Recovery Certificate issued by RERA are legally valid

recovery-certificate-issued-by-RERA-are-legally-valid

Status as on- 07/12/2021

What is Recovery Certificate and how it is issued?

When even after the orders of RERA, the builder is intentionally evading the payments of the said amount then, as per Section 41(a), the RERA Authority has the jurisdiction to issue recovery certificate in favor of the Complainant allottee and against the Builder.

Recovery Certificate is a request letter from the RERA Authority addressed to the concerned District Collector requesting him to recover the specified amount from the defaulting Builder as arrears of land revenue under the Revenue Code and to pay that amount to the entitled complainant allottee.

Recovery Certificate issued by RERA challenged before various Courts.

Various builders with a view of evading or delaying the payment of the amount as per the final orders of the Authority or Adjudicating Officer filed appeals before various Hon’ble High Courts and the matter also reached before the Hon’ble Supreme Court.

Builders have specifically submitted before the Hon’ble Courts that the refund of the principal amount cannot be through the process of execution given under Section 40(1) of the Act of 2016 which is by issuing Recovery Certificate but can be as per Section 40(2) of the Act of 2016 which is execution by rules made by the State government.

How the Courts have upheld the validity of Recovery Certificate issued by RERA?

The Hon’ble Allahabad High Court in “M/S Proview Realtech Pvt. Ltd V/s State of UP” held that:

“If a consumer is to seek execution of the part of the order through the civil court then the very purpose of the enactment of Act of 2016 to provide speedy dispute redressal mechanism would frustrate.”

“We thus hold that the purpose and object of Section 40(1) is to allow recovery of the amount as arrears of land revenue so as to expeditiously give the relief to the consumer having suffered in the hands of the Promoter.”

  • emphasis supplied

The Hon’ble Supreme Court in “M/s Newtech Promoters and Developers Ltd. V/s State of UP & ors.” Also observed that:

“Taking into consideration the scheme of the Act what is to be returned to the allottee is his own life savings with interest on computed/quantified   by   the   Authority   becomes   recoverable   and such   arrear   becomes   enforceable   in   law.”

The Hon’ble Supreme Court further held that the RERA Authority is authorized to issue RC for recovery for the amount of interest and compensation alongwith the Principal amount or else the law will be meaningless.

How the Recovery Certificate is executed?

The Recovery Certificate is sent by the RERA Authority to the concerned District Collector requesting to recover the amount under the Revenue Code wherein the recovery certificate is executed through following methods:

  • By arrest and detention of the defaulter;
  • By attachment and sale of movable property including agricultural produce;
  • By attachment of any bank account or locker of the defaulter;
  • By attachment of the land in respect of which the arrear is due;
  • By lease or sale of the land in respect of which arrear is due;
  • By attachment and sale of other immovable property of the defaulter;
  • By appointing a receiver of any property movable or immovable, of the defaulter.

 

Conclusion-

The validity of the Recovery Certificates issued by the RERA Authority has been upheld by the Hon’ble Supreme Court and Hon’ble High Courts. The Complainant allottees are entitled to get the Recovery Certificate executed by the District Collector as arrears of land revenue under the Revenue Code and to receive the said amount after the execution and recovery.

 

Disclaimer- The above article is based on the personal interpretation of the related orders and laws. The readers are expected to take expert opinion before relying upon the article. For more information, please contact us at rera@centrik.in

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