2/3rd Allottee Consent Under Section 14(2) of RERA Required Only for Alterations Beyond the Development Agreed Under the Agreement for Sale: K-RERA”

 

2/3rd Allottee Consent Under Section 14(2) of RERA Required Only for Alterations Beyond the Development Agreed Under the Agreement for Sale: K-RERA

Raintree Boulevard Apartment Owners Association v. L&T Realty Developers Limited

Case: Raintree Boulevard Apartment Owners Association v. L&T Realty Developers Limited
Forum: Karnataka Real Estate Regulatory Authority (K-RERA)
Complaint No.: 00772/2025

The matter concerned a complaint by the Raintree Boulevard Apartment Owners Association against L&T Realty Developers Limited in relation to alleged unauthorised modifications and commercial development associated with the project. The Association sought, inter alia, revocation of the promoter's project registration and demolition of the commercial buildings.

Key finding

K-RERA held that the requirement of obtaining the consent of two-thirds of the allottees under Section 14(2) of the RERA Act is attracted only where the proposed alteration is beyond what was mutually agreed between the promoter and the allottees under the agreement/sale documents.

In other words, not every change or alteration in a real estate project automatically requires consent of two-thirds of the allottees. The first question is whether the proposed change goes beyond the development that was contractually agreed with the allottees.

K-RERA relied upon an earlier appellate tribunal ruling in reaching this conclusion. The Authority consequently dismissed the Association's complaint seeking revocation of registration and demolition.

Legal proposition

The decision can be usefully stated as:

The statutory requirement of consent of two-thirds of the allottees is triggered when the promoter proposes an alteration which goes beyond what was mutually agreed under the agreement for sale; the mere existence of an alteration does not, by itself, attract Section 14(2).

Relevance under RERA

The ruling is particularly relevant when dealing with allegations concerning:

1. change in sanctioned plans;
2. alteration/addition to the project;
3. development of commercial components;
4. demolition/removal of structures;
5. whether 2/3rd allottee consent is mandatory; and
6. the scope of Section 14(2) of the RERA Act.

The decision also illustrates the importance of examining the agreement for sale and the original contractual representation regarding the project, rather than treating every subsequent modification as requiring statutory consent.

In The Absence of Possession Clause in the Agreement, the Possession should be given in a reasonable time

 in the Matter of Fortune Infrastructure-v/s-Travor D’lima (2018) 5 SCC 442, the Honorable Supreme Court has ordered that when no date of possession is mentioned in the agreement the Promoter is expected to hand over the possession within reasonable time and the period of three years (3 yrs) is held to be reasonable time.

In the case, the Respondents were aggrieved that the appellants were not delivering the possession of flats and accordingly approached the NCDRC (National Consumer Dispute Redressal Commission) to hold that the appellants were guilty of deficiency in service and unfair trade practices as per the provisions of the Consumer Protection Act, 1986.

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Thereafter, the NCDRC directed the appellants to refund the amount of Rs.1,87,00,000/- and pay a sum of Rs. 3,65,46,000/- as to the complainants. Aggrieved by NCDRC’s order, the appellants approached the Supreme Court, the Appellants contended that they had transferred the project to a different company thereby they should be discharged from any liability for not handing over the disputed property to the answering respondents and also to consider the downward trends shown in the real estate market which mandates a lesser compensation, compared to the one awarded by the NCDRC.

The Court remarked that a person cannot be made to wait indefinitely for the possession of flats allotted to them and they were entitled to seek the refund of the amount paid by them, along with compensation. In such cases When no delivery period is stipulated the Court noted that a reasonable time has to be taken into consideration. In the facts and circumstances of this case, a time period of 3 years was deemed as reasonable for completion of the contract.

For the quantum of compensation on account of delay in delivery of flats, the Supreme Court made reference to the case of Ghaziabad Development Authority v. Balbir Singh , wherein the Court observed that there was no fixed formula for fixing damages. The Court stated that it is settled in law that whenever the builder has refused to perform the contract without valid justification, the buyer is entitled for compensation as she has been deprived of price escalation of the flat. Every breach of contract gives rise to an action for damages. Such amount of damages must be proved with reasonable certainty. Where a party sustains loss by reason of a breach of contract, the damages are to be granted so as to place the suffering party in the same position as if the contract had been performed. In light of the above, the damages other than consequential loss have to be measured at the time of the breach. However, the aforesaid rule is flexible and needs to be assessed in facts and circumstances of individual cases.

Reference may be drawn to the decision of Pannalal Jankidas v. Mohanlal, AIR 1951 SC 144, where the Supreme Court for the first time held that the party in breach must compensate in respect of the direct consequences flowing from the breach and not in respect of loss or damage indirectly or remotely caused. This rule is based on the broad principle that the party who has suffered the loss should be placed in the same position, as far as compensation in money can do it, as if the party in breach had performed his contract or fulfilled his duty.