In a significant ruling, the West Bengal Real Estate Appellate Tribunal has stopped Yes Bank from taking over apartments from nine homebuyers due to a loan default by the developer. This decision is considered a landmark judgment, as it sets a precedent for safeguarding the interests of homebuyers against recovery actions by banking institutions in real estate projects.
The apartments are part of the Ideal Exotica project in New Alipore, with each flat valued between Rs 1.95 crore and Rs 3.14 crore. The buyers had already taken possession of these flats when Yes Bank threatened to seize them.
The tribunal upheld an earlier decision by the West Bengal Real Estate Regulatory Authority (WBRERA), which had ruled in favor of the homebuyers. Yes Bank had challenged this ruling, but the tribunal’s decision now prevents the bank from taking possession of or auctioning the flats to recover the developer’s loan.
The case involved nine complainants who purchased flats in the Ideal Exotica project from Ideal Real Estates between 2021 and 2023. The issue arose when Yes Bank, which had provided a loan of Rs 320 crore to the developer, sought to seize the flats under the SARFAESI Act. This law allows banks and financial institutions to recover loans by auctioning the assets of borrowers.
However, the flat owners had already completed the necessary paperwork for ownership under Kolkata Municipal Corporation (KMC) norms. When Yes Bank obtained an order from the Debts Recovery Tribunal in Kolkata to take possession of the flats, the buyers approached WBRERA for protection of their rights.
The tribunal’s ruling emphasized that provisions of the Real Estate (Regulation and Development) Act (RERA), the Transfer of Property Act, and the Insolvency and Bankruptcy Code take precedence over the SARFAESI Act. This decision is a major victory for homebuyers, reinforcing their rights in cases of loan defaults by developers.
