How to execute Recovery Certificate issued by UP-RERA against a Builder?

Introduction

In a report published by the Times of India in its online edition dated 03.10.2020 revealed that according to an RTI (filed by Mr. Anand Mishra, Advocate) response, U.P. RERA till RTI reply dated 14.09.2020 disposed of 21200 complaints of a total of 28438 complaints filed in the entire state.  But it has not been able to achieve its objective when it comes to fixing erring builders and the regulator has been able to realize only 16 per cent of the total recovery citations from builder issued by it for the return of buyers’ money.  The U.P. RERA through RTI responded that of 2177 Recovery Citations issued in the past three years only 353 have been realized so far.

It has now come in the knowledge of common man that most of the home buyers despite getting refund order and recovery citations from the U.P. RERA have not been able to get the money refunded from the developer as the execution of recovery citations by the Collector has not been effective enough.  The execution of recovery citations has become a bottleneck in the successful execution of RERA Act. 

By means of this article, certain steps are suggested which can be adopted by a buyer who has got issued recovery citations against its builder.  A video presentation of the present topic is also shared above.

Q.      What is a Recovery Citation?

A recovery citation or recovery certificate issued by the U.P. RERA or any other state RERA under Section 40(1) of the Real Estate (Regulation and Development) Act, 2016.  As per the sub-section, if a promoter or allottee or real estate agent fails to pay any interest or penalty or compensation imposed on him by the adjudicating officer or by the RERA or by the Appellate Tribunal under RERA Act or Rules and Regulations made thereunder, then such interest, penalty or compensation shall be recoverable from the defaulting promoter, allottee or real estate agent as arrears of land revenue.  For recovery of an amount as arrears of land revenue, recovery citation is issued.

Q.      What is arrears of Land Revenue?

As per the UP Revenue Code, 2006, on land (with certain exceptions) wherever situated and to whatever purpose applied, shall be liable to assessment and payment of land revenue to the state government.  The land revenue assessed on any holding is the first charge on such holding and also on trees or building standing thereon or the rent, profit or produce thereon.  The land revenue is leviable in respect of an agricultural year becomes due on 1^st day of that year and is payable at such time, in such instalment to such person at such place and in such a manner as have been prescribed under the U.P. Revenue Code Rules 2016.  Such land revenue is payable every year but if the same is not paid by the given date, then such unpaid land revenue becomes therefrom an arrear and the person liable for its payment becomes a defaulter.  Section 40 of the RERA Act treats the promoter as a defaulter of such land revenue, and then to recover such land revenue it follows the procedure of recovery of arrears of land revenue by issuing a recovery citation and then sending it to the revenue officials headed by the Collector to recover such arrears from the promoter by following the procedure provided under U.P. Revenue Code, 2006 and Rules, 2016 thereunder.  

Q.      What is the procedure to execute a Recovery Certificate against the promoter? 

Once the recovery citation is issued by the U.P. RERA and sent to the Collector, it becomes the responsibility of the Collector to execute the same as per the procedure prescribed under the U.P. Revenue Code 2006 specifically provided under Chapter XII from Section 169 to Section 205.  An arrear of land revenue remaining unpaid within the time specified in the writ of demand may be recovered by any one or more of the following process, namely –

• 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.

Q.      What is the first step taken by the Collector to enforce a Recovery Citation issued by the U.P. RERA?

As soon as the Recovery Citation is issued by the U.P. RERA and received by the Collector, the Collector sends it to the concerned Tahsildar under whose jurisdiction the concerned promoter has it corporate office or any other property.  It is the duty of the Tahsildar to issue a ‘writ of demand’ against the defaulter calling upon him to appear or to pay the amount within a time specified by the Tahsildar after the issuance of the writ of demand and if the defaulting promoter/allottee/agent pays the amount further proceedings are not initiated.  However, if the defaulter does not pay the demand of money as mentioned in the writ of demand then the Revenue officials may recover such amount by following the process as mentioned in the above paragraph.

Q.      When can a promoter be arrested or detained by the Administration?

It is the discretion of the Revenue officer whether it wants to arrest and detain the promoter in custody in the Tahsil Lock Up for a period not exceeding 15 days unless the arrears are sooner paid in full.  However, women or minor or a senior citizen of 65 years or more may not be detained.  The discretionary power of detaining is not exercised unless the officer issuing the arrest warrant has a reason to believe that the process of detention will compel the payment of the whole or substantial portion of the arrears wherein arrest of a defaulter promoter may be issued by any revenue officer not below the rank of an Assistant Collector as per R.C. Form 37 and it may be executed by the officer or the officials authorized by the Revenue Officer issuing the warrant of arrest.

Q.      When can movable property of the promoter be attached?

A Sub-divisional Officer may attach and sell movable properties of the defaulting promoter.  The Sub-Divisional Officer can attach the movable properties of the promoter which may include their cars, collection of paintings, computers, helicopters, etc.

Q.      When and how bank account and locker of the promoter is attached?

It can be done at any time soon after the time limit prescribed in the writ of demand.  The attachment of any bank account of the defaulter, so far as possible, maybe started by serving garnishee order on the Manager in-charge of the Bank of the Branch concerned and in the case of a locker hired by the defaulter promoter, the same shall be sealed in the presence of such Manager, who shall, thereafter, on the further orders of the Sub-Divisional Officer start preparation of the inventories of lockers content and their ultimate disposal.

Q.      What to do if the recovery citation is not getting executed by the Collector or the Tahsildar?

It is suggestable that soon after the issuance of the recovery citation against the promoter by the U.P. RERA, the complainant should also get involved actively in following up with the process of the execution of the recovery citation.  To begin with, a complainant should immediately try to make representation in form of an application to the Collector and Tahsildar for executing the recovery citation issued by the U.P. RERA.  Once such application is filed then periodical reminders should be sent to the Collector and Tahsildar and one must also visit the offices of these officials to enquire about the progress of the recovery proceedings.

Q.      What if the Tahsildar/ revenue officer is not executing the Recovery Certificate and considerable time has passed?

As per U.P. Revenue Code, it is the statuary duty of the Tahsildar and other Revenue officials including the Collector to recover the arrears of land revenue and execute the recovery citation and writ of demand issued by the U.P. RERA and by it respectively.   The performance of statuary duty is enforceable by a Writ of Mandamus.  An aggrieved person against the non-adherence of the statuary duty by an officer of the state may approach the Hon’ble High Court with his grievance and request for issuing of a writ of mandamus to the Collector for executing the recovery certificate.

Q.      What kind of remedy is expected from Hon’ble High Court?

 As per law it is the duty of the U.P. RERA to conduct execution proceedings as per Rule 24 of the U.P. RERA Rules, 2016.  The RERA should initiate execution proceedings a soon as the promoter fails to adhere its order.  The U.P. RERA should function and conduct proceedings of execution in a regular manner and must seek periodical reports from the Collector with respect to the execution of recovery certificates issued by it.   The execution proceedings by U.P. RERA, as per Rule 24, may be conducted like the civil courts conduct the execution proceeding.  The complainant should be given dates in the execution proceedings and report on execution of the recovery certificate should be called by the RERA before itself during execution proceedings.  The issuance of the recovery citation and then putting the ball in the court of district revenue administration for recovery thereof has become a continued source of harassment for the buyer.

Under such circumstances, the Hon’ble High Court may issue a writ of mandamus either directing the RERA to ensure execution of the recovery certificate by initiating execution proceedings as per Rule 24 or it may also direct the Collector to enforce the recovery citation within a time-bound manner.

In a recent judgment the Hon’ble Allahabad High Court in a Writ Petition filed by a home buyer, Amit Kumar Jain represented by Mr. Prashant Kanha and Mr. Nikhil Kumar Advocate, directed the Collector, Gautam Buddha Nagar to enforce the recovery citation issued in the case of the petitioner in a time bound manner.

The relevant portions of the said and similar order are shared below:

Q.      What if the Collector does not enforce the Recovery Citation even after order from the Hon’ble High Court?

A buyer approaching the Hon’ble High Court must ensure that the order passed by the Hon’ble High Court is submitted before the Collector and Tahsildar as soon as possible by all methods of communication ensuring that the order of the Hon’ble High Court has come into the notice and knowledge of the Collector and Tahsildar.  When the order of the Hon’ble High Court comes into the knowledge of the Collector, then he is duty-bound to honour same within the time prescribed by the Hon’ble High Court.  However, if in any case, Collector does not honour the order of the Hon’ble High Court, then the aggrieved home buyer shall be at liberty to initiate contempt proceedings against concerned Collector before the Hon’ble High Court.