Punjab & Haryana High Court - the requirement of pre- deposit of the amount, as set out in the proviso to Section 43 (5) of the Act, cannot be held to be unreasonable or arbitrary

 In the Matter of Experion Developers Pvt. Ltd. V/s State of Haryana and others Complaint no, CWP No. 38144 of 2018 and other connected matters decided on 16.10.2020 before Punjab & Haryana High court

• These writ petitions under Article 226 of the Constitution raise several important questions of law concerning the interpretation of the provisions of the Real Estate (Regulation and Development) Act, 2016 (hereinafter 'the Act') as well as the Haryana Real Estate (Regulation and Development) Rules, 2017 (hereinafter 'the Haryana Rules').

• In some of these petitions, a challenge has been raised to the constitutional validity of the proviso to Section 43 (5) of the Act and correspondingly the orders passed by the Real Estate Appellate Tribunal (hereinafter 'Appellate Tribunal') rejecting the prayer of the Petitioners for waiver of the pre-deposit for entertaining the appeal against an order of either the Real Estate Regulatory Authority ('Authority') or the Adjudicating Officer ('AO'), as the case may be.

• Under Section 43(5) ,where the order appealed against imposes a penalty, the promoter has to deposit at least 30% of the penalty amount or such higher amount as may be directed by the Appellate Tribunal. 

• Where the appeal is against any other order which involves the payment of an amount to the allottee, then what has to be deposited with the Appellate Tribunal is "the total amount to be paid to the allottee" by such promoter/appellant "including interest and compensation imposed on him, if any, or with both, as the case may be." Further, such an amount has to be deposited "before the appeal is heard."

• The further prayer in these petitions is that given the undue hardship faced by the Petitioners, the aforesaid orders of the Appellate Tribunal should be interfered with by this Court, in exercise of its jurisdiction under Article 226 of the Constitution of India, and the Appellate Tribunal be directed to entertain the Petitioners' appeals without insisting on the pre- deposit.

Order of the High Court

• This Court has perused the decision in M/s. Lotus Realtech Pvt. Ltd. v. State of Haryana CWP No. 15205 of 2020 (O&M) 

• The law laid down by the Supreme Court in the  M/s. Technimont Pvt. Ltd. v. State of Punjab AIR 2019 SC 4489 is that the right of appeal is the creature of a statute and therefore, is and can be made conditional upon fulfilling certain conditions by the statute itself and therefore, any requirement of fulfillment of a condition imposed by the statute itself before a person can avail the remedy of appeal is a valid piece of legislation.

• Appellate Authority does not have the inherent powers to waive the limitation or precondition prescribed by the statute for filing an appeal as the inherent incidental or implied powers vested in the Appellate Authority cannot be invoked to render a statutory provision nugatory or meaningless.

• the treatment of promoters as a class different from other appellants satisfied the test of reasonableness laid down by several judgments of the Supreme Court explaining Article 14 of the Constitution of India.

• as the promoters form a distinct and separate class and as the prescription of the condition of pre-deposit upon the promoters is in furtherance of the object of the legislation, therefore, the imposition of the condition of pre- deposit upon the promoters satisfies the test of Article 14 of the Constitution of India."

• The proviso to Section 43 (5) of the Act clearly states that the pre-deposit is required to be made "before the said appeal is heard." In other words, the Appellate Tribunal is not obliged to proceed to 'entertain' or hear an appeal that has been filed before it, if the promoter, who has filed such appeal, fails to comply with the direction for making the pre-deposit in terms of the proviso to Section 43 (5) of the Act.

• even the High Court cannot issue any direction in that regard contrary to the Act, since it does not have the powers vested in the Supreme Court under Article 142 of the Constitution of India.

• In each of the individual writ petitions before this Court, where the order of the Appellate Tribunal declining to waive the requirement of pre-deposit has been challenged, this Court finds that in the facts and circumstances of the individual cases, no grounds have been made out to persuade this Court to exercise its writ jurisdiction under Article 226 of the Constitution to grant any relief in respect thereof. In none of the cases is the Court satisfied that a case of 'genuine hardship' has been made out.

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Allahabad High Court - Section 43(5) mandates pre deposit of 30% of Penalty amount or higher at the discretion of tribunal, the tribunal must form its opinion on the facts and material before it as the appeal before the Tribunal is the first and the only appeal on facts.The Increase in pre deposit may be exercised only in extreme cases

 In the Matter of Air Force Naval Housing Board Air Force Station Versus U.P. Real Estate Regulatory Authority And Another Complaint no. RERA APPEAL DEFECTIVE No. - 6 of 2021 decided on 16.03.2021 before Allahabad High court

Fact of the Case

• The present appeal was filed against the order passed by the Real Estate Appellate Tribunal (Tribunal in short) in Appeal/Misc. Case No.360 of 2019 dated 28.02.2020 whereby the Tribunal has dismissed that appeal filed by the appellant, under Section 44(2) of the Real Estate (Regulation & Development) Act, 2016. Undisputedly, the above-described appeal came to be filed by the appellant against the order of the RERA, dated 10.04.2019 whereby penalty @ MCLR + 1% w.e.f. 01.07.2012 was imposed on the appellant.

•  at the time of filing the aforesaid appeal to the Tribunal, the appellant furnished a demand draft for an amount of Rs.6,33,000/- towards 30% of the penalty amount awarded by the RERA.

• By an order dated 28.01.2020, the Tribunal required the appellant to deposit the balance amount i.e. the entire amount of penalty awarded by the RERA as a pre-condition to maintain the appeal.

• Thereafter the matter was listed before the Tribunal on 28.02.2020 .the instant case was dismissed due to non compliance of Tribunal's order dated 28.01.2020.

• The Tribunal has relied on the observations made by the Lucknow Bench of this Court in Second Appeal No.364 of 2018 (Radicon Infrastructure And Housing Private Limited Vs. Karan Dhyani) and Second Appeal No. 367 of 2018 (Radicon Infrastructure And Housing Private Limited Vs. Dhaneshwari Devi Dhyani), decided on 26.07.2019, to require the appellant to deposit the entire amount of disputed penalty as a condition to maintain the appeal.

Question of Law

1. Whether deposit of the entire disputed demand of penalty is a condition precedent to maintain the appeal against penalty, under Section 44(2) of the Real Estate (Regulation & Development) Act, 2016?"

Argument from Appellant

• The appellant is a zero-profit organization, registered as a society of retired personnel of the Indian Air Force and the Indian Navy. It exists and operates only for the purpose of providing affordable housing to the members of the Indian Air Force and the Indian Navy and the widows of such personnel.

• Learned counsel for the appellant would submit that the Tribunal has completely misread the law and/or mis-applied itself to reach a very harsh conclusion that the appeal filed by the appellant was not maintainable because the appellant did not deposit the entire disputed demand of penalty.

• it has been submitted, Section 43(5) of the Act does not mandate pre-deposit of the entire disputed demand of penalty as a pre-condition to maintain an appeal under Section 44(2) of the Act.

• Also, the decision of this Court in Second Appeal Nos.364 of 2018 and 367 of 2018 (Radicon Infrastructure And ... vs Karan Dhyani ) does not lay down as a proposition of law that the entire disputed demand of penalty must be deposited before an appeal is entertained or maintained under Section 44 of the Act.

Argument by defendant

• Right of appeal granted under Section 34 of the Act is circumscribed and conditioned by Section 43(5) of the Act.

• According to him, there is no right vested in the appellant to maintain its appeal by depositing 30% of the disputed penalty. The Tribunal could determine a higher amount and, as has been done in the present case. The right of appeal would arise only upon deposit of that higher amount. Since the appellant did not make the necessary deposit, the Tribunal has rightly dismissed its appeal.

Decision of Court

• the first conclusion that may be safely drawn is Reading Section 43 (5) of the Act strictly, no appeal may be filed by a 'promoter' against the order of the RERA imposing penalty unless a minimum of 30% of the demand of penalty is pre-deposited by such 'promoter'. There is absolutely no discretion vested in the Tribunal to reduce that amount below the statutorily defined minimum of 30% of the penalty imposed by the RERA. That condition is absolute. It has also been met, in the facts of this case. Neither that percentage or amount can be reduced by the Tribunal nor an appeal filed without deposit of that amount be entertained by the Tribunal.

• Second, a discretion is vested in the Tribunal to determine an amount more than 30% of the penalty - to be deposited as a condition to maintain such appeal by a 'promoter'. The legislature has referred to the same as such higher percentage "as may be determined by the Appellate Tribunal.

• If the Tribunal were to require a particular 'promoter'-appellant to deposit an amount that be more than 30% of the penalty amount imposed by the RERA in the order impugned before the Tribunal, as a pre-condition to maintain its appeal, it would have to first determine the same.

• In the context of Section 43(5) of the Act, the Tribunal must form its opinion on the facts and material before it - why a higher percentage of the disputed penalty be deposited by a 'promoter'-appellant as a condition to entertain its appeal.this would involve exercise of judicial discretion.

•  the appeal before the Tribunal is the first and the only appeal on facts. The further appeal to this Court is an appeal on substantial question/s of law. Thus, the Tribunal may never place a condition so onerous or burdensome, on the appellant before it, as may shut out the only remedy of appeal on fact, available under the Act.

• The judicial discretion thus vested on the Tribunal must be exercised with extreme care and it must not appear to have been exercised on whims or fancies. It may be exercised only in extreme cases. Only by way of illustration, that discretion may be exercised where it appears to the Tribunal, even on a prima facie basis, that the penalty imposed by RERA is too less/insignificant to the infraction found or that the appellant before it is a repeat or habitual or wilful offender or the facts appear to involve large scale infractions of the law, by way of an organised activity. In such and other cases, for which judicially sound reasons may be recorded as may compel or commend to the Tribunal to require a particular appellant to deposit an amount higher than the statutory pre-defined limit of 30% of the penalty.

• Unless careful application of mind is first made by the Tribunal to the facts of the individual case and unless the Tribunal records specific reasons to determine the higher amount required to be deposited by the 'promoter'-appellant, to maintain its appeal against the order imposing penalty passed by the RERA, the entire exercise made by the Tribunal may be questioned as arbitrary or unreasoned. That would be wholly undesirable and an avoidable course in the context of the quasi-judicial power exercised by the Tribunal.

• Normally, the legislature provides a right of appeal without a condition of pre-deposit. However, in financial matters, the modern legislative trend has been to provide for a minimum deposit as a pre-condition to maintain the appeal. Unless the orders of the Tribunal requiring pre-deposit at higher rates (30% of penalty) are informed with reasons, such practice, if allowed, would amount to taking away the right of appeal before the Tribunal, by an order passed by the Tribunal that has been vested with the jurisdiction to decide such appeals on merits. It would be a uniquely odd process and result, factually and juris prudentially. The appellant in that situation may end up being pre-judged by the Tribunal.

• Consequently, the order dated passed by the Tribunal dated 28.02.2020 is set aside.

Supreme Court - Agreement to Sell Land, but Convyeyance deed was executed after some time - what should be market value of land for the purpose of conveyance deed?

 In the matter of M/s. Residents Welfare Association, Noida V/s State Of U.P. & Ors Complaint no. CIVIL APPEAL NO. 4367 OF 2000  decided on  15.04.2009 before Supreme Court of India

Agreement to Sell Land, but Conveyance deed was executed after some time - what should be market value of land for the purpose of conveyance deed?

1. When delay is caused by Purchaser intentionally, the market value should be determined on the date when the deed is executed and not when an agreement to sale the property or lease the property had been registered.

1. Where however the delay is caused by seller the market value should be determined on the date when the agreement to lease the property was entered.

1. Further observed that there cannot be a straitjacket formula devised for determining the same.

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Once registration of the Real Estate project lapses on non-completion of project or on revocation,the Authority is enjoined upon the duty to consult with the appropriate Government to take such action as it may deem including the carrying out of the remaining development works by competent authority or by the association of allottees or any other manner

 In the Matter of  Bikram Chatterji vs Union Of India Complaint no. WRIT PETITION (C) NO.940/2017 decided on  23.07.2019 before Supreme Court of India

The Supreme Court Observed that

112. Once registration lapses on non-completion of project within the time stipulated or it is revoked the consequence ensue as enumerated in Section 8 of RERA, the Authority is enjoined upon the duty to consult with the appropriate Government to take such action as it may deem including the carrying out of the remaining development works by competent authority or by the association of allottees or any other manner as may be determined by the Authority. The development work has to be completed and cannot be left in between. Section 8 reads thus;

“8. Obligation of Authority consequent upon lapse of or on revocation of registration.- Upon lapse of the registration or on revocation of the registration under this Act, the Authority, may consult the appropriate Government to take such action as it may deem fit including the carrying out of the remaining development works by competent authority or by the association of allottees or in any other manner, as may be determined by the Authority:

Provided that no direction, decision or order of the Authority under this section shall take effect until the expiry of the period of appeal provided under the provisions of this Act:

Provided further that in case of revocation of registration of a project under this Act, the association of allottees shall have the first right of refusal for carrying out of the remaining development works.”

Supreme Court - All agreements of sale are bilateral contracts as promises are made by both - the vendor agreeing to sell and the purchaser agreeing to purchase. agreement of sale signed by the vendor alone and delivered and accepted by the purchaser is a valid contract, however, no practice of the purchaser alone signing an agreement of sale.

 In the Matter of  Alka Bose vs Parmatma Devi & Ors Complaint no. CIVIL APPEAL NO(s). 6197 OF 2000  decided on 17.12.2008 before Supreme Court of India

The defendant submitted that a contract for sale, like any other contract, is bilateral in nature under which both vendor and the purchaser have rights and obligations. It is submitted that an agreement for sale being a contract for sale, creating a right in the purchaser to obtain a deed of conveyance in terms of the agreement under which, the vendor agrees to convey to the purchaser, and the purchaser agrees to purchase, the subject-matter of the agreement for an agreed consideration, subject to the terms and conditions stipulated in the said agreement, it is bilateral. It is therefore contended that an agreement of sale is neither complete nor enforceable unless it is signed by both parties.

The apex court observed that

In India, an agreement of sale signed by the vendor alone and delivered to the purchaser, and accepted by the purchaser, has always been considered to be a valid contract. In the event of breach by the vendor, it can be specifically enforced by the purchaser. There is, however, no practice of the purchaser alone signing an agreement of sale.

An agreement of sale comes into existence when the vendor agrees to sell and the purchaser agrees to purchase,for an agreed consideration on agreed terms.

• It can be oral.

• It can be by exchange of communications which may or may not be signed.

• It may be by a single document signed by both parties.

• It can also be by a document in two parts, each party signing one copy and then exchanging the signed copy as a consequence of which the purchaser has the copy signed by the vendor and a vendor has a copy signed by the purchaser.

• Or it can be by the vendor executing the document and delivering it to the purchaser who accepts it.

• Section 10 of the Act provides all agreements are contracts if they are made by the free consent by the parties competent to contract, for a lawful consideration and with a lawful object, and are not expressly declared to be void under the provisions of the Contract Act.

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

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

The Court Observed that.

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

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

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

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

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Supreme Court - Consumer disputes are non-arbitrable, in the presence of Special act like the Consumer Protection Act.

 In the Matter of M/S Emaar Mgf Land Limited vs Aftab Singh Complaint no. (2019) 12 SCC 751 decided on 10.12.2018 before Supreme Court of India

The appeals were filed challenging the order of National Consumer Disputes Redressal Commission (NCDRC) in Aftab Singh v. Emaar MGF Ltd., 2017 SCC OnLine NCDRC 1614 holding consumer disputes to be non-arbitrable.The respondent entered into a buyer’s agreement with the petitioner company for the purchase of a villa in the township to be developed by them. Dispute arose regarding the same. The respondent filed a complaint with NCDRC under Consumer Protection Act, 1986 for certain reliefs in the matter. The company relied on the arbitration clause provided in the agreement and filed an application under Section 8 of the Arbitration and Conciliation Act, 1996 for referring the matter to arbitration. This application was rejected by NCDRC. The company filed appeals against NCDRC order which was dismissed by the Delhi High Court as well as the Supreme Court.

The Hon'ble Supreme Court considered the provisions of Consumer Protection Act, 1986 & Once the public Statute is in place, Arbitration & Conciliation act 1996 can not be resorted to.It was observed that , “….complaint under Consumer Protection Act being a special remedy, despite there being an arbitration agreement the proceedings before Consumer Forum have to go on….”  Thus, it was held that the Consumer Protection Act being special legislation, NCDRC was right in rejecting the company's application under Section 8 of Arbitration Act. Therefore, the review petition was dismissed.

NCDRC - The Developer having received the sales consideration Cannot Charge Holding charges from the Allottee for the delay in taking possession.

 In the Matter of Capital Greens Flat Buyer Association & Ors. Vs. DLF Universal Limited & Anr Complaint no.Consumer case no. CC/2047/2016 decided on 03.01.2020 before National Consumer Disputes Redressal Commission

The NCDRC Observed that

36. ………………...As far as holding charges are concerned, The Developer having received the sales consideration has nothing to lose by holding possession of the allotted flat except that it would be required to maintain the apartment.Therefore the holding charges will not be payable to the developer. Even in a case where the Possession has been delayed on account of the allottee having not paid the entire sale consideration, the developer shall not be entitled to any holding charges though it would be entitled to interest for the period the payment is delayed.

in Civil Appeal CA 3864-3889/2020 Order dated 14.12.2020 the Supreme court has Upheld all directions of NCDRC except two 

(i) The compensation on account of delay in handing over possession of the flats to the flat buyers is reduced from 7% to 6%; and

(ii) The direction for the refund of parking charges and club charges and interest on these two components shall stand set aside.

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.

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

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

Fact of the Case.

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

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

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

• He therefore sought three reliefs. 

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

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

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

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

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

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

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

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

Order of the Supreme court

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

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

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NCDRC - Wherever the builder commits a particular date or time frame for completion of the construction and offering possession to the buyer, he must necessarily honour the commitment made by him, If the builder can indefinitely postpone and delay the construction of the flat and the flat buyer has no option but to wait till the builder decides to complete the construction and offer possession to the buyer, that would be nothing but a travesty of justice.

 In the Matter of Pradeep Narula & Anr. Vs. M/s. Granite Gate Properties Pvt. Ltd. & Anr. Complaint no. Consumer Case No. 315 OF 2014 decided on 23.08.2016 before National Consumer Disputes Redressal Commission

The NCDRC in this case Observed that 

"10.   ...........  The primary purpose of a consumer in booking a residential flat which the builder is to construct for him, is to start living in that house on or about the date committed to him by the builder for delivering possession of the flat booked by him.  If the builder does not deliver upon his contractual obligation and at the same time, is unable to show that the delay in completion of the flat and offering its possession to the consumer was on account on circumstances beyond his control, this would constitute deficiency on the part of the builder / service provider in rendering services to the consumer.  If I accept the contention that the builder can indefinitely postpone and delay the construction of the flat and the flat buyer has no option but to wait till the builder decides to complete the construction and offer possession to the buyer, that would be nothing but a travesty of justice and result in a situation where the flat buyer is left at the mercy of the builder, without recourse to an appropriate legal remedy.  Such an interpretation, if taken, is bound to defeat the very objective behind the enactment of the Consumer Protection Act, as far as housing construction is concerned.  Therefore, I am unable to accept the contention advanced by the learned counsel for the opposite party.  In my view, wherever the builder commits a particular date or time frame for completion of the construction and offering possession to the buyer, he must necessarily honour the commitment made by him, though a minor delay may not constitute deficiency in the service rendered by him to the buyer.  Of course, if the builder is able to how that the delay in completion of the construction and offering possession to the buyer is attributable wholly to the circumstances beyond his control, that may not be a case of deficiency in the services rendered to the consumer".

NCDRC - The builder ought not to have accepted money and entered into agreement with the buyers without approval of the building plans

 In the Matter of Yogesh Sharma & Anr., vs M/S Unitech Limited Complaint no.Consumer Case No. 267 OF 2014  decided on 26.11.2015 before National Consumer Disputes Redressal Commission

The NCDRC in the case observed that the builder ought not to have accepted money and entered into agreement with the buyers without approval of the building plans by GNIDA (Greater Noida Development Authority). If the opposite party chose to accept money from the flat buyers and enter into agreements, undertaking to give possession within a particular time frame, without having possession of the land and without approval of the building plans, it is only itself to blame for a situation in which the construction got delayed on account of the delay in approval of building plans and physical delivery of the land to it on the spot.

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

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

Facts of the case: 

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

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

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

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

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

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

Issue before Appellate Tribunal: 

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

Promoter’s contentions: 

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

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

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

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

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

The Authority opposed the Promoter’s appeal stating: 

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

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

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

Verdict of Appellate Tribunal: 

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

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

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

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

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

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