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The Odisha Real Estate Appellate Tribunal (REAT) has rejected a public-sector bank's plea to auction a stalled housing project near Bhubaneswar. The project, mortgaged in 2014 for a loan of INR 4.6 crore, was taken over by the bank under the SARFAESI Act after repayments stopped, and auction notices were issued in 2020. Homebuyers had already paid significant amounts but never received their flats. REAT ruled that once the bank assumed control, it effectively became the promoter and remained bound by RERA regulations. The tribunal directed ORERA to find a way to complete the project, offering long-awaited relief to affected allottees.
The Odisha Real Estate Appellate Tribunal (REAT) has dismissed a plea filed by a public-sector bank seeking to auction a stalled housing project on the outskirts of Bhubaneswar. The project in question had been mortgaged in 2014 for a loan of INR 4.6 crore. When loan repayments ceased and the account turned sour, the bank took possession under the SARFAESI Act and published auction notices in 2020. Allottees, who had paid substantial amounts over a decade ago, had alleged protracted delays in construction and non-delivery of flats. Advertisement
In its ruling, the tribunal observed that once the bank assumed control under Section 13(4) of the SARFAESI Act, it effectively stepped into the shoes of the original promoter. As such, the regulatory provisions under RERA continue to apply, notwithstanding invocation of the SARFAESI route. The tribunal therefore rejected the bank's argument that SARFAESI overrides RERA.
Rejecting the auction proposal, REAT directed ORERA to explore options for completion of the housing project - either by appointing an external developer or facilitating the formation of an allottees' association in consultation with the bank. In effect, the lender has been barred from auctioning flats that have already been allotted to homebuyers.
Homebuyers described the decision as a relief after more than a decade of uncertainty, rent payments and EMIs. One of the complainants said their life savings had been locked for years, and this verdict restored their faith that the flats could finally be delivered.
This ruling by REAT underscores an important principle: when a bank takes over a mortgaged development under SARFAESI, it cannot treat the project as a mere asset for recovery. The tribunal's decision to involve ORERA and allow for project completion through third-party intervention or allottees' collective association offers a pragmatic path forward. For homebuyers, long subjected to delays and uncertainty, this judgment reinstates the prospect of actual possession - and sends a signal to lenders and regulators that housing finance cannot bypass the obligations owed to genuine buyers.
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