WB Govt stops Banks seizing Homeowners Apartments for Developers Loan Defaults

The West Bengal Real Estate Appellate Tribunal has ruled against a bank's attempt to take over apartments from nine homebuyers due to a loan default by the developer.

This decision is considered a landmark judgment, setting a precedent for protecting homebuyers from bank recovery proceedings in real estate projects. 

The case involves apartments in the Ideal Exotica project in New Alipore, each valued between Rs. 1.95 crore and Rs.  3.14 crore. The buyers had already taken possession when Yes Bank attempted to seize the properties.

The tribunal upheld an earlier ruling by the West Bengal Real Estate Regulatory Authority (WBRERA), which had favored the homeowners. Yes Bank had challenged this decision but failed to overturn it. 

The dispute arose after Yes Bank, which had granted a Rs. 320 crore loan to the developer, sought to reclaim the amount through the Debts Recovery Tribunal (DRT) under the SARFAESI Act. This act enables financial institutions to recover loans by auctioning borrowers' assets without court intervention. However, the homeowners, who had completed property mutations under Kolkata Municipal Corporation norms, contested the bank’s move. 

When Yes Bank secured an order from the DRT, Kolkata, allowing it to take possession of the nine flats, the bank published a notice appointing a receiver to facilitate an auction. In response, the homeowners approached WBRERA for protection, arguing that their rights as rightful owners should be upheld. 

With the tribunal’s ruling, the bank is now barred from seizing or auctioning the flats, reinforcing legal safeguards for homebuyers against financial institutions' loan recovery actions in real estate disputes.