Rajasthan Authority Decides- RERA Prevails Over Companies Act; Winding Up Order Will Not Bar RERA

The Rajasthan Real Estate Regulatory Authority has held that winding up order under Section 279 of the Companies Act 2013 will not bar proceedings under Real Estate (Regulation and Development) Act 2016.

This was held by the Authority while dismissing an application filed by the builder seeking stay of proceedings on the ground that the Delhi High Court had appointed a provisional liquidator in respect of the builder-company, while the proceedings under RERA were pending.

The builder cited Section 279 of the Companies Act, which states that no suit or legal proceeding against the company can be commenced or continued against the company after the passing of the winding up order except with the permission of the Tribunal.

At the outset, the Authority noted that no winding up order as such has been passed. The mere appointment of provisional liquidator without passing a winding up order will not attract the bar under Section 279 of the Companies Act.

"appointment of provisional liquidator is of no consequence when it comes to staying or not staying a pending suit or other legal proceeding. It is the winding up order, and only the winding up order,which is relevant for staying a pending suit or legal proceeding", observed the Authority.

Further, the Authority observed that even if a winding up order was passed, it will not affect RERA proceedings. Referring to Section 89 of the Act, it observed that RERA has overriding effect over Companies Act, as it was a special statute. It also held that RERA will prevail over Companies Act as the former was a later statute.

"the provisions of Section 31 of RERA will prevail over Section 279 of the Companies Act", the Authority held.

The Apex Court judgment in Allahabad Bank vs Canara Bank and ors (2000)4SCC406, which held that RDB Act will prevail over Companies Act, was also relied upon to strengthen the order of dismissal.

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