Interim Order Complaint - IA No.15 Of 2024

BEFORE TELANGANA STATE REAL ESTATE REGULATORY AUTHORITY
[Under the Real Estate (Regulation and Development) Act, 2016]
I.A. No.15/2024
in
COMPLAINT NO.15 OF 2024
4th Day of May 2024
Corum:

Dr. N. Satyanarayana, IAS (Retd.), Hon’ble Chairperson
Sri K. Srinivasa Rao, Hon’ble Member
Sri Laxmi Narayana Jannu, Hon’ble Member

1. M/s NCC Limited
2. M/s RNR Limited

…Complainants
Versus

1. M/s Mantri Developers Pvt. Ltd.
2. M/s Jubilee Hills Landmark Pvt. Ltd.
3. Indian Bank
…Respondents

The present Interim Application filed by the Complainant herein came up for
hearing on 01.05.2024, 02.05.2024, 04.05.2024 before this Authority in the
presence of Counsel for Complainants, Sri Siva Acharya, and Counsel for Respondent
Nos.1 and 2, Sri Anand Subramaniam and Ms. M. Geeta and upon hearing the
arguments, this Authority passes the following INTERIM ORDER:

2.

The present Application has been filed by the Complainants seeking “to direct

the proposed Respondent No. 3 Bank to deposit the entire proceeds received after
auctioning the mortgaged Project Property before this Hon'ble Authority or in an Escrow
account created for the purpose of depositing the amounts”.

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Facts on behalf of the Complainants:
3.

Complainants filed the present complaint seeking reliefs under Section 7 and

8 of the Real Estate (Regulation & Development) Act, 2016 (hereinafter referred to as
the “Act, 2016”) read with Telangana State Real Estate (Regulation & Development)
Rules, 2017 (hereinafter referred to as the “Rules, 2017”) thereof.

4.

During the course of hearing on 01.05.2024, the Counsel for Complainants

and Counsel for the Respondent Nos.1 & 2 entered appearance, and the
Complainants preferred the above-mentioned Applications seeking the relief therein.
The Complainants submitted that Respondent No. 1 has availed a loan of Rs.
112,00,00,000/- (Rupees One Hundred and Twelve Crores Only) from Allahabad
Bank which is now Indian Bank i.e., Respondent No. 3, vide Term Loan Agreement
dated 19.09.2016 ("Principal Loan Amount"). The said loan was availed on security
of Equitable Mortgage of the “Mantri – A” Project property situated at Shaikpet
Village and Mandal, Jubilee Hills Area, Hyderabad. ("Project Property") to the extent
of Respondent No.1's share of 50% undivided interest in the land and 4,19,999 Sq.ft
of super-built-up area, supported by General Power of Attorney ("GPA") given by
Respondent No. 2 and the Joint Development Agreement.

5.

That the Respondent No. I had defaulted on the Principal Loan Amount availed

from the proposed Respondent No. 3 Bank and pursuant to the same, Respondent
No. 3 Bank is taking steps under the provisions of the Securitization and
Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002,
("SARFAESI Act").

6.

Meanwhile, it came to the notice of the Complainants that the Respondent No.

3 Bank has issued an auction sale notice for sale of the mortgaged Project Property

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wherein the auction is scheduled to be conducted on 06.05.2024 for recovery of Rs.
212,11,26,824.28/- (Rupees Two Hundred Twelve Crores Eleven Lakh Twenty-Six
Thousand Eight Hundred Twenty-Four and paisa Twenty-Eight Only) as on
31.03.2024 with further interest, charges, and expenses due to the proposed
Respondent No. 3 Bank with a reserve price of Rs. 272,50,00,000/- (Rupees Two
Hundred Seventy-Two Crores Fifty Lakhs Only).

7.

That Respondent No.3 Bank is unjustly proceeding to auction the mortgaged

Project Property for amounts higher than the Principal Loan Amount (plus interest
accrued thereon) availed by Respondent No. 1 by jeopardizing the interests of the
allottees (home buyers). That banks are considered as promoters for the purposes of
the Act, 2016 and that the moment a bank takes recourse to any of the measures
under SARFAESI Act, it triggers statutory assignment of right of the borrower in the
secured creditor.

8.

That the Respondent No. 3 Bank does not in any manner whatsoever have

the right to curtail and infringe the rights of the allotees (home buyers) including the
Complainants herein who have paid substantial amounts for their flats.
Furthermore, the Respondent No.3 Bank cannot unjustly enrich itself by auctioning
the Project Property for amounts higher to its entitlement. In the event the auction
process is continued to take place and the proposed Respondent No.3 Bank receives
amounts as mentioned in the sale notice, there is every scope and likelihood that the
proposed Respondent No.3 Bank would misappropriate the proceeds of auction
process.

9.

Therefore, he prayed to make Respondent No.3, a party to the proceedings.

Accordingly, Application for Impleadment bearing I.A. No.14/2024 was allowed vide

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Order dated 02.05.2024. The matter was accordingly adjourned to 04.05.2024 to
hear arguments on the I.A. No.15/2024 duly directing the Respondents to file their
counters.

10.

The matter was called on 04.05.2024, wherein the Counsel for Complainants

and Counsel for Respondent Nos.1 & 2 were present. The Respondent No.3 Bank
failed to appear despite service of notice. Therefore, Respondent No.3 is set ex-parte.

11.

The Complainants reiterated the contentions raised in the I.A.No.15/2024 and

submitted that unless the interests of the allotees are protected by allowing the
present application and passing an order directing the proposed Respondent No. 3
Bank to deposit the entire proceeds of auction process, the Complainants and the
other allottees will suffer irreparable harm and injury.

12.

The Complainants also submitted that the Hon’ble High Court of Telangana

in W.P. No.41976/2022 vide Order dated 22.02.2023 directed this Authority to
consider the complaint lodged by the petitioners on 14.11.2022 by giving due
opportunity to all the parties and decide the matter as expeditiously as possible and
till a decision was made by this Authority, further the Respondent No.3 Bank herein
was categorically directed not to proceed with the auction of the Project Property.

13.

The Complainants further stated that in light of the said observations by the

Hon’ble High Court, this Authority, vide considering the Complaint of the petitioners
in W.P. No.41976/2022 vide Complaint No.678/2022/TSRERA, also directed the
Respondent No.3 Bank not to conduct auction of the Project Property as per
Memorandum of Deposit of Title-deeds, dt.28.09.2016 (Document No.5078/2016)
over and above ground + 7 floors where permission has been obtained subsequently.

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14.

In light of the above-made submissions, it was prayed that Respondent No.3

Bank in the event of auction being conducted on 06.05.2024 and a successful bidder
has been declared, then the entire proceeds of the auction may be directed to be
deposited in a designated bank account/escrow account and not to utilize the same
until the disposal of the matter.

15.

Respondent Nos.1 & 2 orally submitted that they have no objection to the

reliefs prayed for the Complaint in this regard.

Interim Directions:
16.

This Authority has perused the material on record and the contentions raised

by the parties thereto. The Respondent No.3 Bank has indeed had availed loan of an
amount of Rs. 112,00,00,000/- (Rupees One Hundred and Twelve Crores Only) vide
Term Loan Agreement dated 19.09.2016 with the Respondent No.1 to the extent of
his share of 50% undivided interest in the land and 4,19,999 Sq.ft of super-built-up
area, supported by General Power of Attorney ("GPA") given by Respondent No. 2 and
the Joint Development Agreement. The Complainants submission that the
Respondent No.3 Bank is proceeding to auction the mortgaged Project Property for
amounts higher than the Principal Loan Amount (plus interest accrued thereon) in
view of the subsequent changes to the Building Permission by increasing number of
floors and also increase in the square feet of area thereby, to the detriment of the
allottees (home buyers) remains un-rebutted. In view of the same, the Authority, is
of the opinion that there is force in the argument of the Complainants and no harm
or adverse interest will be accrued to Respondent No.3 should the reliefs as prayed
for be granted in favour of the Complainants.

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17.

Therefore, in the peculiar facts and circumstances of the present case, in order

to protect the interests and rights of the allottees, while exercising its powers under
Section 36 and 37 of the Act, 2016, this Authority directs the Respondent No.3 as
under:
a. To create a designated bank account for the purpose of depositing the entire
auction proceeds and submit compliance of the same to the Authority before
next date of hearing; and
b. In the event of conducting auction on 06.05.2024 and declaration of a
successful bidder thereof, the Respondent No.3 shall deposit the entire
proceeds of the auction in the above-mentioned designated bank account and
the same shall not be utilised for any purpose until the final disposal of the
present complaint.

18.

Accordingly, in view of the above directions, I.A. No.15/2024 is allowed.

Sd/Sri K. Srinivasa Rao,
Hon'ble Member,
TS RERA

Sd/Sri Laxmi Narayana Jannu,
Hon'ble Member,
TS RERA

Sd/Dr. N. Satyanarayana, IAS (Retd.),
Hon'ble Chairperson,
TS RERA

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