Mumbai collector asks Nirmal Developers, SREI Equipment to attend plot auction hearing

February 17, 2020

Mumbai

The Mumbai suburban collector has scheduled a hearing on the cancelled auction under the Real Estate (Regulation and Development) Act (RERA) provisions of a 2600 sq m plot owned by Nirmal Developers property in Mulund on February 17 as per the orders of the Bombay High Court.

The collector has issued notices to Nirmal Developers, Nirmal Developer Olympia Aggrieved Buyers' Association, Kurla Tehsildar Sanjay Thorat, and SREI Equipment Finance Pvt Ltd to remain present for the hearing at 1 pm on the 10th floor of Suburban Collector's office in Bandra.

The 2597.40 sq m plot at Jawahar Talkies Compound in Mulund West was slated to be auction on January 22 by the Kurla tehsildar to repay 120 home buyers of Nirmal Olympia project under RERA recovery process ordered by the Maharashtra Real Estate Regulatory Authority (MahaRERA). The plot was valued at Rs 40.25 crore, which was also the reserve price fixed for the property which houses a 1946-built single screen Jawahar Talkies.

But, the auction was cancelled on January 21 at the last minute after the Bombay High Court quashed the collector's auction notice during the hearing of a petition by SREI Equipment Finance Ltd (SREIEFL), which claimed that the plot was mortgaged to the company.

The SREIEFL claimed that it had advanced credit to Nirmal Developers and the property sought to be auctioned is mortgaged to the company, and, therefore, as a mortgagee, the company should get priority of interest over dues of the flat buyers.

A bench comprising Chief Justice Pradeep Nandrajog and Justice Bharati Dangre found that due legal process for the auction was not followed properly.

The court also pointed out that if an immovable property is to be sold, a notice of the sale date has to be given 30 days prior, but the auction notice was published on January 9 and the auction was scheduled on January 22. The court also noted that SREIEFL had filed their objections before the collector on January 13, but they have not been decided by the collector yet the auction was scheduled.

Pointing out that SREIEFL claimed their outstanding dues to be Rs 168 crore while the property has been valued at Rs 40.25 crore, the court said the SREIEFL claim would get priority. The court directed the Collector to give personal hearing to SREIEFL before taking a decision if it can proceed with the auction.

The 120 home buyers from Nirmal Olympia have been waiting since 2018 hoping to recover their investments. The project was proposed as 54-storey towers with December 2019 possession date but after the date was revised to 2024, homebuyers had approached MahaRERA with complaints. The developer had signed consent terms to repay Rs 35 crore in four installments between April and December 2018, but failed to pay after first installment following which the auction process was initiated.

"The reserve price for Jawahar Talkies plot was fixed at Rs 40 crore, and we thought even if someone purchases the plot at the base price, our dues of Rs 23 crore would be easily recoverable. But, the stay on the auction at the last minute has been a huge setback for us. We can only hope that the Collector takes a decision tomorrow and reschedules the auction of the plot," said Nitin Desai, a home buyer from Nirmal Olympia who hopes to recover his dues of Rs 30 lakh.

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