Supreme Court of India - The nature and extent of relief, to which a subsequent purchaser can be entitled to, would be fact dependent.

 In the matter of LAUREATE BUILDWELL PVT. LTD. V/s CHARANJEET SINGH CIVIL APPEAL NO. 7042 of 2019 decided on July 22, 2021 before THE SUPREME COURT OF INDIA

Fact of the Case

• Ms. Madhabi Venkatraman (hereafter “the original allottee”) applied on 29.08.2012 for allotment of a residential flat (No. 7013,(hereafter “the flat”) admeasuring 4545 sq. ft., in Nectarine Tower "PARX LAUREATE" at Sector- 108, Expressway, Noida.

• On 16.10.2012, an allotment letter was issued to the original allottee

• According to the allotment letter, the possession of the flat was to be handed over within 36 months (from the date of allotment letter) i.e., latest by 15.10.2015.

• The original allottee made payment to the tune of ₹1,55,89,329/

• after noticing the slow pace of construction, the original allottee decided to sell the flat

• The purchaser and now complainant alleged that possession was not delivered in October, 2015 as  promised (in the allotment letter).

• The Complainant claims to have visited the builder’s office in last week of January, 2017 and was informed that possession of the said flat could not be delivered till the end of year 2017

• After this, the purchaser sought for refund of the amount paid, from the builder. On 08.03.2017, a legal notice was issued to the builder asking for refund of the amount of ₹1,93,70,883/- with interest

• The builder, Laureate denied the claim

• . It is in these circumstances, that the appellant approached the NCDRC, for direction to the builder to refund the entire sum of ₹1,93,70,883/- with interest at the rate of 24% from the respective dates when the instalments were paid to Laureate. In addition, ₹ 5,00,000/- as compensation and ₹ 2,00,000/- as litigation expenses were sought along with other costs.

• The NCDRC directed the Developer to refund the amount deposited with the developer in respect of subject flat No. 7013 with interest @ 10% p.a

Arguments of the Builder 

• Learned senior counsel submits that since the complainant was not the original allottee but a subsequent purchaser, he could not claim any interest. He relied upon two rulings of this Court in HUDA v. Raje Ram and the recent judgment of this Court in Wing Commander Arifur Rahman Khan and Anr. v. DLF Southern Homes Pvt. Ltd.

• It is submitted that in both these cases, this Court had categorically ruled that when the allottee in a housing project transfers his or her rights in favor of another, such a third party cannot claim equities to the same extent as the original allottee, especially as regards a claim for interest

Analysis and Conclusions:

• this court is of the opinion that the per se bar to the relief of interest on refund, enunciated by the decision in Raje Ram (supra) which was applied in Wg. Commander Arifur Rehman (supra) cannot be considered good law. 

• The nature and extent of relief, to which a subsequent purchaser can be entitled to, would be fact dependent.

• It would no doubt be fair to assume that the purchaser had knowledge of the delay. However, to attribute knowledge that such delay would continue indefinitely, based on an a priori assumption, would not be justified.

• the interests of justice demand that interest at least from that date ( Subsequent allottee purchasing the unit" should be granted, in favor of the respondent.

Supreme Court - Subsequent buyers are entitled to receive interest only after the date of endorsement in their favour.

 In the Matter of Haryana Urban Development Authority Vs. Diwan Singh Complaint no. Civil Appeal no. 3409 of 2003 // (2010) 14 SCC 770 decided on 23.10.2008 before Supreme Court of India

Fact of the Case.

• Plot No. 2163P in Sector 13, Bhiwani was allotted by the Appellant in the year 1990

• on the request of the original allottee, it was re-allotted to the respondent by the appellant on 21.4.1998

• In the year 1999, respondent approached the District Consumer Disputes Redressal Forum, Bhiwani, alleging that in spite of payment of the full price, the appellant had failed to deliver possession, on account of non-completion of development

• He therefore sought three reliefs. 

• First, a direction to the appellant to pay interest at 24% per annum on the amounts deposited, till the date of delivery of possession (after removing the road laid over a part of the plot). 

• Second was for a direction to the appellant not to charge any extension fee after 1994 or any interest on the extension fee. 

• Third was for payment of compensation of Rs.1,00,000/ for harassment and suffering

• The appellant resisted the claim on several grounds and also alleged that it had offered possession in 1994 and again in May 1998

• The District Forum by its order dated 10.8.1999 accepted the contention of the respondent that there was no effective offer of delivery of possession in May 1998 and awarded interest at 18% per annum on the amounts deposited, with effect from the date commencing on the expiry of two years from the date of deposit, till date of fresh offer of possession with a further direction to the appellant not to charge interest on the extension fee. The prayer for compensation for suffering/mental agony was rejected.  

• The appeal filed by the appellant was dismissed by the State Consumer Disputes Redressal Commission on 21.9.1999 by a nonspeaking order on the ground that there was no merit in the appeal.

• The appellant challenged the order of the State Commission in a Revision filed before the National Consumer Disputes Redressal Commission.

• The National Commission by a non-speaking order dated 27.8.2002 disposed of the Revision Petition in terms of its decision in HUDA v. Darsh Kumar (Revision petition No. 1197 of 1998) wherein it has upheld the award of interest even at 18% per annum.

Order of the Supreme court

• One significant aspect to be noticed is that respondent is not the allottee who was allotted the plot in 1990, but a re-allottee who was re-allotted the plot in April 1998. When he was offered possession of the plot in May 1998, he found that a part of it was used for road purposes of road. Thereafter, the appellant even offered an alternative plot. The respondent however rushed to the District Forum in 1999, hardly within a year of re-allotment.

•  A re-allottee in 1998 cannot obviously be awarded interest from 1992 on the amounts paid by the original allottee in 1990 on the ground that the original allottee was not offered delivery in 1990.

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MahaRERA - Subsequent allottees are not entitled to any interest under Section 18 of the Act.

 In the Matter of Devindersingh Harbajansingh Anand and others Versus Poona Bottling Co. Pvt. Ltd. And others Complaint no.CC005000000011586 decided on 09.01.2019 before Maharashtra Real Estate Regulatory Authority

It has been held that subsequent allottees are not entitled to any interest under Section 18 of the Act. In the instant case, the complainants purchased the flat from the original allottees and were now claiming rent from the developer for the delay in possession on the basis of the date of possession mentioned in the earlier agreement between the original allottees and the developer.

MahaRERA stated that the subsequent allottees were aware at the time of purchase of the flat that the date of possession had lapsed and hence they were not entitled to any relief.

The order can be accessed on http://www.jclex.com/reradossier/subsequent%20allottees%20not%20entitled%20to%20interest.pdf