Complaint No. CC006000000396728


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BEFORE THE MAHARASHTRA REAL ESTATE REGULATORY AUTHORITY
MUMBAI

Complaint No. CC006000000396728

Association of Allottees of Luxury
Empire Township (Signature Residency)


... Complainant

Versus

1. Asset Reconstruction Company (India) Limited

2. India Infoline Finance Limited

3. Dr. Munir Abdul Latif Gazi

4. M/s Goldstar Realtors


... Respondents


MahaRERA Project Registration No. P99000006550


Coram: Shri. Mahesh Pathak, Hon’ble Member – I/ MahaRERA

Ld. Adv. Pooja Gaikwad appeared for the complainant.
None appeared for the respondents.


INTERIM ORDER


( Thursday, 28th March 2024)

(Through Video Conferencing)


1. The complainant above named has filed this online complaint before the
MahaRERA on 18-07-2023, seeking various directions from the MahaRERA as
prescribed under the provisions of the Real Estate (Regulation &
Development) Act, 2016 (hereinafter referred to as ‘RERA’) in respect of the
respondent’s registered project known as “Signature Residency” bearing
MahaRERA registration No. P99000006550 located at Boisar, Kambalgaon,
Dist. Palghar.

2. This complaint was heard on 14-08-2023 and the same was heard finally on


Complaint No. CC006000000396728


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20-11-2023 as per the Standard Operating Procedure dated 12-06-2020 issued
by MahaRERA for hearing of complaints through Video Conferencing. Both
the parties have been issued prior intimation of this hearing and they were also
informed to file their written submissions if any. Accordingly, the complainant
appeared and made its submissions. However, the respondents (except the
respondent no. 3 who appeared for the hearing held on 14-08-2023) remained
absent despite the notice of the hearing issued to them. The MahaRERA heard
the arguments of the complainant and also perused the available records.

3. After hearing the arguments of the complainant/respondent no. 3 as per their
appearance, the following Roznamas were recorded in this complaint-
i)On 14-08-2023:-
“First Hearing Matter”
The complainant is present. The respondent no. 3 is present. The respondents nos. 1, 2
and 4 are absent.
The MahaRERA has passed an order dated 05-07-2022 in the said project vide which
the respondent no. 3 - the landowner (Mr. Munir Gazi) has taken over the project from
the respondent no. 4 (erstwhile promoter) with the consent of the complainant (AOA).
This complaint is filed as the respondent no. 1 and 2 have extended project loans to the
respondent no. 4 and are taking action under section 13(4) of the SARFAESI Act,
against the respondent no. 4. Therefore, prima facie, this complaint is not maintainable
under provisions of the RERA. However, the complainant is directed to serve the copy
of the complaint on the respondents nos. 1, 2 and 4 within a period of one week i.e. by
21-08-2023. All the respondents are directed to file their reply to the complaint on the
issue of maintainability within a further period of three weeks i.e. by 11-09-2023. The
complainant may file a rejoinder to the said replies of the respondents within a further
period of one week i.e. by 18-09-2023. Needless to say that the complainant may serve
the rejoinder on the respondents.


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This matter is adjourned to a suitable date after 18-09-2023 for the arguments on the
issue of maintainability of this complaint. List the matter for next hearing on 09-10-

2023. ii) On 9-10-2023: - “First Hearing Matter”. The complainant is present. The
respondents are absent.
The complainant contends that the respondents have been served with the
copies of the complaint which was kept today for arguments on the issue of
maintainability. However, the respondents are not present and only the
respondent no. 3 has filed its reply to the complaint.
Therefore, the complainant is directed to upload the proof of service on the
respondents within a period of one week i.e. by 16-10-2023. Further two weeks’
time i.e. till 30-10-2023 is granted to the remaining respondents i.e. the
respondent no. 1, 2 and 4 to file their replies to this complaint.
The matter is adjourned to a suitable date after 30-10-2023 for final arguments
by all the parties on the issue of maintainability. List the matter for next
hearing on 20-11-2023.

iii) On 20-11-2023:-
“First Hearing Matter” The complainant is present. The respondents are
absent. The complainant has served the copies of the complaint on the
respondent no. 1, 2 and 4 on 18-11-2023 and uploaded the proof of service in
the complaint on MahaRERA website today. Therefore, all the respondents
may file their replies within a further period of one week i.e. by 27-11-2023
along with their written arguments. The complainant may file a rejoinder to
the said replies within a further period of one week i.e. by 04-12-2023 along
with written arguments. Both replies and rejoinder are expected to be on the
issue of maintainability of the complaint as raised in the first hearing on 14-
08-2023. The complainant may file written arguments even if the respondents
do not file any reply to the complaint. Accordingly, the matter is reserved for


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orders suitably after 04-12-2023 on the issue of maintainability of the
complaint based on the reply, rejoinder and written arguments filed in the
complaint. The future course of action in this matter would be decided once
such an order on the issue of maintainability is passed.”

4. Despite specific directions issued by the MahaRERA, the respondents have not
filed/uploaded any replies on the record of the MahaRERA. The complainant
has also not uploaded any rejoinder/ written arguments on the record of the
MahaRERA. Hence, the MahaRERA has perused the available records.

5. It is the case of the complainant that the complainant is an Association of
Allottees consisting of 181 members. The respondent no. 3 is the current
promoter and he along with his family members are the landowners of the said
project land. In the year 2010, respondent no. 3 and the other landowners
entered into a registered development agreement dated 28-12-2010 with
respondent no. 4 for the development of the said project land. As per clause
no. 1.1 of the said development agreement, respondent no. 4 agreed that
respondent no. 3 to 5 would be entitled to the constructed area to the extent of

37. 5 % of FSI share (owners’ component) and respondent no.4 would be
entitled to 62.5% of the constructed portion/FSI share (developers’
component). The owner’s component was required to be constructed and
completed within a period of 48 months from the date of the said development
agreement. Between 2011 to 2018 the respondent no. 4 by way of registered
agreements for sale sold 150 flats and 10 shops in the said project to 181
members of the complainant. The respondent no. 4 sold and allotted many
more flats and shops to other purchasers which were unknown to the
complainant. Despite having collected crores of rupees from the members of
the complainant and other purchasers, respondent no. 4 miserably and
deliberately avoided to construct and complete the said project within the
agreed timelines as agreed in the said development agreement. The


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complainant further stated that, in view of breach of the terms and conditions
of the said development agreement, respondent no. 3 duly terminated the said
development agreement vide its advocate’s letter dated 20-08-2015 and 29-07-

2019. The said termination was never challenged or questioned by respondent
no. 4. The said termination was also reported to MahaRERA by respondent no.
3 and the other landowners on 29-07-2017. After termination, the respondent
no. 4’s share i.e. 62.5% came to be irrevocably vested upon respondent no. 3
and other landowners. Thus, respondent no. 3 and other landowners became
100% owner/beneficiary in the said project. Therefore, on account of said
termination of the said development agreement, respondent no. 4 ceased to
have any rights on the properties forming part of the said project. Further,
respondent no. 4 had no authority to continue the said project. Despite that,
respondent no. 4 by false representations made before the MahaRERA,
unlawfully got registered the said project as “Luxury Empire Township
Phase-II” and “Luxury Empire Township Phase-III” which was earlier
known as “Colour Discovery”. The said act was questioned by respondent no.
3 before the MahaRERA. Even after getting unlawful registration of the said
project, respondent no. 4 abandoned the said project and neglected to carry
out construction of the said project. In view of the above, the allottees in the
said project decided to form an association of flat/shop purchasers known as
“Association of Allottees” to protect their rights. Accordingly, the complainant
eventually approached the MahaRERA and lodged complaint against
respondent no. 4 seeking revocation of the said project. In the said complaint
proceedings as well, despite multiple notices issued by the MahaRERA, the
respondent no. 4 wilfully failed and with malafide intentions avoided to
appear before the MahaRERA which was observed by the MahaRERA in its
order dated 05-07-2022. It was further submitted by the complainant that the
complainant entered into consent terms with respondent no. 3 who had agreed
to take over and complete the said project. In view of the said consent terms,
the MahaRERA by its reasoned order and

JUDGMENT

dated 05-07-2022 disposed


Complaint No. CC006000000396728


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of the said complaints and thereby directed respondent no. 3 to take over and
complete the said project as per the timelines agreed in the consent terms. In
the said order of the MahaRERA as well, the said fact of termination of said
development agreement by respondent no. 2 in the year 2015 was admitted. In
furtherance of the directions given by the MahaRERA, respondent no. 3 after
carrying out necessary compliances took over the said project and commenced
construction of the building nos. 1 to 14 in the said project. About 70% of the
said building came to be completed by respondent no. 3 until 28-03-2023. Thus,
possession of the flats and shops were likely to be received by the allottees in
near future. Consequently, when one of the members of the complainant
visited the said project site on 29-03-2023, the said member came to know that
respondent no. 1 by its impugned notice dated 29-03-2023 under section 13(2)
of the SARFEASI Act has taken symbolic possession of respondent no. 4’s
unsold units, development rights and all saleable FSI and construction work
of the said project was stopped by respondent no. 3. In the said impugned
notice, respondent no. 1 indicated that respondent no. 1 issued demand notice
to the borrower namely J.E Marketing and Services Pvt. Ltd. (Borrower of
loan), Guarantors viz Mr. Siddharth Shah and Mr. Ankit Shah and Security
provider i.e. respondent no. 4 calling upon them to repay the amount
outstanding as mentioned in the said demand notice being Rs. 1,092,458,062/-
as on 15-09-2022 together with further interest and other charges. Since the
borrower of loan viz. J.E Marketing and Services Pvt. Ltd. has failed to repay
the said amount, thus the said impugned notice was issued to borrower and
respondent no. 4, further to the public at large that respondent no. 1 had taken
over possession of the properties. Pursuant to the said, the borrower and
respondent no. 4 at large were cautioned not to deal with the properties
referred thereto. The complainant further stated that the concerned committee
members of the complainant made necessary queries with respondent no. 3
regarding the stoppage of the construction of the said project. The respondent
no. 3 informed the said members that respondent no.4 and its partners, by


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forging respondents’ NOC in collusion and connivance with J.E Marketing
and Services Pvt. Ltd, its directors and respondent no. 2 , had illegally
obtained the loan facility in the name of said J.E marketing and thereby created
fraudulent security interest on respondent no. 4’s share of unsold units,
development rights and all free saleable FSI as indicated in the said impugned
notice. The respondent no. 3 further informed that on account of the said
impugned notice the said project was not commercially viable for further
construction and unless the said mortgage/security interest created by
respondent no. 4 was withdrawn by respondent no. 1 or set aside by competent
authority, respondent no. 3 would not continue construction of the said
project. Further, it was also informed that, after perusing the documents filed
in the proceedings before Debt Recovery Tribunal, Mumbai-II i.e. O.A
263/2023 filed by respondent no. 1, respondent no. 3 came to know that
mortgage/security interest created by respondent no. 4 was illegal and
fraudulent. The respondent no. 1 in its correspondence dated 24-04-2023 with
respondent no. 3 claimed that respondent no. 3/landowners had allegedly
issued NOC dated 07-05-2019 for grant of loan and to create mortgage on
respondent no. 4’s component in said development agreement. However,
respondent no. 3 informed the complainant that they never issued such NOC
and as per respondent no. 1 and 2’s records no such NOC was in custody of
respondent no. 1 or 2. Upon further perusal of the papers and proceedings,
some of the facts indicated clearly reveal illegal act of fraud and forgery being
committed by partners of respondent no. 4, in collusion with the officials of
respondent no. 2 and directors of J.E marketing. Some of the facts that were
respondent no. 2 had purportedly issued a sanction letter dated 01-04-2019 to
J.E marketing for an amount of Rs. 70 crores as a loan against property on the
basis of security mortgage that was created by respondent no. 4 and Cosmos
Investment on the said project as mentioned therein. Under the sanction letter
some securities were directed by respondent no. 2 to be provided to secure the
said loan facility. Further, one of the conditions for the loan was that the loan


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was to be used only for the purpose for which it was being disbursed and not
for any other purpose. Vide a letter dated 24-06-2019, JEMSPL intimated and
clarified to respondent no. 2 that the said loan was procured for the purpose
of construction of residential project “Luxury Empire” at Boisar as well as for
working capital requirements for the said project and repayment of unsecured
loan of the company. The respondent no. 4 executed a declaration cum
undertaking dated 02-04-2019 to respondent no. 2 whereby it was stated that
respondent no. 4 has not entered into agreement for sale in respect of any
portion of the construction in the said project. JEMSPL and security providers
including respondent no. 4 and the guarantors had also executed various other
documents in favour of respondent no. 2 for the alleged credit facilities.
Therefore, being aggrieved by the actions of the respondents, the complainant
has filed this present complaint before the MahaRERA seeking to declare that
measures taken by respondent no. 1 under section 13 (4) of the SARFAESI Act
including the impugned notice dated 29-03-2023 of possession is illegal,
arbitrary and unreasonable and be recalled or quashed or set aside by the
MahaRERA. Further to declare that the purported possession vide impugned
notice is void ab initio and not binding upon the members of the complainant.
Lastly, to declare that respondent no. 1 is entitled to exercise any rights under
the SARFAESI Act over the unsold units, development rights and all free
saleable area in the said project land as referred at Sr. Nos. 2 and 3 of the said
impugned notice and all such actions taken by respondent no. 1 are illegal and
void ab -intio.

6. In the present case, during the course of hearing held on 14-08-2023, the
MahaRERA has suo moto raised the issue of maintainability of this complaint.
Hence, the complainant as well as the respondents were directed to file their
rejoinder/ reply/ written submissions on record of MahaRERA. However, as
stated hereinabove neither the complainant nor the respondents have
uploaded any submissions (as recorded in the aforesaid roznamas) on record


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of MahaRERA despite the fact that the copy of this complaint was duly served
upon the respondents. Hence, the MahaRERA has examined the submissions
made by the complainant and the respondent no. 3 (during the hearing held
on 14-08-2023) and also perused the available record.

7. The complainant, which is an association of the allottees formed in this project
has approached the MahaRERA mainly seeking following reliefs (as per the
reliefs column of the complaint) :-
“a)The Hon'ble Authority be pleased to restrain Respondent No.1 to take
any further steps in pursuance with the Possession Notice dated 29.03.2023.
b)That the Hon'ble Authority may please to direct the Respondent No.1 to
withdraw the alleged charge on the said project.”

8. However, in the present case, during the course of hearing held on 14-08-2023,
the MahaRERA has noticed that the aforesaid prayers sought by the
complainant association are not maintainable before the MahaRERA under
the provisions of the RERA and the MahaRERA has no jurisdiction to decide
this complaint on merits.

9. In view of the above, during the course of the said hearing, the MahaRERA
has suo moto raised the issue of maintainability of this complaint. Hence, the
said issue of maintainability of this complaint is to be decided first being a
preliminary issue before going into the merits of this complaint.

10. Admittedly, as stated hereinabove neither the complainant nor the
respondents has/ have filed any written submissions on record of MahaRERA
on the said issue of maintainability of this complaint. Hence, the MahaRERA
has perused the available record viz. the online complaint filed by the
complainant herein and the webpage information uploaded by the respondent
promoter on the MahaRERA website.


Complaint No. CC006000000396728


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11. In the present case, from the record it appears that the respondent no. 3 is the
owner of the project land, who had assigned the development rights in respect
of the said project land to the respondent no 4 by virtue of the development
agreement dated 28-12-2010. Accordingly, after commencement of the RERA,
the respondent no. 4 has registered this project with the MahaRERA being an
ongoing project under the provisions of section 3 of the RERA. However, it
appears that due to non-compliance of the terms and conditions of the said
development agreement in the year 2015, it was terminated.

12. Since the project was not progressing further, the association of the allottees
formed in this project had earlier filed two separate complaints before the
MahaRERA bearing nos. CC006000000209950 and CC006000000209952
seeking reliefs under sections 7 and 8 of the RERA. In the said complaints, the
Ld. Erstwhile Member -1/MahaRERA has passed a common order dated 5-07-

2022. Vide the said order, the project was taken over by the respondent no. 3
for further development as he was also shown as co-promoter having area
sharing in the project.

13. As per the said order, the necessary corrections have also been made in the
project and the name of the respondent no 4 was replaced with the name of the
respondent no. 3.

14. However, now by filing this complaint, the association of the allottees has
again approached the MahaRERA being aggrieved by the action initiated by
the respondent nos. 1 and 2 against the respondent no. 4 under the provisions
of section 13 (4) of SARFAESI Act. The complainant has mainly contended
that the respondent nos. 1 and 2 have initiated actions against the respondent
no. 4 under section 13(4) of the SARFAESI Act for recovery of security debt


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under the assignment agreement dated 30-12-2021 and the respondent no. 4
has failed to repay the loan amount of Rs. 109,24,58,062/- to the respondent
no. 1. Hence, the respondent has initiated the said action against the
respondent no. 4 and issued the possession notice dated 29-03-2023. The
complainant has mainly contended that by virtue of the said possession notice,
the respondent no. 1 has taken symbolic possession of the said 4 flats from the
respondent no.4’s area share. Also, the said loan was obtained by the
respondent no. 4 by showing the fraudulent NOC of the respondent no. 3
dated 07-05-2019. Hence, the complainant has sought injunction order against
the respondent no. 1. To support its contentions, the complainant has relied
upon the order passed by the Hon’ble Apex Court in SLP (C) No. 1861-1871 of
2022 and contended that the MahaRERA has jurisdiction to entertain this
complaint filed by it being an aggrieved party under section 31 of the RERA.

15. The aforesaid submissions made by the complainant has not been disputed by
the respondents by filing any written say on record of MahaRERA despite the
fact that specific direction was given to them to file their reply/ written
submissions. Hence, the aforesaid submissions made by the complainant
remain unchallenged and undisputed.

16. In view of the aforesaid facts cited by the complainant, the MahaRERA has
perused the aforesaid order dated 14-02-2022 passed by the Hon’ble Supreme
Court of India as relied upon by the complainant. On bare perusal of the said
order, it appears that in the said order, the Hon’ble Apex Court has made
following two crucial observations viz:-
“ (iv) RERA would not apply in relation to the transaction between the
borrower and the banks and financial institutions in cases where security
interest has been created by mortgaging the property prior to the
introduction of the Act unless and until it is found that the creation of such
mortgage or such transaction is fraudulent or collusive


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(v) RERA authority has the jurisdiction to entertain a complaint by an
aggrieved person against the bank as a secured creditor if the bank takes
recourse to any of the provisions contained in Section 13(4) of the SARFAESI
Act.”

17. However, in this case, from the submission made by the complainant in this
complaint, it appears that the said Mortgage Deed between the respondent no.
1 and the respondent no. 4 promoter was executed after commencement of
the RERA in the year 2019 (as the alleged NOC of the respondent no. 3 was
obtained on 17-05-2019). Also, the assignment agreement has been done on 30-
12-2021.

18. In view of these facts, the MahaRERA prima facie feels that as per the aforesaid
ratio laid down by the Hon’ble Apex Court at para no. (v) above, the
MahaRERA has jurisdiction to try and entertain any complaint filed by an
aggrieved person (in this case the complainant) against the respondent nos. 1
and 2 banks as a secured creditor since the respondent no. 1 has taken action
under the provisions of Section 13(4) of the SARFAESI Act.

19. Consequently, this complaint is held to be maintainable and the same needs to
be heard and decided by the MahaRERA on its own merits. Hence, the registry
is directed to list this complaint for next hearing as per its seniority, since no
further submissions for urgent hearing has been filed by the complainant.


(Mahesh Pathak)
Member – 1/MahaRERA