P&H High Court - Authority has no power or jurisdiction to reduce the time period mentioned in the declaration

 In the Matter of M/S Parador Developers ... vs Real Estate Regulatory Authority RERA Appeal No.19 of 2020 decided on 27 November, 2020 before THE HIGH COURT OF PUNJAB AND HARYANA

Fact of the Matter

• Vide request dated 13.10.2017, the appellant sought permission for change of land use of an area measuring 93.265 acres for development of a residential colony. 
• The Department of Town and Country Planning, Punjab, granted permission for change of land use vide its memo dated 17.10.2017. 
• Consequently, an application for grant of licence was made to the Amritsar Development Authority, who, granted the licence vide its memo dated 13.06.2019. Licence period was 5 years ending on 12.06.2024. 
• Thus, application dated 10.09.2019 was filed before the Real Estate Regulatory Authority, Punjab (hereinafter referred to as the 'Authority) for registration of Phase-I of the residential colony under the Real Estate (Regulation and Development) Act, 2016 (hereinafter referred to as 'the Act'). 
• A declaration in Form-B was also filed stating that the development 1 of 8 work would be completed on or before 12.06.2024. 
• Phase-I was registered but the validity thereof was reduced by one year i.e. upto 12.06.2023. 
• The appellant sought a clarification and vide memo dated 13.11.2019. 
• The Authority clarified that registration was uptill 12.06.2023 only as the group housing component was not being executed in Phase-I. 
• Thus, the appellant filed a statutory appeal before respondent No.2 but the same has been dismissed vide order dated 03.07.2020.  (This Order is published on this blog on 18.05.2021)
• Hence, the present appeal has been filed under Section 58 of the Act.

Order of the High Court 

 It is held that the Authority has no power or jurisdiction to reduce the time period mentioned in the declaration. If it feels that the period mentioned is arbitrary or unacceptable due to any reasons, a notice to show cause for rejection of the application must be given.

Supreme Court - Time is not an Essence of Contract, However, if the parties agreed to a specified time in the agreement to perform their part of the Contract, then time is the essence of the Contract and parties shall adhere to the same.

 In the Matter of  I.S.Sikandar (D) By Lrs.& Ors vs K.Subramani & Ors Complaint no. Civil Appeal no. 7306 OF 2013 // (Arising out of SLP(C) No. 20367 of 2009) decided on  29.08.2013 before Supreme Court of India

The Court Observed that.

This position of law is well settled by this Court in the Constitution Bench judgment in Smt.Chand Rani (dead) by LRs. Vs. Smt. Kamal Rani(dead) by LRs. Appeal (civil)  3377 of 1979 decided on 18/12/1992 ; wherein this Court has held that it is a well settled principle of law, that in a case of sale of immovable property, time is not the essence of the contract. 

However, If the parties agreed to a specified time in the agreement to perform their part of the contract, then time is the essence of the contract and parties shall adhere to the same.

The Court also relied on the statement in Chand Rani Vs. Smt. Kamal Rani(supra) case whereas it was mentioned 

“It has to be ascertained whether under the terms of the contract the parties named a specific time within which completion was to take place, really and in substance it was intended that it should be completed within a reasonable time. An intention to make time the essence of the contract must be expressed in unequivocal language.””

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The Authority is not bound by the declaration of the Promoter under section 4(2)(1)(c),Authority is not powerless if the promoter’s declaration is arbitrary and unreasonable.Promoter cannot be given free run in deciding time for completion of a project thereby adversely impacting the interest of the prospective Allottees.

 In the Matter of M/s. Parador Promoters Amritsar Private Limited vs. Real Estate Regulatory Authority Complaint no.Appeal no. 113 of 2019 decided on 03.07.2020 before Punjab Real Estate Appellate Tribunal

Facts of the case: 

• The Promoter obtained license on 13.06.2019 to develop a residential colony within a period of 5 years. 

• The period commenced from 13.06.2019 and ended on 12.06.2024 with a stipulation that the development work must be completed within the said period. 

• The Promoter applied to the Real Estate Regulatory Authority, Punjab for registration of the project. Order passed by Punjab Authority: 

• The Authority accepted the registration of the project but allowed the timeline for completion of the project up to 12.06.2023 i.e a period of 4 years instead of 5 years. 

• The Punjab Authority observed that even though the license to develop the colony is valid up to 12.06.2024, the license of the Promoter is valid only up to 19.12.2022 . Secondly, though Change of land use is for 93.265 Acres, only 70.264 Acres is proposed to be developed in Phase I. Balance 23.001 Acre is proposed in Phase 2. Since the Promoter is not taking up the entire Group Housing in one phase, the date of completion should be 12.06.2023.

• Aggrieved by the said order of the Authority, the Promoter filed appeal before the Punjab RERA Appellate Tribunal. 

Issue before Appellate Tribunal: 

•     Whether the Act entitles the Authority to reduce the completion period of the project while registering the project? 

Promoter’s contentions: 

1. Promoter relied on section 5(3) of the Real Estate (Regulation and Development) Act, 2016. It challenged the ability of the RERA authority to vary the period applied by the promoter in the application. 

2. Reference was also made to section 6 of the RERA Act stating that a license granted to the Promoter for 5 years could not have been varied to its disadvantage while registering the project. It necessarily had to be commensurate with the period prescribed in the license. Any other interpretation would render the provision of section 6 of the Act illusory. 

3. Promoter claimed that it has now been deprived of the right to seek extension which had it not been restricted to 4 years 1 2018 (1) ABR 558 by the Authority, would have given the Promoter 6 years by including the extended period of one year. 

4. Referring to Neelkamal Realtors Suburban Pvt. Ltd. and Ors v. Union Of India 1 , it stated that the observations of this judgment can only be applied to ongoing projects. 

5. Promoter lastly contended that no reasoning was given by the Authority while reducing the period and hence decision has to be revisited. Authority’s contentions: 

The Authority opposed the Promoter’s appeal stating: 

1. Under Section 18 of the Act the Authority may, based on facts of each case and for reasons recorded in writing, extend the registration granted to a project. 

2. That extension of registration is not a matter of right but it is dependent on circumstances that the Promoter has to establish to be beyond his control i.e due to force majeure.

3. Reliance was placed on the judgement of Neelkamal Realtors Suburban Pvt. Ltd. and Ors v. Union Of India (supra) holding that in case the promoter mentions unreasonable period to complete construction, certainly the authority would not register such an application of the promoter, taking into consideration the facts of each case. 

Verdict of Appellate Tribunal: 

The Appellate Tribunal upheld the order of Authority in reducing the period of completion of project and dismissed the appeal of the Promoter. It observed that:

(i) The Authority is not bound by the declaration of the Promoter under section 4(2)(1)(c). It placed reliance on Neelkamal Realtors Suburban Pvt. Ltd. and Ors v. Union Of India (Supra) and stated that Authority is not powerless if the promoter’s declaration is arbitrary and unreasonable. Promoter cannot be given free run in deciding time for completion of a project thereby adversely impacting the interest of the prospective Allottees. 

(ii) The Tribunal rejected the Promoter’s contention that the observation of the judgement of Neelkamal case is only applicable to the ongoing project. The tribunal stated that no such distinction manifests from the provisions of Act or the observation of the judgment. 

(iii) The RERA Act does not specifically say that the period of license and the declaration made by the Promoter in terms of section 4(2)(1)(c) have to be coterminous. 

(iv) The Tribunal held that the one-line reason given by the authority for reducing the time period is sufficient. Merely because it is not set out in detail cannot ipso facto be a ground to hold it a non-speaking order.

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