder in favour of petitioner-debenture trustee to secure obligation of Respondent No. 4 under debenture trust deed and mortgage created by Respondent No. 4 in favour of petitioner in respect of the said Property was an English Mortgage as defined under section 58(e) of Transfer of Property Act, 1882, petitioner had priority in respect of said property over claims of respondent - Flat purchasers

Facts

• The petitioner is the Debenture Trustee under the Debenture Trust Deed. The Debenture Trust Deed has been registered with the Sub-Registrar of Assurances at Haveli-16 under Registration No. Havl-16/1511/211/2015. Various immovable properties were mortgaged in favour of the Petitioner to secure the obligations of Respondent No. 4 under the Debenture Trust Deed. Petitioner has challenged the auction sale of immovable property, of which the Petitioner was a Mortgagee, by Respondent No. 1 (District Collector, Pune) and Respondent No. 2 (Additional Tehsildar, Pimpri Chinchwad, Pune), in favour of Respondent Nos. 3 and 3A, in order to recover amounts payable by Respondent No. 4 - Builder to the Respondent Nos. 10 to 15 - Flat purchasers, under orders passed by Respondent No. 9 (Maharashtra Real Estate Authority) under the provisions of the Real Estate (Regulation and Development) Act, 2016.

Held

• Section 169 of the MLRC makes a clear distinction between actual arrears of land revenue due on account of land, and amounts other than arrears of land revenue which are recoverable as arrears of land revenue under the MLRC. In the former case, the arrears of land revenue due on account of land, amount to a paramount charge on the land in question, which shall have precedence over all other debts. However, in the latter case, the claim of the State Government to monies recoverable as other than arrears of land revenue but in the same fashion, have priority only over unsecured claims and not over secured debts. Therefore, it is clear that land revenue means amounts payable to the State Government on account of land. In the present case, the amounts of compensation and interest which have been awarded by Respondent No. 9 against Respondent No. 4 and in favour of Respondent Nos. 10 to 15 cannot be said to be actual arrears of land revenue. They are not dues payable to the State Government which arise out of any particular land. They are not even claims of the State Government. They are dues payable by a promotor of a real estate project to the fat purchasers under orders passed under the provisions of RERA. The mode of recovery of such amounts is the same as if they were arrears of land revenue under the MLRC. Hence these amounts clearly cannot be governed by Section 169(1) of the MLRC. Therefore, the claims of Respondent Nos. 10 to 15 as awarded by Respondent No. 9 cannot have priority over the properties of Respondent No. 4 in derogation of the Petitioner's secured interest therein. Having held that the Petitioner is a secured creditor of Respondent No. 4 and a Mortgagee in respect of the said Property under the Debenture Trust Deed, the Petitioner has priority in respect of the said Property over the claims of Respondent Nos. 10 to 15. In other words, the Petitioner is entitled to have its debts satisfied out of the said Property in priority over Respondent Nos. 10 to 15.

• When the Petitioner came forward with an objection pointing out that it had a registered mortgage over the Property which was the subject matter of the auction, the same was sufficient reason for the authority to postpone the same.

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