MAHA AT - The Total Amount For Making deposit by Appellant promoter towards compliance of the proviso to Section 43 (5) of the Act will Include amounts received by the promoter directly from complainant as well as the amounts received from the financier out of the loan sanctioned under the subvention scheme.

The Total Amount For Making deposit by Appellant promoter towards compliance of the proviso to Section 43 (5) of the Act will Include amounts received by the promoter directly from complainant as well as the amounts received from the financier out of the loan sanctioned under the subvention scheme.

MB6 Residency Private Limited V/S Ketan Kataria & L & T Finance Holdings Ltd. Appeal No. AT006000000174630 of 2023 Before the Maharashtra Real Estate Appellate Tribunal Mumbai Decided in 18th July 2024

Fact of the main Complaint CC006000000054749 :-

• On 9th June 2018, The Original Allottees filed the captioned complaint before MahaRERA  seeking inter alia for refund of the entire money paid to promoter together with interest on the grounds as set out in the complaint.
• On 24tn February 2022, Upon hearing the parties, learned Member, MahaRERA has passed the impugned order whereby it directed appellant promoter inter alia to refund the entire amounts of Rs. 1,90,28,2751/- paid by complainant together with interest over it.
• On date 20th July 2023, Subsequently, the application filed by Appellant/promoter to review the order  was also disposed of by MahaRERA by dismissing the review application.
• Executing Authority issued recovery warrant of Rs.3,48,40,409/- towards the refund of Rs.1,90,28,275/- being the paid Principal amount by complainant to promoter and Rs.1,58,12,134/- being the interest till 30th January 2024.

Fact of the Appeal:-

• Aggrieved appellant/promoter has preferred the instant appeal before this Tribunal seeking inter alia to quash and set aside these two orders, dated 24th February 2022 and 20th July 2023 passed by MahaRERA.
• In view of both the said impugned orders, promoter  pre deposited Only Rs.85,22,583/- in the Tribunal on 24.05.2024 towards the  compliance of the proviso to Section 43(5) of the Act. 
• This Amount included the Amount of Rs.53,23,433/- deposited by the Allottee Plus interest over it and did not include the amount of Rs.1,36,30,530/- which it received from the Banking Partner L & T Finance Holdings Ltd as the Subvention payment.

The Appellate Authority Framed the following Question(s) for consideration:-

Whether the total amounts received by the promoter, i.e directly from complainant as well as the amounts received from the financier out of the loan sanctioned under the subvention scheme be accounted for making deposit by Appellant promoter towards compliance of the proviso to Section 43 (5) of the Act based on the impugned orders passed by the MahaRERA?

Observations made by the Hon’ble Court:-

• Payments for the costs of the subject flat have been made from two sources 
• (a) by the complainant himself directly to appellant and 
• (b) Payments made by the financier to the promoter on behalf of and in the name of the complainant under the said subvention scheme from out of the loan sanctioned to complainant borrower.
• Reliance was made on M/s Newtech Promoters and Developers Pvt. Ltd Vs, State of UP & ors. [civil Appeal Nos.6745-6749 of 2021]
• The provisions of Section 43(5) also stipulate for pre deposit of the entire amounts received from all the sources without making any distinction of the amounts paid to the promoter, whether amounts are received directly or indirectly or from different sources directly or indirectly or through different financial products/ instruments etc.
• The Complainant is the primary borrower to whom, the subvention loan has been sanctioned to the complainant (borrower) for funding the subject flat under the subvention scheme and this loan amount has been disbursed to promoter for and on behalf of as well as in the name of the complainant. Therefore, the complainant has the primary responsibility for repayment of the outstanding loans.
• Tribunal is expected to direct promoter to first deposit the total amount to be paid to the allottee and these pre-deposits are sine qua non before the said appeal be admitted and entertained for further consideration on merits.

Court’s Order:-

Appellant promoter is being directed once again as last chance to pre-deposit the entire amounts received from both the sources (A and B), i.e. total amounts received from the respondent no. 2, financier under the subvention scheme and also the amounts received directly from respondent no. 1 together with interest on the entire amounts.

BOMBAY HIGH COURT Allowed the refund of Stamp Duty, even when the Agreement for Sale was not cancelled within the five years of the execution giving the rational that an act of Court shall prejudice no man and the law does not compel a man to do what he cannot possibly perform.

Satish Buba Shetty v/s Inspector General of Registration and Collector of Stamps and Others

WRIT PETITION NO.9657 OF 2022

Decided on JANUARY 11, 2024

IN THE HIGH COURT OF JUDICATURE AT BOMBAY 

Fact of the Case:- 

1. On 10/11/2014 the Petitioner Purchased a flat in a building known as “ERA” of the M/s. Vijaykamal Properties Private Limited (the Developer.)
2. The Total Cost of Flat was Rs. 95 lakhs and the Petitioner paid 25% of it to the developer
3. On 19/11/2014 The Agreement to sale was duly registered with the Registrar of Assurances.
4. The stamp duty of Rs. 4,76,000/- was paid to the Exchequer.
5. The Developer had agreed to deliver possession of the flat by 30/06/2017. 

Time line of the Matter :-

1. On the Default of Developer in providing the Possession, the Petitioner filed the case in MahaRERA. 
2. On Date 26/12/2017 MahaRERA directed the the Developer to refund the amount and execute a Deed of Cancellation.
3. On the Non Compliance of the MahaRERA Order the petitioner filed an Execution Application u/s 63 of RERA Act, 2016. 
4. On Date 13/03/2018 MahaRERA imposed the penalty of Rs. 5,000/- per day on the Developer till the compliance of the order.
5. The Developer preferred an appeal before MahaRERA Appellate Tribunal (MREAT).
6. On 21/08/2018 the MREAT stayed the MahaRERA's order but subject to the Submission of 50% of the due amount plus interest, by the developer. 
7. The Developer defaulted on the Order of MREAT.
8. On Date 16/10/2018 MREAT dismissed the Developer's Appeal for want of compliance of order.
9. The petitioner filed for execution before the MREAT.
10. The Developer and the petitioner arrived at a settlement and Developer refunded the full amount by 22/02/2021.
11. On 09/03/2021 the Deed of Cancellation was executed by the petitioner.
12. On 19/03/2021 the Execution Application  was disposed off by the MREAT.
13.  On 31/03/2021 the petitioner applied to Collector of Stamps, Borivali for refund of Rs. 4,76,000/- paid as stamp duty. 
14. On 27/04/2021 the Collector of Stamps, Borivali declined to refund the stamp duty u/s 48(1) of the Stamp Act, 1958 holding that as Agreement for Sale was not cancelled within the five years of the execution.
15. The petitioner preferred an appeal before the Chief Controlling Revenue Authority. 
16. On 09/02/2022, in Appeal No. 111 of 2021 the Chief Controlling Revenue Authority also dismissed the petitioner's appeal u/s 53(1A) Stamp Act, 1958 holding that  the registered instrument was cancelled beyond five years of its execution.  
17. This petition filed this writ under Article 227 of the Constitution of India, on the legality, propriety and correctness of the impugned order.

Submissions by Appellant:-

1. The impossibility of performance of the condition within the period stipulated by the proviso was not properly appreciated by the authorities under the Stamp Act, 1958. 
2. A genuine claim of a bonafide Senior Citizen home buyer, was unjustifiably rejected by the authorities.

Submissions by Respondent:-

1. The petitioner had obtained the entire benefit under the Agreement for Sale.
2. The petitioner had never sought the cancellation of the agreement for sale within the period prescribed under the proviso to section 48(1) of the Stamp Act, 1958.
3. The Stamp Act, 1958 being a fiscal statute is required to be construed strictly.

Observations made by the Hon’ble Court:-

1. The Controversy at hand, is governed by the proviso to sub section (1) of section 48
2. The proviso to sub section (1) of section 48 thus envisages two time limits.
•  One, the registered Agreement for Sale must have been cancelled by another registered instrument within a period of five years of the execution of the Agreement for Sale.
• Two, the application for relief under section 47 be made within a period of six months from the date of registration of the Cancellation Deed.
3. In the case at hand, the authorities under the Act of 1958 have declined to grant the relief on the premise that there was non fulfilment of the first condition of cancellation of the Agreement for Sale within five years of its execution.
4. The submission of the petitioner  that there was, in a sense, an enforced impossibility of fulfillment of said stipulation cannot be said to be unworthy of consideration.
5. there was no indolence or other blameworthy conduct attributable to the petitioner.
6. The question that wrenches to the fore is, in such a situation, can a party who does all that which is in its control, be saddled with the consequence of non-compliance of a statutory prescription ?
7.  In my considered view, the answer has to be in the negative. 
8. The law recognizes impossibility of performance as a ground to relieve a person from forfeiture and penalty.
9. In the case of Shaikh Salim Haji Abdul Khayumsab v/s. Kumar and Others (2006) 1 Supreme Court Cases 46 the Supreme court recognized two maxims,
• “actus curiae neminem gravabit”; an act of Court shall prejudice no man. and 
• “lex non cogit ad impossibilia”; the law does not compel a man to do what he cannot possibly perform.
10. In the facts of the case, the first of aforesaid maxims may have an application in the context of the time which was consumed in prosecuting the remedies before the authorities under RERA. The petitioner could have compelled the Developer to execute the Deed of Cancellation if the transaction was not to materialize, only by invoking the remedies under the law. The time spent in pursuing legitimate remedies, in the absence of any bad faith or want of due diligence, can not be arrayed against the petitioner
11. Secondly, the petitioner could not have lodged a claim for refund of the stamp duty without there being a registered instrument to cancel the registered Agreement to Sale as Cancellation of earlier registered Agreement to Sale by another registered instrument is a prerequisite for the applicability of the proviso to sub section (1) of section 48.
12. Rajeev Nohwar vs. Chief Controlling Revenue, Authority Maharashtra State, Pune and Others 2021 SCC OnLine SC 863. was a case for refund of stamp duty which was purchased but no Agreement to Sale was executed. The Supreme Court found that the provisions of section 47 had no application to the facts of the said case. Yet, the Supreme Court allowed the application for claim for refund observing, inter alia, that a rejection of the application for refund would violate equity, justice and fairness where the applicant is made to suffer the brunt of judicial delay

Court’s Order:-

The petition stands allowed.

The order dated 9th February, 2022 passed by the Chief Controlling Revenue Authority, Maharashtra State, Pune and the order dated 27th April, 2021 passed by the Collector of Stamps, Borivali are quashed and set aside.

The claim for relief under section 47 of the Stamp Act, 1958 stands allowed.

BOMBAY HIGH COURT - The liability of refund falls upon all the listed promoters even if they may not have received the amount in consideration.

BOMBAY HIGH COURT - The liability of refund falls upon all the listed promoters even if they may not have received the amount in consideration.

Wadhwa Group Housing Private Ltd vs Vijay Choksi & SSS Escatics Pvt. Ltd

SECOND APPEAL (Stamp) NO. 21842 OF 2023

Decided on 26 February 2024

IN THE HIGH COURT OF JUDICATURE AT BOMBAY

Time line of the Matter :-

1. Allottee approached MahaRERA U/s 12 and 18 of the RERA act and sought refund of amount of Rs.2,62,35,056/- along with interest as well as compensation and costs.
2. On 24/09/2021 MahaRERA passed the Order holding that Allottee could not claim any equity under the provisions of act and his prayer for refund was rejected, and directed parties to execute registered agreement for sale within 30 day failing which the entire amount was directed to be refunded to the Allottee within six months.
3. Allottee filed Appeal U/s 43 of the RERA Act before the Appellate Tribunal.
4. On 18/10/2022 Appellate Tribunal partly allowed the appeal and set aside the Order directing both the Builders to Jointly refund the amount paid by the Allottee with interest.
5. Aggrieved by the Appellate Tribunal’s Order to put the liability to refund the amount received by SSS Escatics Pvt. Ltd the other Builder Wadhwa Group Housing Private Ltd chose to file this appeal.

Question of Law Framed in Second Appeal

"Whether a promoter who has not received any consideration from an allottee can be made liable for giving refund with interest under Section 18 of the Real Estate (Regulation and Development) Act, 2016?"

Fact of the Case:-

1. Builder SSS Escatics Pvt. Ltd, launched a project called “The Nest” as a Slum Rehabilitation Scheme.
2. On 05/09/2012 A JDA (Joint Development Agreement) came to be executed between both the Builders SSS Escatics Pvt. Ltd and Wadhwa Group Housing Private Ltd.
3. Under the said JDA Wadhwa and SSS segregated the constructed area amongst themselves for being sold to customers.
4. On 19/07/2013, Allottee booked a 3BHK Flat bearing B-502 admeasuring 2385 sq.ft in the said project for agreed consideration of Rs.2,65,35,000/-
5. Allottee paid an amount of Rs.1,20,00,000/- towards part consideration.
6.  On 24/07/2013 SSS issued allotment letter to Allottee.
7. The project remained incomplete on the date of coming into force of RERA Act, 2016.
8. The project was accordingly registered as ongoing project under Section 3 of the RERA by SSS in which the Wadhwa was declared as a Promoter (Investor).

Submissions by Appellant

1. Wadhwa cannot be held responsible for refund of any amount to the Allottee as he has not paid any amount to the Wadhwa and that therefore there is no question of refunding any amount to him.
2. As per the JDA both builders identified their respective entitlements in constructed portion of the building and the flat in question falls in the share of SSS, and it  alone received the entire consideration from the Allottee thereby no question of Wadhwa refunding the amount which it did not receive.
3. Mere a change in law requiring reflection of name of wadhwa as Promoter does not create its liability, which did not exist prior to introduction of RERA.  

Submissions by Respondent

1. Wadhwa is undoubtedly covered by definition of the term ‘Promoter’ per se Section 2(zk) of RERA.
2. Definition U/s 2(zk) makes it clear that all promoters are jointly liable under the Act.
3. That a promoter cannot be permitted to defeat the rights of the flat purchasers by making internal arrangements with investors, land owners, etc 

observations made by the Hon’ble Court

1. There appears to be no dispute that the payments were made by the Allottee to the SSS.
2. it is necessary to determine whether Wadhwa falls in the definition of the term ‘promoter’.
3. While registering the project as ongoing project under Section 3 of the RERA, Wadhwa’s name has been included in the list of Promoters. Therefore, Wadhwa cannot run away from the fact that it is the promoter in respect of the project ‘The Nest’
4. Mere falling of flat in the share of the SSS under the JDA would not excuse the Wadhwa from the responsibilities and liabilities under the RERA, Rules and Regulations made thereunder qua that flat. 
5. RERA does not demarcate or restrict liabilities of different promoters in different areas and the liability is joint for all purposes under the Act, Rules and Regulations
6.  Since the Wadhwa is covered by definition of the term ‘Promoter’, it is also jointly liable to refund the amount along with the SSS.
7. Distinction between projects launched before and after coming into force of RERA cannot be a ruse to escape the liabilities as promoter under RERA.
8. The Wadhwa’s contention about absence of privity of contract between it and the Complainant is totally misplaced as it is a matter of indoor management between the Promoters and the flat purchaser who is not supposed to know the intricacies of the arrangements made between several promoters amongst themselves.

Court’s Order

Accordingly the Second Appeal is accordingly dismissed with costs.

TSRERA :- The Allottee has an obligation to adhere to the payment schedule as agreed in its Agreement of Sale as per Section 19(6) and non procurement of the Home loan amount cannot put the Builder under financial distress.

The Allottee has an obligation to adhere to the payment schedule as agreed in its Agreement of Sale as per Section 19(6) and non procurement of the  Home loan amount cannot put the  Builder under financial distress. 

Sri Umesh Choudhary Vs/ M/s Alpine Infratech 

COMPLAINT NO.519 OF 2023 decided on 12th Day of March, 2024 

BEFORE TELANGANA STATE REAL ESTATE REGULATORY AUTHORITY

Facts :-

1. The Complainant booked a flat in August 2021 in the project of the Respondent Builder.
2. Application Form/Terms and Conditions of Allotment was signed by him.
3. The Agreement of Sale was executed in the month of January 2022.
4. Complainant paid 20% of the cost and the balance 80% amount was to be arranged in form of Home loan.
5. The Project was approved from many nationalized bank but as the Complainant was a Central Government employee so he wanted the Home Loan in the form of House Building Allowance (HBA) from his concerned department. 
6. That vide e-mail dated 15.04.2022, the Complainant sought for several documents ( a list of 19 documents) from the Respondent Builder to avail HBA loan.
7. The complete documents were finally given by the builder on 20.02.2023.
8.  The Builder directed the Complainant to pay the Final due amount by 28.03.2023 else base price will be increased by Rs.200 per sft.
9. The Complainant offered an interim payment of Rs.5,00,000/-  by first week of May 2023 and the full payment by July 2023.
10. In May 2023, the Complainant requested the builder to accept the due amount of Rs.25,00,000/-
11. The Builder refused to accept the amount and stated that they will only accept if the Complainant agreed to make the payment with the revised base rate by Rs. 1000 per sft an increase of  Rs.11,20,000 in total price. 

Complainants Contentions :-

1. The delay in making payment occurred due to non-handing over of documents in time. hence, management is responsible for such delays.
2.  The revised increased rate is not acceptable as the delay in making payment did not occur on default of the Complainant. 
3. Prayed to take needful action against the Respondent Builder as per the applicable rules and regulations and to get the flat at the original agreed rate.

Respondent Builder's Contentions :-

1. The Complainant in spite of availing discount did not pay the agreed amount on time.
2. The Complainant initially agreed orally to take loan from various nationalized banks but later in the month of July 2022, started requesting various documents from the Respondent Company
3. The Complainant made one or the other request for the documents and that too after a lapse of one year and also which were beyond the purview of the Respondent Company and evaded the payments due to the Respondent Company. 
4. The Respondent Company sent several mails requesting the Complainant to visit the office of the Respondent Company to sort the issue. 
5. The Complainant failed to perform his part of contractual obligation and did not make the payment as per schedule, that's why the Company is justified in cancelling the booking 

Observations of the Authority :-

1. In Clause 1.3 of the BBA, the Complainant agreed to make payment as per payment plan set out in Schedule C (Payment Plan).
2. As per the Payment Schedule annexed to the said Agreement of Sale, the Complainant categorically agreed to payment of the schedule therein. which is not disputed by either party 
3. in the annexure to the said Payment Schedule, Point No.4 stipulates that prices are subject to change without prior notice upon non confirmation of sale.  
4.  the Complainant is bound by the same and failure of the Complainant in complying with the payment schedule is derogation of his duty under Section 19(6) of the Act.
5. the delay in procuring the documents cannot be attributed to the Respondent Builder as the said documents may not readily available with him and he may not be in a position to produce documents such as 
1. government pleader's certificate, 
2. estimates, 
3. permission under Conduct Rules for purchase of site and for construction of the house,
4.  Notice under Section 26(1) of the Urban Land (Ceiling & Regulation) Act, 1976, etc
6. Clause 9.3 (ii) of the undated Agreement of Sale executed between the parties clearly stipulates In case of Default by Allottee under the condition listed above continues for a period beyond 2 (two) consecutive months after notice from the Promoter in this regard, the Promoter may cancel the allotment of the [Apartment/Plot] in favor of the Allottee and refund the money paid to him by the allottee by deducting the booking amount and the interest liabilities and this Agreement shall thereupon stand terminated

Order of Authority:-

1. The Complainant is directed to pay the remaining amounts which is pending as on date as per the payment schedule agreed upon by both the parties within 60 (sixty) days, along with interest of 10.65%.
2. In the event the Complainant fails to complete such payment, the Respondent is to initiate measures in accordance with the provisions of the Act and Rules thereunder.

Supreme Court - Home buyers who had availed remedies under RERA, can not be treated as unsecured creditors in IBC.

 IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO. 3806 OF 2023

VISHAL CHELANI & ORS. .....Appellant(s)

Vs.

DEBASHIS NANDA .....Respondent(s)

Date of Decision :-October 06, 2023

FACTS OF THE CASE:-

1.  The appellants are home buyers, who had opted for allotment in a real estate project of  Buland Buildtech Pvt. Ltd.
2. Aggrieved by the delay in the completion of the project, the appellants approached the UPRERA which by its orders upheld this entitlement to refund amounts deposited by the, together with interest.
3. In the meantime, by the Order dated 28.02.2023 by NCLAT, in C.A.(AT) No. 991/2022 proceedings under the Insolvency and Bankruptcy Code, 2016 were initiated.
4. A resolution plan was presented to the adjudicating authority. In that plan, a distinction was made between home buyers, who had opted or elected for other remedies such as i.e. applying before the RERA and having secured orders in their favor, and those who did not do so.
5. Home buyers who did not approach authorities under RERA Act were given the benefit of 50% better terms than that given to those who approached RERA or who were decree holders.
6. The appellants felt aggrieved as their applications were rejected by the NCLT and their appeals in NCLAT too was unsuccessful. Consequently, they approached the Supreme Court.  

Contentions of appellants

1. with regard to the definition of financial debt [Section 5(8)(f)] which was amended in 2018 after which home buyer allottees in real estate projects also fell within the broad description of financial creditors, so A distinction cannot be made between one set of such home buyer allottees and another.

Contentions of defendants

1. the appellants cannot be permitted to secure two benefits. Having approached the UPRERA, they fell into a different sub-class of home buyers, who were entitled to specified amounts and, therefore, were unsecured creditors, as compared with allottees who had not invoked RERA remedies. It is submitted that such home buyers relinquished their rights under Section 18 of the RERA Act.

QUESTION OF LAW

1. The main issue before the Court was whether such a classification, differentiating between home buyers who sought relief under RERA and those who did not, could be upheld. In essence, the question was whether RERA-allotted financial claims should be treated differently from those not claiming relief under RERA in insolvency proceedings.

COURT'S FINDINGS

1. The Court is unpersuaded by the submission of the Resolution Professional’s view that once an allottee seeks remedies under RERA, and opts for return of money in terms of the order made in her favour, it is not open for her to be treated in the class of home buyer.
2. To treat a particular segment of that class differently for the purposes of another enactment, on the ground that one or some of them had elected to take back the deposits together with such interest as ordered by the competent authority, would be highly inequitable.
3. Section 238 of the IBC contains a non obstante clause which gives overriding effect to its provisions. Consequently its provisions acquire primacy, and cannot be read as subordinate to the RERA Act.
4. In view of the foregoing reasons,  appeal was allowed in the above terms and the impugned order is hereby set aside; the appellants are declared as financial creditors within the meaning of Section 5(8)(f) (Explanation) and entitled to be treated as such along with other home buyers/financial creditors for the purposes of the resolution plan.

Supreme Court of India - allottee holds the right of refund on demand as an unconditional absolute right, if the promoter fails to give possession of the unit within the time stipulated under the terms of the agreement

The Supreme Court of India vide its land mark judgement Newtech Promoters and Developers Pvt. Ltd. v. State of U.P. (MANU/SC/1056/2021) dated November 11, 2021 held that the allottee holds the right of refund on demand as an unconditional absolute right, if the promoter fails to give possession of the unit within the time stipulated under the terms of the agreement regardless of unforeseen events or stay orders of the Court/Tribunal, provided that the allottee wishes to withdraw from the project.

Thus, the unqualified right of the allottee to seek refund is not dependent on any contingencies or stipulations.

Supreme Court : parties are entitled for the refund of the Court Fees in case of private amicable negotiation without intervention of the Hon’ble Courts

 High Court of Madras v. M.C. Subramaniam (2021) 3 SCC 560

Honourable Supreme Court of India has held that parties are entitled for the refund of the Court Fees in case of private amicable negotiation without intervention of the Hon’ble Courts as prescribed under aegis of Section 89 of the Code of Civil Procedure, 1908

Cancellation of allotment after taking 90% of the total sales consideration is unsustainable in the eyes of law

 In the Matter of Gautam Bhatla V/s Vatika limited Complaint no.1208 of 2019 decided on 17.02.2021 before Haryana Real Estate regulatory authority, Panchkula.

it was held that " The Authority is prima facia of the view that Cancellation of allotment after taking 90% of the total sales consideration and without remitting the amount payable to the allottees after deducting earnest money, is unsustainable in the eyes of law"

The complaints under Section 12 were thus held to be required to be filed only before the Adjudicating Officer, being the authority empowered to grant compensation under the Act

 In the Matter of Sandeep Mann vs. Real Estate Regulatory Authority, Punjab and Anr. Complaint no. Appeal No. 53 of 2018 decided on 27.02.2019 before  Punjab Real Estate Appellate Tribunal

The issue that arose in the batch matter of fifteen appeals was as to the forum (as between the Real Estate Regulatory Authority constituted under Section 20, and the Adjudicating Officer appointed under Section 71) before which a person aggrieved by violations and contraventions enumerated in Section 11(5), 12, 14(3), 18(1), 18(2), 18(3), 19(4) and 19(7) of the RERA, 2016 or the agreement for sale, praying for reliefs of refund, return of investment including compensation, setting aside of order of cancellation of allotment, compensation, compensation and interest, compensation or interest and interest as a separate relief may file a complaint.The question arose on account of two circulars issued by the Authority declaring that complaints for compensation shall be filed before and adjudged by the Adjudicating Officer whereas all other complaints shall be filed before and adjudicated by the Authority. Following these circulars, one set of orders came to be passed by the Adjudicating Officer, whereby the complaints claiming relief of refund, interest and compensation came to be dismissed for lack of jurisdiction. Another set of orders were those which the Authority passed, rejecting the complaints which alleged

violations and contraventions of the Act, while granting liberty to approach the Adjudicating Officer. All these orders were subject matter of the appeal decided by the Appellate Tribunal.

The Appellate Tribunal after considering the provisions of the Act came to the conclusion that:

(i) In case of Section 11(5), no difficulty arose, in view of the fact that the said provision specifically mentioned the Authority as the forum, before which a complaint could be filed by a complainant aggrieved by cancellation of allotment by the promoter;

 

(ii) Section 12 provides for compensation on account of false advertisement, and also for refund of investment along with interest, in case of a complainant who desires to withdraw from the project on account of false advertisement. The nature of relief being different, the circulars issued by the Authority provided for adjudication of the complaint based on the same cause of action (viz., false advertisement) by two different authorities (viz., the Adjudicating Officer for compensation and the Authority for refund of investment). The Appellate Tribunal held this mechanism to be flawed, inter alia, on account of the fact that it raised the possibility of differing orders being passed by the two authorities. Further, the cause of action being the same, the fact that the complainant had a choice of relying would not change the nature of the proceedings. The basis of the proceedings was adjudication of the proof of default. The complaints under Section 12 were thus held to be required to be filed only before the Adjudicating Officer, being the authority empowered to grant compensation under the Act;

(iii) Section 14(3), like Section 11(3), was held not to pose any problem on account of the fact that the use of the words ‘shall be entitled to receive appropriate compensation in the manner as provided under this Act’ could only mean that the appropriate forum was the Adjudicating Officer, viz., the authority empowered to award compensation under the Act;

(iv) Section 18(1), the cause of action for which is the inability of the promoter to give possession due to any of the reasons specified therein, provides an option to the buyer to withdraw from the project and seek return of investment with interest including compensation in the manner prescribed in the Act, thereby meaning that the Adjudicating Officer shall have power to adjudicate the complaint. In a case covered by the proviso, however, viz., one where return of investment is not sought and the allottee is entitled to interest till possession, the appropriate forum was the Authority; (v) Sections 18(2) and (3) provide for compensation in terms of the Act for the default of the promoter for the reasons specified therein, and therefore the appropriate forum was the Adjudicating Officer, it was held by the Appellate Tribunal;

(vi) A complaint under Section 19(4), which made a reference to award of compensation, was held to be required to be placed before the Adjudicating Officer, while one under Section 19(7), which imposed a liability upon the allottee to pay interest on delayed payments to the promoter, was required to be filed before the Authority.

Based on the above findings, the appeals came to be allowed. The Appellate Tribunal did however clarify that the decision of the Tribunal was not to apply to matters which had attained finality. The pending complaints/ applications were to be transferred to the appropriate forum as per the findings set out above.

The Complete order can be accessed at https://rera.punjab.gov.in/pdf/OrdersJudgementsPbAT/20190405PbATAppealNo11to56of2018.pdf

Appellants, having accepted a part of benefit, are not permitted to approbate and reprobate also they can not be permitted to resile from their earlier stand. Therefore, the Appellant has to be estopped from claiming again.

 In the Matter of S.Dominic Savio and Anr. vs. Phoenix Serene Spaces Pvt. Ltd. Complaint no.Appeal No. 64 of 2019  decided on 28.02.2020 before Tamil Nadu Real Estate Appellate Tribunal

The Appellant entered into an agreement with the Respondent for a flat in the project of the Respondent. The apartment was to be completed by 31.12.2015 with a grace period of six months. However, the unit was not delivered on time and the Respondent agreed to cancel the allotment on 05.05.2018, refunding the principal amount in three installments. In December 2018, the Appellants approached Respondents for refund of interest, for which the Respondent refused. Being aggrieved, complaint was filed before Adjudicating Officer for interest and compensation. The said complaint was dismissed by the Adjudicating Officer. In the present Appeal, it is contented by the Appellants that Respondent visited their offices and homes to deliberate on the refund process and due to the mental pressure and undue influence exerted by the Respondents, they were forced to accept foregoing interest and compensation and agreed for refund of principal only to free themselves from the mental agony. The Tribunal after going through the communication between the Appellant and the Respondent over a period of time held that there was no undue influence or undress. The said communication clearly reflected that Appellants voluntarily asked the Respondents to cancel the allotment, refund the money without any deduction, promising to forego their claim of interest and compensation. Further, it was held that the action of the Appellants was an afterthought, since they had waived their right of interest and compensation due to their agreement with the Respondent. The Appellants in this case, having accepted a part of benefit could not to be permitted to approbate and reprobate nor can they be permitted to resile from their earlier stand. Therefore, the Appellant was estopped from claiming again. 

Provisions of Section 12 are retroactive in nature,allottees are entitled to protection for breaches and failure of the developer notwithstanding that the transactions between the developer and the allottees consummated before the Act came into force

 In the Matter of Rohit Chawla and Ors. vs. Bombay Dyeing & Mfg. Co. Ltd. complaint no.AT006000000011016  decided on 31.12.2019 before Maharashtra Real Estate Appellate Tribunal

In the instant case, 

• the developer had published the project and gave assurances regarding details of the amenities and flats and basis such representations, the allottees booked flats in the project in 2012-2013. 

• The developer further represented to the allottees that it would handover the possession of the flat by 2017. However, the developer failed to handover the possession and also failed to provide amenities as were assured to the allottees. 

• Accordingly, the allottees filed a complaint before MahaRERA claiming that they had suffered a loss on account of incorrect and false statements made by the developer in relation to the project. Further, the allottees also sought refunds of the amounts paid by them along with interest thereon.

• MahaRERA held that Section 12 of the Act (which deals with obligations of the developer regarding veracity of the advertisement or prospectus) was not retrospective and was not applicable to the instant case since the allottees had booked flats in the year 2012-2013 and the Act came into force in the year 2017. 

• Further, MahaRERA had rejected the plea of the allottees to withdraw from the project since it would jeopardise the completion of the project. 

• The MahaRERA Appellate Tribunal overruled the order passed by MahaRERA and held that provisions of Section 12 (which deals with obligations of the developer regarding veracity of the advertisement or prospectus) are retroactive in nature and the allottees are entitled to protection for breaches and failure of the developer notwithstanding that the transactions between the developer and the allottees consummated before the Act came into force.

•  Further, MahaRERA Appellate Tribunal also held that the allottees are entitled to withdraw from the project and the developer was under an obligation to refund the amounts paid by the allottees along with interest thereon.

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If the tax amount is credited to the State Government in the name of the allottee the predominant role is of the allottee and for that the Promoter cannot be held responsible to refund the VAT payment.

  In the Matter of Ashutosh Suresh Bagh v/s. The Member & Adjudicating Officer & Ors. Complaint no. AT005000000000120 decided on 02.05.2018 before Maharashtra Real Estate Appellate Tribunal

The Appellate Authority Held that 

"While deciding claims between the allottees and meeting with controversies, or the difficulties faced by the Promoter, a harmonious approach is imperative to be adopted. This is moreso the cumulative effect of the Statute coupled with Sections 71(3), 72, 38, Preamble and impetus of Section 18 of

RERA Ad is to be coherently considered. Going by these provisions and reading the order under challenge, it is apparent that refund of VAT could not be from the Promoter as the tax amount is credited to the State Government at the credit ,/ in the name of the allottee. Whatever would be the refund, would be available subject to termination of existing agreement between the parties and on an application to the concerned authorities by the allottees. In both these situations, the predominant role is of the allottee and for that the Promoter cannot be held responsible to refund the VAT payment. 

Statutory payments like stamp duty, VAT, service tax are to be deducted and flat purchaser is not entitled for the same

In the Matter of Bhoomi And Arcade Associates vs Alistair Gomes, Appeal No. AT 005000010880

Mumbai Rera Authority ordered the promoter to refund the entire amount of Rs.3,40,491/- expended by the complainant with regard to the ancillary expenses borne towards registration, stamp duty, processing fees, and finance company charge.

The Mumbai RERA Tribunal overruling the order of the Authority held that in the proposition settled in the case of Ashutosh Suresh Bagh v/s. The Member & Adjudicating Officer & Ors. and conjunctive reading of clauses 6 and 10 of the Agreement entered between the parties, it is clear that statutory payments like stamp duty, VAT, service tax are to be deducted and flat purchaser is not entitled for the same.

Developers failing to transfer the benefits of GST reduction to homebuyers may end up compensating them with penalty in case the homebuyer withdraws from the project.

 In the Matter of Rajesh Vs. M/s Alliance Villa Pvt. Ltd Complaint no. 189 of 2019 decided on 22.11.2019 before Tamil Nadu Real Estate Regulatory Authority

• The Tamil Nadu Real Estate Regulatory Authority (TNRERA) directed a promoter to refund the booking amount with fine, after the latter refused to reduce the GST rate from 12% to 5%.

• The case relates to a complaint filed by Rajesh over booking a villa developed by Alliance Villa Pvt. Ltd at Thaiyur on Old Mahabalipuram Road (OMR) on the outskirts of the city. 

• The homebuyer entered an agreement with the developer for land and construction of a row villa in a project named ‘Alliance Humming Gardens‘ by paying Rs 4.18 lakh of the total villa price estimated as Rs 55.67 lakh. 

• While the agreement was entered with a GST rate of 12% at the time, the Centre revised the GST rate from 12% to 5%, two months later. 

• The complainant submitted to the realty regulator that the developer insisted he pay GST at old rates against the government notification, committing a breach of trust. Following this, the homebuyer withdrew from the project.

• As the developer did not refund the amount paid for booking the villa, the home buyer filed a complaint with the TNRERA. G Saravanan, adjudicating officer of TNRERA, said that for the ongoing projects, the promoter has an option to pay GST at old rates (12%), avail permissible input tax credit and pass on the benefit of the availed credit to homebuyers.

•  When the homebuyer questioned the developer, the latter stated that the 12% GST was compulsory, the order added. As per Section 19(1) of the RERA Act, the allottee has a right to all information regarding the villa intended to be purchased by him. 

• Taking all this into consideration, the adjudicating officer said the complainant was entitled for refund of the entire amount paid with an interest rate of 10.15%, besides Rs 25,000 and Rs 15,000 as compensation and for legal expenses.

2/3rd majority of allottees, keeping the larger interest of project completion and the interest of all the allottees of the said project, have accorded their consent for transfer of project under Section 15 and extension of project under Section 7(3), the complaint of minority of less than 1/3rd of the allottees for refund under Section 18 is disallowed

 In the Matter of Nitin Soni & Ors. Vs NNP Buildcon LLP Complaint no.CC005000000043692  decided on 07.08.2020 before Maharashtra Real Estate Regulatory Authority 

• The complainants purchased apartments in a project 

• The possession was to be granted by the year 2019 but it was not provided hence the complainants sought for refund along with interest and compensation. 

• The Respondent‘s project has undergone a change of promoter, in March 2019, in accordance with the provisions of Section 15, wherein the erstwhile promoter Riverview Properties Pvt Ltd, has obtained consent of two-third of the allottees in the said project and as per the said consent terms, the project has been taken over by the present promoter i.e. NNP BUILDCON LLP. 

• The delay in the project was due to change in planning authority, the new planning authority provided commencement certificate in August 2019, no progress was done from 2013 till 2019. 

• The respondent submitted that a mutually agreed proposal was shared with the allottees of the project including the complainants during discussions before the Conciliation forum. Accordingly, consent of 2/3rd allottees was received. It was also submitted that since the law provides for 2/3rd consent, providing different relief to remaining 1/3rd allottees would go against the provisions of the Act and also would set a wrong precedent for 2/3rd allottees. 

• Hence, the Complainants prayer of refund under Section 18 of the Act was disallowed by the Authority.

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Section 12 Refund - Developer to deal with Bank Directly in case of Refund in Subvention Scheme

 In the Matter of Mohan Vamsi Vs M/s Dewan housing Finance  ( Complaint no. CC006000000193176) the Maharashtra Real Estate Regulatory Authority has Ruled that

In Case of Refund in the Project where the Subvention Scheme is involved, the Builder has to deal directly with the bank and to return the money taken under Subvention scheme. The Complainant will have not  have any role between the builder and the bank.

 In the Earlier matter of khyati shah v/s rajsanket realty limited Complaint number CC006000000141031 Decided on 08/01/2020

The Complainant Filed the complaint seeking directions to the respondent to refund the entire amount paid by the complainant along with interest under the provision of section 18. The complainant purchased the flat in respondent’s project under the Subvention scheme whereby paying 20% of total amount 1,98,14,750/- . Agreement to sale was also registered on 06/09/2013. Out of The remaining amount 75% was to be paid by the ICICI bank immediately on registration of agreement to sale and balance 5% on the Possession of the flat. The interest on that amount in the form of PRE-EMIs was to be paid by the respondent builder.

Date of Possession was not mentioned in the agreement of sale. The respondent builder in contravention of the agreement stopped paying pre-emi to the Icici bank so icici issued several demand letters to the complainant to pay the pending amount.

The honourable tribunal observed that “the date of possession was not mentioned in the agreement for sale but the respondent no. 1 agreed to pay the monthly EMI to the respondent no. 2 till the possession is given to the complainant. since it has stopped paying EMI from march,2019 the same can be taken as the date of possession, Hence the complainant, who is an allottee is entitled to seek relief under section 18 of the RERA and the refund sought by the complainant, under section 18 is justified.”

The Honourable tribunal further added that “ The respondent number 1 ( The builder) is further directed to deal with the bank under subvention scheme for the remaining amount payable to the respondent number 2 viz. ICICI bank as the complainant is not liable to pay anything to the respondent number 2.”

Maharashtra Real Estate Regulatory Authority (MahaRERA) has refused to differentiate between an investor in a housing project and a homebuyer

 The Maharashtra Real Estate Regulatory Authority (MahaRERA) in the matter of Kamal Aggarwal V/s Sakla Enterprises Complaint No. CC006000000171603 has refused to differentiate between an investor in a housing project and a homebuyer and has directed a developer to honour contractual obligations.

Complete order can be seen at 

https://media-exp1.licdn.com/dms/document/C561FAQHuOUtaDbRVDA/feedshare-document-pdf-analyzed/0/1610797082012?e=1618682400&v=beta&t=4MhyLgKZFWL_FzuePp0A6QXc8nKPXC50OMKONxECUKw

Land Owners can’t be Punished in Joint Ventures – Tamil Nadu RERA

 In a complaint filed by Shankari Sundararaman (“Complainant”) against Sree Vardhana Builders Private Limited (“Company”), 265 of 2020 its directors and landowners of the Project named ‘Vardhana Constellation’ in Coimbatore, for claiming refund of amounts paid towards the purchase of the flat under Real Estate (Regulation and Development) Act, 2016 (“Act”), the Tamil Nadu Real Estate Regulatory Authority, Chennai (“TNRERA”) stated that since directors are actively involved in the affairs of the Company and have received money and corresponded with the Complainant, they would be liable for violations under Section 69 the Act which deals with offences by companies and people responsible for the conduct/business of the company. 

However, with respect to landowners of the project site (being the other respondents), TNRERA stated that the landowners had just entered into joint venture agreements and had executed general power of attorney with the Company. The sale deeds for the undivided share of land was only executed by the Company and not the landowners. 

Further, it was stated that it was the Company that had launched the project and had entered into various agreements with the Complainant for construction and delivery of the constructed apartment on receiving consideration. 

Henceforth, the landowners would not come under the definition of “promoter” and only the Company would fall under the definition of “promoter” to be made liable for contravention under Section 31 read with Section 71 of the Act

Adjudicating Officer Under RERA is only Empowered to Adjudge Compensation Under Section 71 and Section 72 of the RERA and does not have Jurisdiction to decide Matters for Allowing Refund Under Section 18 of the RERA

The Maharashtra Real Estate Appellate Tribunal, Mumbai (“Appellate Tribunal”), in the matter of Xrbia Developers Ltd. v. Firoz Aziz Shaikh (“Appeal”), has, inter alia, held that the Adjudicating Officer (“AO”) under RERA is only empowered to adjudicate on the compensation to be granted under Section 71 and Section 72 of the RERA. 

The Hon’ble Appellate Tribunal has further held that the jurisdiction to adjudicate on the matters relating to refund with interest under Section 18 of RERA vests with Adjudicating Authority. 

The Hon’ble Appellate Tribunal, whilst deciding the issue of sustainability of the order passed by AO in the complaint preferred by the allottee seeking refund with interest along with other reliefs had held that, 

“11. Considering the legal position discussed and held as above, it is crystal clear that AO has powers only to adjudge compensation under Sections 71 read with 72 of RERA and has no jurisdiction to decide matters for allowing refund with interest under Section 18 which is vested with the Authority only. Consequently, the order passed by AO with regard to subject matter involved in the above complaint is obviously without jurisdiction as per provisions of RERA. It is a fundamental principle well established that an order passed by a forum having no jurisdiction over subject matter is a nullity. An objection to lts valldity can be raised at any time including the appeal proceedings. For the said reasons, the impugned order passed by AO cannot be sustained and therefore is liable to be quashed and set aside being a nulllty for lack of jurisdiction of subject matter as contended by Promoter, We answer the point accordingly.”

Promoters are NOT entitled to exemption from compliance of Proviso of Section 43(5) of the Real Estate (Regulation and Development) Act, 2016

 IN THE MATTER OF: 

M/s Mahanagar Reality & Ors. Vs. Dinesh Ramlal Oswal & Anr. (Decided by the Hon’ble Maharashtra Real Estate Appellate Tribunal, Mumbai) 

Issue: 

 Whether the Promoters are entitled for exemption to make compliance of Proviso of Section 43 (5) of the Real Estate (Regulation and Development), Act, 2016? 

Facts: 

 Promoters being the Applicant preferred an appeal against the impugned order dated 10.01.2019 wherein the promoter was directed to refund of the amount paid by the allottees along with the interest amounts. 

 Thereafter, the Promoters filed an application for waiver of pre-deposit mandated under Section 43(5) of Real Estate (Regulation and Development) Act, 2016 before the Hon’ble Appellate Tribunal. 

Observations and Findings of the Hon’ble Tribunal: 

 The Hon’ble Appellate Tribunal observed that, it is mandated under the Real Estate (Regulation and Development) Act, 2016 that the promoter who prefers an appeal has to deposit the amount(s) and comply with the Proviso of Section 43 (5) of the Real Estate (Regulation and Development) Act, 2016 for entertaining and hearing the appeal, and that deposit in respect of the same is a prerequisite. 

 The Hon’ble Tribunal also observed that the right to appeal can be conditional and quantified. 

 The Hon’ble Tribunal further observed that the Hon’ble Supreme Court has previously settled this principle that any statute has to be interpreted in the context in which the words by are used in that particular statute. 

 Real Estate (Regulation and Development) Act, 2016 being a special legislation enacted to protect to the interests of the allottees cannot grant any exemption/ waiver to the promoter from pre-deposit of the amounts to be made under Section 43(5) of Real Estate (Regulation and Development) Act, 2016