Provisions of the special Act always override the provisions of the general law

 In the Matter of M/s Apex Buildwell Pvt. Ltd. V/s Sachin Kumar,Appeal No.240 of 2019 decided on 09.02.2021 before THE HARYANA REAL ESTATE APPELLATE TRIBUNAL it was held that

"We do not find any substance in the contentions raised by learned counsel for the appellant that in order to claim the compensation for delay in delivery of possession, the respondent /allottee was required to establish the loss suffered by him as provided in Section 74 of the Indian Contract Act, 1872. The provisions for grant of damage on account of the breach of contract provided in Section 74 of the Indian Contract Act are the general provisions. Whereas Section 18 of the Act is a special provision dealing with consequences on account of the failure of the promoter to complete the project by the date specified in the agreement for sale. The proviso to Section 18(1) of the Act categorically provides that where an allotee does not intend to withdraw from the project, he shall be paid by the promoter the interest for every month of delay till handing over of the possession at such rate as may be prescribed. Thus, the proviso to Section 18(1) of the Act stipulates that the allottee shall be entitled to interest at the prescribed rate for the delay in delivery of possession beyond the date stipulated in the agreement for sale. It is nowhere mentioned in Section 18 of the Act that in order to claim the interest for delayed delivery, the allottee has to prove the loss. Simple failure of the promoter to deliver the possession by the date specified in the agreement for sale, will make the allottee entitled for the interest provided in the proviso to Section 18(1) of the Act. It is settled rule of interpretation that the provisions of the special Act always override the provisions of the general law. So, the provisions of the Act will override Section 74 of the Indian Contract Act which is the general law."

The interest provided in proviso to section 18(1) of the Act is the return for his money used by the promoter

 In the Matter of M/s Apex Buildwell Pvt. Ltd. V/s Sachin Kumar,Appeal No.240 of 2019 decided on 09.02.2021 before THE HARYANA REAL ESTATE APPELLATE TRIBUNAL it was held that

“the interest is a premium paid for the use of money. Ordinarily a person who is deprived of his money to which he is legitimately entitled as of right is entitled to interest for the period his money is used by the other person.”

it was also held that

“the interest provided in proviso to section 18(1) of the Act is an interest simplicitor which is available to an allottee who does not intent to withdraw from the project as a return for his money used by the promoter, who caused delay in the delivery of the possession. Thus, the interest for delayed possession cannot be construed to be the compensation in strict sense to fall within the purview of Sections 71 and 72 of the Act read with rule 29 of the Rules.”

NCDRC - compensation to the complainant company cannot be at par with that to an individual.The company is not entitled to compensation for the mental agony and harassment to which an individual is entitled

 In the Matter of Springdale Core Consultants Pvt Ltd vs. Pioneer Urban Land and Infrastructure Ltd Complaint no, Consumer case no. 349/2017 decided on 14.07.2020 before National Consumer Disputes Redressal Commission.

The Complainant company booked a residential apartment for its Directors in the Builders project on 29.11.2011. An agreement for sale dated 13.03.2012 was executed between the parties. Under the agreement, the Builder had to apply for Occupancy certificate by 04.09.2015 and obtain the OC by 04.03.2016. The builder could not obtain OC within agreed time. The Complainant filed a complaint seeking possession of the flat along with the compensation for delay in construction. Alternatively, the complainant company prayed for refund of the amount paid to the Builder. During the pendency of the complaint, the Builder obtained OC and offered possession to the complainant company vide letter dated 03.04.2019. 

Issue before NCDRC: 

(i) Whether the flat booked by the Complainant company for its Directors was booked for speculative purposes? 

(ii) Whether the Complainant company is entitled to any compensation in the form of interest for delay in possession of flat?

It placed reliance on the resolution passed by its board of directors on 14.11.2011, resolving to book flat for the residence of one of the directors of the company. Accordingly, the complainant argued that the purchase of flat was not for speculative purposes. 

Builder’s contentions: 

1. Since the complainant is a private limited company resolution may have been manufactured at a later date. 2. As per the information provided by the Registrar of companies, the business activities of the complainant company were confined to Amritsar and all the Directors were residents of Amritsar. A director was also a partner of LLP engaged in the business of Real estate. 

3. The compensation for the delay in delivery of the possession where the complainant is a company should not be at par with the compensation granted to an individual. 

4. Submitting the lease deeds, the builder showed the prevailing rentals in the project. They stated that there would be no justification for compensation higher than the prevailing rentals in the project.

5. Builder also claimed for holding charges from the complainant company.

Verdict of NCDRC: 

NCDRC directed the Builder to hand over the possession of flat to the complainant company within 8 weeks from the date of order. The court also awarded compensation to the complainant company. It rejected the Builder’s contention that the flat in question was for speculative purposes. It observed that the Director became a partner in the LLP in the year 2017 and the flat in question was booked earlier in the year 2011. Secondly, she was residing at Gurgaon and was planning to shift to Gurgaon even if she was residing at Amritsar. Therefore, it is difficult to infer that the flat was booked for speculative purposes 

The Commission relied on the decision of Vishal Malik & Anr. Vs. Pioneer Urban Land Infrastructure Ltd 1 , to direct possession of flat along with the compensation. The commission agreed with the Builder that the compensation to the complainant company cannot be at par with that to an individual. 

The company is not entitled to compensation for the mental agony and harassment to which an individual is entitled. On quantum of compensation, NCDRC stated that the prevailing rents in respect of similarly situated flats of identical specifications and size cannot be made the sole basis for grant of such compensation. Else the builder would have no incentive to complete the construction within the agreed time frame. He would know that even if he diverts the funds collected from the flat buyer to another project, he would easily compensate the buyer which would not cost him more than 3-4% of the capital employed. 

NCDRC placed reliance on the decision of Capital Greens Flat Buyer Association & Ors. Vs. DLF Universal Limited & Anr 2 to observe that the builder is not entitled to holding charges. Since the builder having received the consideration has nothing to lose by holding possession of flat except to maintain the apartment.

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

in the absence of any pleadings or material placed on record for award of compensation on account of mental agony, compensation ought not to have been awarded.

 In the Matter of Estate Officer vs. Real Estate Regulatory Authority, Punjab and Anr. Complaint no. Appeal No. 65 of 2019 decided on 01.07.2019 before Punjab Real Estate Appellate Tribunal

In this case, the RERA Appellate Tribunal was called upon to examine the correctness of an order of the Adjudicating Officer, vide which compensation had been awarded under Section 72 of the Act on account of two heads, viz., mental agony and litigation expenses. While passing the Order for compensation, the Adjudicating Officer had opined that since the Act did not define the term compensation, and had thought fit to draw upon the scheme of Workmen’s Compensation Act, 1923, the Motor Vehicles Act 1988 and the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013 for settling the claims for compensation. 

The Appellate Tribunal held:

(i) The objects and reasons in the matter of award of compensation under those enactments acts have no connection even remotely with the award of compensation under the RERA and to draw a corollary from the said enactments for considering the award of compensation was wrong and illegal;

(ii) Section 72 of the Act operates a self contained code for consideration of the factors to be taken into account while deciding the quantum of compensation. In support of this proposition, the Tribunal also relied on the previous decision in the same matter, wherein it had been concluded by reference to Section 72(d) that the factors enumerated in the said provision were not exhaustive;

(iii) that in the absence of any pleadings or material placed on record for award of compensation on account of mental agony, compensation sought not to have been awarded. It was found that in order to support the plea of compensation, only a bald statement had been made and no material was placed on record to support the case of loss suffered on account of interest paid for bank loan availed. The Tribunal also relied on Bhavnagar University vs. Palitana Sugar Mills Pvt. Ltd. 2003 (2) SCC 111, for the proposition that when a statutory authority is required to do a thing in a particular manner, the same must be done in that manner or not at all. 

The award of compensation on account of litigation expenses was upheld, while that on account of mental agony was set aside.

Grant of relief of compensation can only be adjudicated by the adjudicating officer,if compensation is provided as a part of the multiple reliefs, the complaints have to be placed before the adjudicating officer.

 In the Matter of Sameer Mahawar Vs. MG Housing Pvt. Ltd. Complaint no. appeal no. 6/2018 decided on 02.05.2019  before Haryana Real Estate Appellate Tribunal

In this order after taking into consideration the provisions of Sections 11(4), 12, 14, 18, 19, 31, 34(f),  37, 38 and 71 of the Real Estate (Regulation and Development) Act, 2016 (hereinafter called the Act) and rule 28 & 29 of Haryana Real Estate (Regulation and Development) Rules, 2017 (hereinafter called the rules). The Honourable Appellate tribunal added that. “ Thus, as a result of our aforesaid discussions, we conclude and sum up our considered view in following manner :-

(i) That violations and causes of actions arising out of the same bundle of facts/rights giving rise to the multiple reliefs shall be placed before one and the same forum for adjudication in order to avoid the conflicting findings. 

(ii) The complaints for the grant of relief of compensation can only be adjudicated by the adjudicating officer as per the provisions of section 71 of the Act and rule 29 of the Rules. 

(iii) Similarly, if compensation is provided as a part of the multiple reliefs alongwith refund/return of investment with interest flowing from the same violation/violations and causes of action, the complaints have to be placed before the adjudicating officer exercising the powers under 3 Sections 31, 71(1) read with rule 29 of the Rules as only the adjudicating officer is competent to deal with the relief of compensation.”

Karnataka Rera - No Compensation is payable for mental agony in case of breach of a contract.

 In the Matter of Suman Rupanagudi vs. Adarsh Developers Complaint no. CMP/190912/0004118 decided on 31.01.2020  before Karnataka Real Estate Regulatory Authority

Karnataka RERA tried to clear this ambiguity by placing reliance on the judgment of the Hon’ble Supreme Court of India in Ghaziabad Development Authority vs. Union of India. (2000)6 SCC113 The Hon’ble Supreme Court, while considering a case of breach of contract under Section 73 of the Indian Contract Act, 1872, held that no damages are payable for mental agony in case of breach of a contract.

In Lucknow Development Authority vs. M.K. Gupta,AIR1994 SC 787 the Hon’ble Supreme Court of India held that the liability for mental agony had been fixed not within the realms of contract but under the principles of administrative law.

In view of the same, Karnataka RERA refused to grant relief towards mental agony

If the developer is not building the project as promised in the brochure, the Authority directed the promoter to complete the project as promised in brochure and rectify the mistake and also for compensation they can approach the Adjudicating Authority

 In the Matter of Pawan Beniwal and Kavita Vs Parsvnath Developers Ltd Complaint no.Raj-RERA-C-2017-2007 decided on 20.06.2019  before Rajasthan Real Estate Regulatory Authority

• The Rajasthan Real Estate Authority presided by Shri Nihal Chand Goel and Shri Rakesh Jain held that the Allottee/complainant contended that the developer is not developing these flats as per their brochure in that they have converted the lawn of the flat into a common facility area by making five sewerage manholes in the backyard. 

• The issue has not been resolved despite complaints made to the non-complainant. Even as per para 1(a) of the Agreement, it is clear that a lawn was supposed to be part of these flats at ground floor, but no lawn has been developed. 

• The competent Authority issued the following directions:

• (i) The non-complainant shall cover the manholes and develop the back yard/ rear set back into a proper lawn; 

• (ii) The complainants shall take possession of the their respective floors; and then point out the difficulties and deficiencies in workmanship, quality or provision of services to the promoter to rectify such difficulties and deficiencies, at no cost to the complainants, Within 30 days thereof; 

• (iii) If, before or after giving possession, the non-complainant does not comply with the directions given hereinbefore, the complainants will be at liberty to approach the Adjudicating Officer for relief under section 14(3) of the Act. Besides this, the complainants will also be at liberty to approach the Adjudicating Officer for relief of compensation under section 12 and section 18(1) of the Act.

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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.

The cause of action for claiming possession after the lapse of agreed date of possession becomes a recurring course of action

 In the Matter of Avinash Saraf, Neha Duggar Saraf v/s Runwal Homes Pvt. Ltd. Complaint number CC006000000000032 decided on 13.10.2017 before Maharashtra Real Estate Regulatory Authority

The complainants contended that they have paid 97% of total consideration of the flat. The date of possession of the flat was August, 2016, as per agreement of sale executed in November 2014, but the respondent failed to give the Possession in time.hence the complainant demanded the amount of consideration with interest @ 21% p.a. from the respondent with compensation for the amount expended towards stamp duty and registration charges.

The respondent contended that MAHARERA has come into effect from 1st May 2017. Therefore MAHARERA has no jurisdiction to entertain this complaint. The date of possession was delayed due to delay in getting permission for constructing parking from MCGM (Municipal Corporation of Greater Mumbai), for reasons beyond control of the respondent.

Point for consideration before The Honorable judge was whether the complainant is entitled to get back the amount paid to respondent with interest and compensation? He answered affirmatively with the following reasons.

The cause of action for claiming possession after the lapse of agreed date of possession becomes a recurring course of action. Therefore MAHARERA has the jurisdiction under section 79 of the Act. The reasons given by the respondent for delay in possession is also not acceptable, since the agreement was executed in November 2014 it means the respondent was aware of the time for giving possession.

The honorable judge has delivered the following judgment.

• To refund the entire amount paid to the respondent till date with interest and compensation for amount paid towards stamp duty and registration charges. Rate of interest upto the date of 30th April 2017 was decided @  9% per annum. And from 1st May 2017 the rate of interest was decided to be the interest at SBI’s highest marginal cost of lending rate + 2% p.a. till the date of final payment to the complainant.

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The provisions of the Real Estate (Regulation and Development) Act, 2016 can be invoked without entering into an agreement between the developer and the homebuyer

 IN THE MATTER OF: M/s Casa Grande Civil Engineering Pvt. Ltd. Vs. Mr. P. Govindraj, Mrs. Deeparaj (Decided by Hon’ble Tamil Nadu Real Estate Appellate Tribunal- TNREAT)

Issues: 

 Issue 1 - Whether the provisions of the Real Estate (Regulation and Development) Act, 2016 can be invoked without entering into an agreement between the developer and the homebuyer? 

 Issue 2 -Whether the order of the Hon’ble Adjudicating Officer is an erroneous one? 

 Issue 3 -Whether the appeal deserves to be allowed or not?

Facts: 

 Promoters being the appellant preferred an appeal against the impugned order dated 31.07.2019 passed by the Hon’ble Adjudicating Officer in CCP.No. 78/2019 for settling of an issue pertaining to whether without entering into a contract the homebuyers have the locus standi to invoke the provisions of the Real Estate (Regulation and Development) Act, 2016? 

 The appellant/ promoter had advertised in newspaper sale of flats in the residential real estate project. 

 The homebuyer and the developer mutually agreed for consideration payable in respect of the same. The homebuyer was asked to pay amounts towards consideration in respect of the proposed purchase of the residential flat in the real estate project. Thereafter, an acknowledgment letter was issued by the appellant/ promoter acknowledging the receipt of payment and providing for other terms and conditions. 

 The terms and conditions of the said acknowledgment letter further provided for non-payment of goods and services tax that was subsequently asked to be paid by the homebuyer. Subsequently, the appellant/ promoter even reduced the area of residential flat proposed to be sold. Stemming from the above mentioned facts and events, the homebuyer decided not to sign any definitive agreement. 

 The homebuyer further appeared before the Hon’ble Adjudicating Officer complaining about of violation of Section 12 and 13 of Real Estate (Regulation and Development) Act, 2016. 

 The Hon’ble Adjudicating Officer ruled that the appellant/ promoter had violated the provisions of Section 12 and 13 of Real Estate (Regulation and Development) Act, 2016. Hence, in lieu of the same, an appeal was preferred by the appellant/ promoter.

Observations and Findings of the Hon’ble Tribunal: 

Findings on Issue 1- 

 The Hon’ble Tribunal observed that if the letter was only an acknowledgment of payment, why were certain terms and conditions mentioned in the same? The Hon’ble Tribunal even questioned the Appellant/ Promoter for incorporating terms and conditions before entering into any agreement. 

 The Hon’ble Tribunal further observed that the letter was relied on for repayment so the developer cannot say that it is not binding. 

 The Hon’ble Tribunal upheld the findings of the Hon’ble Adjudicating Officer that Section 12 and 13 of Real Estate (Regulation and Development) Act, 2016 were violated by the appellant/ promoter, as the project falls within the ambit of an ongoing project. 

 Thus, the Hon’ble Tribunal observed that the provisions of Real Estate (Regulation and Development) Act, 2016 can be invoked even without entering into an agreement.

Findings on Issue 2- 

 The Hon’ble Tribunal further modified the compensation to Rs.1,00,000/- awarded as opposed to 9% as awarded by the Hon’ble Adjudicating Officer. 

Findings on Issue 3- 

 As issue 1 was decided against the Appellant/ Promoter and issue 2 was modified by the Hon’ble Tribunal. 

Thus, the said appeal was allowed by the Hon’ble Tribunal, in part.