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Winding Up Order Will Not Bar RERA Proceedings; RERA prevails over Companies Act – Rajasthan Authority

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

This was held by the Authority while rejecting an application by the builder seeking an injunction on the ground that the Delhi High Court had named a provisional liquidator with regard to the builder-company,  while the procedures under RERA were pending.

The builder referred to Section 279 of the Companies Act, which expresses that no suit or lawful proceeding against the company can be initiated or proceeded against the company after the passing of the winding up order except with the authorization of the Tribunal.

At the outset, the Authority noticed that no winding up order thusly has been passed. Mere appointment of provisional liquidator without passing a winding-up order will not be a bar under section 279 of the Companies Act.

“appointment of the 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 saw that regardless of whether a winding-up order was passed, it won’t influence the proceedings of RERA. Alluding to Section 89 of the Act, it saw that RERA has a superseding impact over Companies Act, as it was a special statute. It likewise held that RERA will prevail over the Companies Act as the previous was a later rule.

“the provisions of Section 31 of RERA will prevail over Section 279 of the Companies Act”, the Authority held
 The Supreme Court of India in  Allahabad Bank versus Canara Bank and or (2000)4SCC406, held that the RDB Act will beat Companies Act, also relied upon to strengthen the order of dismissal.

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