Complaints can be instituted against promoters in relation to both projects which have been registered with the authority or which are not registered with the authority

Simmi Sikka V/s M/S EMAAR MGF LAND LTD Complaint number RERA-GRG-7-2018

Haryana Real Estate Regulatory Authority Gurugram 

The judgement contains the following conclusions

• The RERA Act, nowhere mentions anywhere that it is applicable only for the registered projects.

• The RERA Act, provides certain categories of projects which are not required to be registered but these are within the ambit of the Act. These projects mentioned in section 3(2) have been taken out of the registration requirement but not out of the purview of other provisions of the Act.

• The provisions regarding registration and obligation during registration are applicable only for the registered projects.

• The obligations of the promoter’s post expiry of the validity of the registration provided in the Act are applicable to even the real estate projects exempted from the registration.

• The projects which were completed and handed over during the last 5 years are 

covered for the purpose of workmanship and structural defect liability.  A complaint may be filed by the allottee in such matter in case the possession of the real estate was within 5 years prior to the date of the complaint.

• All real estate projects are covered for land title defect liability

• A complaint pertaining to violation of the provisions of RERA Act, Haryana RERA Rules, and regulations thereunder, may be filed by any aggrieved person in respect of any real estate project as per the definition given in section 2(zn) of RERA Act.

Based on the above judgment, it may be concluded that registration of project and filing RERA complaint, both are separate activities. A RERA case can be filed even against the non-registered projects.

In the Absence of Builder Buyer agreement, the Allotment letter if having all the Important details will serve as valid Contract and the complainant can ask for the refund under section 18 also.

 In the Matter of Nikhil Chopra V/s JVPD Properties Pvt. Ltd. Complaint number CC005000000001348 The Maha RERA observed That 

• “The complainant has filed this complaint under Section 18 to claim refund of his amount from the respondents with interest. 

• The respondents issued a letter dated 24.07.2017 expressing their inability to complete the project. 

• The respondents in their reply contended that the complainant is an investor and therefore, the Authority has no jurisdiction to entertain this complaint. 

• The respondent further contended that for the application under Section 18 of RERA, there must be agreement for sale and the complainant does not have it. 

• The Authority observed that lt is a fundamental principle of law of contract that once a proposal is accepted; it becomes a contract, provided  it is coupled with lawful consideration and lawful object and it is not specifically barred by any statute. There can be oral agreement for sale or it can be also in written form. in this case the complainant has relied upon an allotment letter, admittedly issued by the respondents on 11.07.2014.

• The Authority observed that It is the contention of the respondents that there is no concluded contract. Hence, it is necessary to look at the allotment letter. On its perusal it becomes clear that the complainant agreed to purchase the flats and the respondents agreed to sell them for the consideration mentioned in the letter.

•  The respondents agreed to deliver the possession of the flats within 42 months from receipt of final commencement certificate from plinth level. All these terms and conditions have been accepted and signed by both the parties. Therefore, there remains no doubt that it is a concluded contract which has taken place on 11.07.2014.” 

• The Authority therefore ordered 

• “The respondents shall refund the amount mentioned in Para-l0 of this order.

• The respondents shall pay the complainant Rs. 20,000/- towards the cost of the complaint.. 

• The respondents shall pay simple interest at the rate of 10.05% from the dates of receipts of the amount till they are refunded.. 

• The charge of aforesaid amount shall be on the respondents’ property under project bearing C.T.S. No. 634/5 and 64D “S” ward of village Tirandaz, Taluka Kurla, Mumbai, till the complainant’s claim is satisfied.”

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Open Car Parking can not be Sold, Open Car Parking is for all the residents

 In the Matter of Sanjeev Dharkar V/s M/s. Arkade Realty Complaint number CC006000000001135 The Maharashtra Real Estate Regulatory Authority Ruled the Followings

The complainant, who is a resident in a completed building in the registered project, has filed this complaint seeking directions of Maha RERA to the respondent to allow him to park his vehicle inside the compound wall of the building. The Complainant has further alleged that the Respondent is selling open car parking by collecting in cash without any documentation.

 Maha RERA  in its order observed on the facts mentioned above, and directed the Respondent to allow parking of Complainant’s vehicle in the premises, as is being done for other allottees. As per the Act, Rules and Regulations, the respondent cannot sell open parking space, which has to be handed over to the legal entity of the allottees when it is formed.

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Agriculture lands which have not received Non Agriculture permissions (N.A permission) are not a real estate project as defined under Section 2(zn) of the Act and the same cannot be registered under Section 3 of the Act.

In the Matter of Mohommed Zoin Khan Versus M/s. Emnoy Properties india &  Ors Complaint number SC 10000227 The Maharashtra Real Estate Regulatory Authority judgement contains the following conclusions :-

Agriculture lands which have not received Non Agriculture permissions, do not fall under the jurisdiction and need not register with RERA Authorities. Hon’ble Tribunal have upheld that Agriculture land and plots which have not received NA permissions are not Real Estate Projects and hence should not be registered.

The Hon’ble Tribunal observed ” We find that by applying the above observations to the facts of the case in hand, the Authority observes in para 10 of the order that the land under this Project is admittedly an agricultural land and till date no N.A. permission or order is granted by the competent Authority to develop the same. Consequently, the Authority has held that the subject project is not a real estate project as defined under Section 2(zn) of the Act and the same cannot be registered under Section 3 of the Act. ”

The Hon’ble Tribunal further added: “We have given a thoughtful consideration to the relevant provisions of the Act. In our view the real estate project as defined under Section 2(zn) contemplates development of land into plots or apartments. In case of an agricultural land, as is the case in the instant appeal, to be designated as a real estate project, necessary permissions are required to affect the development of the said land. Compliance of such a requirement also seems essential from the perspective of provisions under Section 11(4) detailing therein the obligations of a promoter and Section 4 for mandating the requirements of certain documents/ permissions necessary for registration of the project under Section 3 of the Act. In this regard, we note that Complainant has utterly failed to establish that the said land had all necessary N.A. or other permissions for its development and for undertaking its registration as real estate project under the Act.”

Only a reasonable amount can be forfeited as earnest money.

 In the Matter of DLF Ltd. v. Bhagwanti Narula, I (2015) CPJ 319(NC) the Hon’ble National Consumer Disputes Redressal Commission has clearly laid down that only a reasonable amount can be forfeited as earnest money in the event of default on the part of the purchaser and it is not permissible in law to forfeit any amount beyond a reasonable amount unless it is shown that the person forfeiting the said amount had actually suffered loss to the extent of the amount forfeited by him. Further, it was held that 20 % of the sale price cannot be said to be a reasonable amount which the petitioner company could have forfeited on account of default on the part of the complainant unless it can show it had suffered loss to the extent the amount was forfeited by it.

Courts will not enforce and will strike down an unfair and unreasonable contract when flat purchaser had no option but to sign on the dotted line

In the Matter of Pioneer Urban Land and Infrastructure Ltd. v. Govindan Raghavan 2019 (5) SCC 725,

The Hon'ble Supreme Court has laid down that the courts will not enforce and will, when called upon to do so, strike down an unfair and unreasonable contract, or an unfair and unreasonable clause in a contract, entered into between the parties, who are not equal in bargaining power. A term of a contract will not be final and binding if it is shown that the flat purchaser had no option but to sign on the dotted line, on a contract framed by a builder. Further, incorporation of one-sided clauses in an agreement constitutes an unfair trade practice since it adopts unfair methods or practices for the purpose of selling the flat by the builder.

In the said case, the Buyer had deposited Rs. 4,83,25,280/- with the Builder for purchase of a flat in Araya Complex, Gurugram (the ‘Flat’), but the Builder had failed to obtain the occupancy certificate within the stipulated time period of 39 months with a grace period of 180 days and therefore, could not offer possession of the Flat to the Buyer within the time period agreed by them vide Agreement dated 08.05.2012.As a result, the Buyer had approached the National Consumer Disputes Redressal Commission (NCDRC), whereby the NCDRC directed the Builder to pay compensation to the Buyer and also awarded interest for a part of the period of delay, vide Order dated 23.10.2018.Meanwhile, the Builder obtained the Occupancy Certificate on 23.07.2018 and issued a Possession Letter to the Buyer on 28.08.2018. But the Buyer refused to accept the same as they were no longer interested to buy the said Flat and were looking for a flat elsewhere. Aggrieved by the Order dated 23.10.2018 of the NCDRC, the Builder filed an appeal before the Supreme Court (‘Appeal’).

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The Supreme Court held that terms of a contract will not be final and binding if it is shown that the flat purchasers had no option but to sign on the dotted line, on a contract framed by the builder. It further held that incorporation of one-sided clauses in an agreement constitutes an unfair trade practice as per Section 2 (r) of the Consumer Protection Act, 1986 since it adopts unfair methods or practices for the purpose of selling the flats by the builder. The supreme court further added that The Builder cannot compel the Buyer to purchase the Flat after causing an inordinate delay of almost 3 years in handing over the possession of the Flat to the Buyer and the builder cannot seek to bind the Buyer with one-sided and unfair contractual terms of the Agreement.

Thus, the Apex Court directed the Builder to pay compensation and interest to the Buyer for the entire period of delay caused in handing over possession of the Flat to the Buyer.

The Apex court also was of view that “ It is difficult to accept the argument that RERA is a special enactment which deals with real estate development projects and must therefore be given precedence over the Code which is only a general enactment.  At the time of introduction of the explanation to Section 5(8)(f) of the IBC, Parliament was aware of RERA and applied some of the definition provisions to the Code.” It also held that “The fact that RERA is in addition to and not in derogation of other laws (Section 88) makes it clear that remedies under RERA to allottees were intended to be additional and not exclusive remedies”.

The Supreme court was of view that  “By the process of harmonious construction, RERA and Code must be held to co-exist and in the event of a clash, RERA must give way to the Code.  RERA therefore cannot be held to be a special statute which in the case of a conflict, would override the general statute viz. the Code.”

Letter of allotment would tantamount to an agreement for sale

 In the Matter of Manjeet Singh dhaliwal versus Jvpd properties private Limited,the Maharashtra appellate Tribunal held that even a letter of allotment would tantamount to an agreement for sale under Section 2(c) of the ACT if the letter contains the description of the property, payment schedule and costs requisition of permissions, obligation to complete the project and getting Clarity to title. since nothing further was left to be agreed upon, the contract was concluded.

Only a nominal amount can be an earnest money

 In the Matter  of Bhuley Singh Vs. Khazan Singh & Ors. RFA No.422/2011 The Hon’ble Delhi High Court said  that nomenclature of a payment is not important and what is important is really the quantum of price which is paid. Only a nominal amount can be an earnest money, in as much as, the object of such a clause is to allow forfeiture of that amount to a nominal extent.

In the absence of completely formulated contract, earnest money is refundable.

In the Matter of  Commr of HR & CE Deptt v. S. Muthekrishnan AIR 2012 Mad 43, The Madras High Court observed that if the contract is not completely formulated between the parties but the earnest money is paid, the other party is not entitled to forfeit the amount and it stands refundable.

No provisions in RERA and rules there under to forfeit the earnest money.

  In the Matter of Sumit Mukherjee Versus M/s. Rajsanket Realty Limited Complaint No. CC006000000057591 THE MAHARASHTRA REAL ESTATE REGULATORY AUTHORITY, MUMBAI observed that there is no provisions in RERA and rules there under to forfeit the earnest money.

In the dispute matter between builders and home buyers write petition under Article 32 not maintainable

 The Honorable Supreme Court of India,In the Matter of Upendra Chaudhary V. Bulandshahr Development Authority & Ors.Writ petition (Civil) No. 150 of 2021 Pertaining to the Real estate dispute between builders and home buyers stated that because of Availability of Statutory provisions including Consumer Protection Act 1986, and its successor legislation, Real Estate (Regulation and Development) Act 2016 and Insolvency and Bankruptcy code 2016, write petition under Article 32 not maintainable.

Escalation Cost in the Event of Delayed Possession are to be borne by the builder only

In the Matter of  Brig. (Retd.) Kamal Sood V/s DLF Universal Ltd.(FA /557 /2003)  Date of Order 02.04.2007 The NCDRC observed that

         “it was the duty of the builder to plan in advance, obtain necessary permission and thereafter, promise to deliver the possession of flat in the stipulated time. It is unfair trade practice on the part of the builder to collect money from the prospective buyers without obtaining the required permission.Secondly, in such a case, if there is any express promise that the premises would be delivered within the stipulated time, and, if not done so, escalation cost is required to be borne by the builder.”

In The Absence of Possession Clause in the Agreement, the Possession should be given in a reasonable time

 in the Matter of Fortune Infrastructure-v/s-Travor D’lima (2018) 5 SCC 442, the Honorable Supreme Court has ordered that when no date of possession is mentioned in the agreement the Promoter is expected to hand over the possession within reasonable time and the period of three years (3 yrs) is held to be reasonable time.

In the case, the Respondents were aggrieved that the appellants were not delivering the possession of flats and accordingly approached the NCDRC (National Consumer Dispute Redressal Commission) to hold that the appellants were guilty of deficiency in service and unfair trade practices as per the provisions of the Consumer Protection Act, 1986.

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Thereafter, the NCDRC directed the appellants to refund the amount of Rs.1,87,00,000/- and pay a sum of Rs. 3,65,46,000/- as to the complainants. Aggrieved by NCDRC’s order, the appellants approached the Supreme Court, the Appellants contended that they had transferred the project to a different company thereby they should be discharged from any liability for not handing over the disputed property to the answering respondents and also to consider the downward trends shown in the real estate market which mandates a lesser compensation, compared to the one awarded by the NCDRC.

The Court remarked that a person cannot be made to wait indefinitely for the possession of flats allotted to them and they were entitled to seek the refund of the amount paid by them, along with compensation. In such cases When no delivery period is stipulated the Court noted that a reasonable time has to be taken into consideration. In the facts and circumstances of this case, a time period of 3 years was deemed as reasonable for completion of the contract.

For the quantum of compensation on account of delay in delivery of flats, the Supreme Court made reference to the case of Ghaziabad Development Authority v. Balbir Singh , wherein the Court observed that there was no fixed formula for fixing damages. The Court stated that it is settled in law that whenever the builder has refused to perform the contract without valid justification, the buyer is entitled for compensation as she has been deprived of price escalation of the flat. Every breach of contract gives rise to an action for damages. Such amount of damages must be proved with reasonable certainty. Where a party sustains loss by reason of a breach of contract, the damages are to be granted so as to place the suffering party in the same position as if the contract had been performed. In light of the above, the damages other than consequential loss have to be measured at the time of the breach. However, the aforesaid rule is flexible and needs to be assessed in facts and circumstances of individual cases.

Reference may be drawn to the decision of Pannalal Jankidas v. Mohanlal, AIR 1951 SC 144, where the Supreme Court for the first time held that the party in breach must compensate in respect of the direct consequences flowing from the breach and not in respect of loss or damage indirectly or remotely caused. This rule is based on the broad principle that the party who has suffered the loss should be placed in the same position, as far as compensation in money can do it, as if the party in breach had performed his contract or fulfilled his duty.

Developer can not charge interest on delay in payment of installments in case of Fit out Possession

In a recent order titled Sukhbir Singh V/s Tdi Infrastructure (Complaint no. 1801 of  2019) , the Haryana Real Estate Regulatory Authority, Panchkula has held that Fit out Possession can not be considered a legally valid offer because in this case, the occupation certificate has not been obtained, in such circumstances, when the developer himself has failed to deliver a valid possession to Alllotee, it can not be allowed to charge interest on delayed payment of installments by the allocates. 

The Complete order can be accessed at this link https://haryanarera.gov.in/assistancecontrol/viewOrderPdf/NTk2MTU=