Union Bank of India's move to send an eviction notice to flat owners, who were not at fault, of a residential society here was incorrect and illegal, said real estate and legal experts on Wednesday. The state-run bank had on August 5 asked around 200 families living in Gardenia Gateway society in Sector 75 of Noida to evict premises by August 20 because the project's builder, Gardenia India Limited, had defaulted in payment of its Rs 78.45 crore loan to the bank.
Realtors and legal experts criticized the Union Bank of India's move to slap eviction notices on flat owners, even as the state-run bank on Wednesday rolled back its notices in the wake of the hue and cry they triggered. "We have withdrawn all the notices. The matter has been resolved," the bank's Managing Director and CEO Rajkiran Rai G said in Mumbai on Wednesday.
The plot was mortgaged with the bank by the builder for a construction loan worth Rs 78 crore. Since the builder failed to repay the loan, the bank's branch in Delhi from where the loan was given, had put the property on auction as per the procedures, said Rai.
President Pankaj Bajaj of Delhi-NCR chapter of CREDAI, which is the apex body of real estate developers in India, said builders routinely take construction loans from banks to finish their projects on time. "The banks mortgage the project assets to secure their loans. When the builder sells an apartment he is supposed to take an NOC from the lending bank in favor of the customer or the customer's bank. Therefore at one point, there is only one mortgage on the apartment. Builder is not supposed to sell without taking NOC," he said.
"In the present case either the builder has not taken the NOC or the bank has issued notice despite having issued the NOC earlier. Both these cases indicate a lapse in proper practice. The buyers are not at fault. Either the bank or the builder is at fault," Bajaj, also the managing director of Eldeco group, told PTI. Legal experts said if eviction notices to flat buyers were to put pressure on the builder for payment of loan, the notices are not only illegal but amount to the "harassment" of flat owners.
"The flat owners were neither borrowers nor guarantors in this case, so it's illegal to send such a notice to them. Moreover, there is due legal process to be followed before issuing eviction notices which hasn't been followed," said advocate Nitin Gupta. He said by what appears from preliminary information available about the loan agreement between the builder and the buyer in this case, the flat owners were not signatories to the deal and hence any action against them is not justified.
Annu Khan, president of Noida Extension Flat Owners and Members Association (NEFOMA), said the bank's action was not in compliance with the Supreme Court's order in the Amrapali Case. "The apex court had clearly stated that any such issue is to be sorted out between the bank and the builder and the flat buyers should not be bothered. Here, sending eviction notice to flat buyers over default in payment of loan by the builder was completely wrong," Khan said.
(This story has not been edited by Devdiscourse staff and is auto-generated from a syndicated feed.)