Rajasthan RERA – Subsequent Security Interests of Lenders of Promoters Are Subordinate to the Allottees Rights & Prior Sale Agreement under Section 11(h) of the RERA Act.
Rajasthan RERA Protects Allottee Rights Against Unauthorised Subsequent Mortgage by Promoter – Held Inoperative under Section 11(4)(h) of the RERA Act.
Rajasthan RERA Landmark Order – Promoter’s Post-Sale Agreement Mortgage Unenforceable Against Allottees – Section 11(4)(h) of RERA Act
CIRP No Shield for Promoters’ Violations – Rajasthan RERA Affirms Allottee’s Priority Sale Agreement over Subsequent Project Mortgage
RERA Prohibits Post-Agreement Mortgage of Promoter – Declares Promoter’s Charge Non-Enforceable against Allottees’ Prior Sale Agreements
Order dated 19.2.2026 of Rajasthan RERA in the matter of Suo Moto Vs. GRJ Distributors and Developers Pvt Ltd in File No.F.3(151)/RJ/RERA/P/2017.
Section 11(4)(h) of RERA Act – Prohibition from creating any mortgage or charge on the flat, once agreement of sale is executed.
The respondent – promoter has launched real estate project. Various allottees booked the flats during the period of 2012-2013, paid substantial amounts and agreements for sale were executed. They have availed home loan and the promoter had issued NoC permitting mortgage of flats with the banks.
In 2018, the promoter had mortgaged the entire project to ECL Finance Ltd and availed term loan of Rs.50 crores vide mortgage deed dated 14.2.2018 without the knowledge of the allottees and without NoC of their lending banks.
The promoter gave false declaration on 28.3.2018 to the RERA Authority that the mortgage was created only on unsold units.
The allottees filed application to implead ECLF as party for declaration that the mortgage deed is null and void to the extent of their flats, to restrain enforcement of any charge and for appropriate proceedings against the promoter.
The promoted objected to the said prayers on the ground that CIRP is already initiated.
HELD that the RERA Authority cannot be a mute spectator where the rights of allottees, expressly protected under the RERA Act, are threatened. Section 11(4)(h) of the Act clearly stipulates that any mortgage or charge created after execution of the agreement of sale shall not affect the right of the allottee, notwithstanding anything contained in any other law.
Relying on the decision of the Supreme Court in Bikram Chatterji case (2019) (8) SCC 416, it was held that the security interests of other creditors cannot be enforced against allottees whose rights pre-date the mortgage and that the SARFAESI or other recovery mechanisms cannot override the protections under the RERA Act.
