Bombay HC orders in favour of Orbit Haven homebuyers, dismisses Axis bank’s plea

Bombay HC orders in favour of Orbit Haven homebuyers, dismisses Axis bank’s plea
05/08/2017 , by , in News/Views

The Bombay High Court recently dismissed an application filed by Axis Bank, with whom the under construction residential tower – Orbit Haven – is mortgaged, to be removed as parties from a suit the flat buyers filed for delivery of their flats. Buyers of flats in the Orbit Haven at Napeansea Road have scored a crucial victory in their fight to get flats for which they paid crores to the builder.

The buyers have alleged that after selling the flats to them for prices ranging between Rs 12 crore to Rs 30 crore and collecting around Rs 200 crore, Orbit Corporation took a loan from the bank with the building as security. The buyers said the bank did not carry out any due diligence before granting the loan and alleged some of the officials had colluded with the builder.

“Allegations concerning the lack of due diligence on the part of Axis Bank, as also want of a public notice before advancing such a loan, in the peculiar facts and circumstances of the case and read with allegations of collusion between some of its officers and Orbit, clearly spell out a case which ought to go to trial,” said Justice Suresh Gupte.

The developer launched the project in 2009 as a 32-storey luxury residential tower at Darabshaw Lane, Napeansea Road. According to the plan, the second to 10th floors would be utilised for parking.The 11th and 12th floors were reserved for service utilities while the 14th and 15th floors would house a club for residents. Duplex flats would be constructed from the 16th floor onwards. The flats were sold and the builder collected around Rs 200 crore from buyers, with around Rs 45 crore remaining to be paid. In 2013, the builder took a loan from Axis Bank and in 2016 the bank moved the Debt Recovery Tribunal and took symbolic possession of the building.

Earlier this year, some flat buyers filed a suit in the HC against Orbit and Axis Bank, seeking delivery of their flats. They also questioned the loan that was granted by the bank in violation of rules.

The bank’s lawyers questioned the HC’s jurisdiction as a plea filed by it was already pending before the DRT. The bank said as a secured creditor, under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, a civil court was barred from proceeding against it. The HC refused to agree and pointed out while the DRT could decide if there was a mortgage in its favour, the tribunal could not grant the other prayer of the flat buyers that the bank, now as a promoter, comply with the builders’ obligations and deliver the flats to them.

“If a claim made by the parties to the suit is outside the jurisdiction of the DRT or the appellate tribunal and any disputes raised by the parties in that behalf cannot be adjudicated by them, the right of the parties to approach the civil court for appropriate relief in that behalf can’t be said to be deprived or taken away,” ruled the HC.

The judge further referred to allegations by flat buyers of fraud and collusion between the bank’s officials and the builder. “If the action of the secured creditor is alleged to be fraudulent, it is certainly permissible to bring the matter before the civil court,” added Justice Gupte.

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