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.

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 : the banks had failed to comply with their duties, and had in fact colluded with the developer in committing a fraud on the home buyers, and breaching public trust.

 Bikram Chaterjee vs. Union of India, [2018]147 SCL 154 wherein the Apex Court took cognizance of the fact that the banks had failed to comply with their duties, and had in fact colluded with the developer in committing a fraud on the home buyers, and breaching public trust. It may be useful to refer to paragraphs 69 and 127 of the judgement, which reads as under-

“69. In the instant matter, the question of larger public importance is involved. It is a shocking and surprising state of affairs that such large scale cheating has taken place and middle and poor class home buyers have been duped and deprived of their hard-earned money and lifetime savings and some of them had taken a loan from the bank and they are not getting houses. Bank has made payment to the builder, owners have the liability of making payment of amount with interest, homebuyers are still waiting for their dream houses to be completed.

127. The Forensic Auditors’ report makes it apparent that Bankers have failed to ensure and oversee that the money was invested in the projects. It was diverted elsewhere as rightly found by the Forensic Auditors. Even what was paid by the home buyers, had not been used in the projects and stands diverted. There was, in fact, no necessity for raising the loans from the bank. The money borrowed from banks was used to create other assets worth thousands of crores. Thus, the banks can realise their money from those assets  and from guarantors and not from the investment of home buyers, not from the buildings in which loans granted by banks have not been invested, which have been erected partially or some are at the nascent stage, for which hard- earned money has been paid by the home buyers”

Delhi High Court : The Bank has disbursed the loan amount to the builder, and in these circumstances, it remains to the seen as to whether, or not, the petitioner is at all liable.

 Hirdesh Kumar Pathak v Bank of Maharashtra WP (C) 6774/2021 Delhi High Court

“In our view, prima facie, it appears that the petitioner has been taken for a ride by the builder and it is not the petitioner, who has received the loan amount. The Bank has disbursed the loan amount to the builder, and in these circumstances, it remains to the seen as to whether, or not, the petitioner is at all liable. Moreover, the Resolution Plan appears to be on force and there would be no justification to subject the petitioner to the ongoing proceedings before the DRT at this stage. We, accordingly, stay further proceedings in O.A No. 166/2019 pending before the DRT-II, Delhi, till further orders.”

Housing Finance Company (Reserve Bank) Directions, 2021 issued by the RBI on 17.02.2021

Housing Finance Company (Reserve Bank) Directions, 2021 issued by the RBI on 17.02.2021

88. Disbursement of housing loan to individuals linked to the stages of construction

88.1 Disbursal of housing loans sanctioned to individuals shall be strictly linked to the stages of construction of the housing projects/ houses and upfront disbursal shall not be made in case of incomplete/ under-construction/ green field housing project/ houses.

88.2 HFCs while introducing any kind of product shall take into account the customer suitability and appropriateness issues and also ensure that the borrowers/customers are made fully aware of the risk and liabilities under such products.

88.3 In cases of projects sponsored by Government/ Statutory Authorities, HFCs may disburse the loans as per the payment stages prescribed by such authorities, even where payments sought from house buyers are not linked to the stages of construction, provided such authorities have no past history of non-completion of projects.

88.4 HFCs shall desist from offering loan products involving servicing of the loan dues by builders/ developers etc. on behalf of the borrowers.

88.5 HFCs shall have in place a well-defined mechanism for effective monitoring of the progress of construction of housing projects and obtaining consent of the borrower(s) prior to release of payments to the builder/developer.

circular dated 09.07.2019 issued by the NHB,

 circular dated 09.07.2019 issued by the NHB, 

“3. Based on a review of the matter, HFCs are advised to desist from offering loan products involving servicing of the Loan dues by builders/ developers etc. on behalf of the borrowers. The prevalent products of HFCs, if any, should also be reviewed on the above lines. It is clarified that the above stipulation shall also be effected in cases wherein the HFC is yet to commence disbursements under the sanctioned cases.

Further, reference is also drawn to the Circular No.NHB(ND)/DRS/Policy Circular No.75/2016-17 dated July 01, 2016 whereby HFCs were again advised that disbursal of housing loans should be strictly linked to the stages of construction and no upfront disbursal should be made in case of incomplete/un-constructed projects. It is reiterated that disbursal of housing loans sanctioned to individuals should be closely linked to the stages of construction of the housing project/houses. In cases of projects sponsored by Government/Statutory Authorities, HFCs may disburse the loans as per the payment stages prescribed by such authorities, even where payments sought from house buyers are not linked to the stages of construction, provided such authorities have no past history of non-completion of projects.

HFCs should have in place a well-defined mechanism for effective monitoring of the progress of construction of housing projects and obtaining consent of the borrower(s)

prior to release of payments to the builder/ developer. Merely obtaining borrower consent and release of funds by the company without linkage to the stage of construction will be seen as dereliction of duty of the HFC.”

RBI circular dated 01.07.2015, pertaining to the issue of subvention schemes or “innovative housing loan schemes”

RBI circular dated 01.07.2015, pertaining to the issue of subvention schemes or “innovative housing loan schemes”. Paragraph 3 (d) (e) and (f) of the same which read as under:

“(d) It has been observed that some banks have introduced certain innovative Housing Loan Schemes in association with developers / builders, e.g. upfront disbursal of sanctioned individual housing loans to the builders without linking the disbursals to various stages of construction of housing project, Interest/EMI on the housing loan availed of by the individual borrower being serviced by the builders during the construction period/ specified period, etc. This might include signing of tripartite agreement between the bank, the builder and the buyer of the housing unit. These loans products are popularly known by various names like 80:20, 75:25 schemes

Such housing loan products are likely to expose the banks as well as their home loan borrowers to additional risks e.g. in case of dispute between individual borrowers and developers/builders, default/ delayed payment of interest/ EMI by the developer/ builder during the agreed period on behalf of the borrower, non-completion of the project on time etc. Further, any delayed payments by developers/ builders on behalf of individual borrowers to banks may lead to lower credit rating/ scoring of such borrowers by credit information companies (CICs) as information about servicing of loans get passed on to the CICs on a regular basis. In cases, where bank loans are also disbursed upfront on behalf of their individual borrowers in a lump-sum to builders/ developers without any linkage to stages of constructions, banks run disproportionately higher exposures with concomitant risks of diversion of funds.

Banks are advised that disbursal of housing loans sanctioned to individuals should be closely linked to the stages of construction of the housing project / houses and upfront disbursal should not be made in cases of incomplete /under-construction / green field housing projects.”