The Real Estate Regulatory Authority (RERA) Act was instituted on the 1st of May, 2017. The Act focuses on protecting the interests of the consumers in the real estate sector by facilitating quick and convenient settlement of disputes. The Maharashtra Real Estate Regulatory Authority (Maha RERA) is the body that controls the real estate sector in Maharashtra. The point of determination in the above case includes the amount of compensation which is to be paid by the Respondent (Runwal Homes Pvt. Ltd. MAHARERA Mumbai), to the Complainant (Avinash Saraf and Neha Saraf), due to the failure in the transfer of the property, within the agreed period.
- A dispute arose when the booked flat, in a building known as Redwood in the respondent’s Runwal Greens project, having MahaRERA registration no. P5180000027’1., under section 18 of the Real Estate (Regulation & Development) Act, 2016, was not transferred to the buyer. The respondent had promised to the complainant that the booked flat would be delivered by August 2016. Agreements were signed (November 2014) regarding the same, and the consideration was paid.
- The complainant further claimed that they paid almost 97% of the consideration.
- However, the respondent was unable to provide possession to the complainant even after the lapse of the agreed date of transfer of possession, hence they expressed their willingness to cancel the booking, to which the respondent offered to refund the money by 1st of March, 2017. But the issue could not get resolved as the complainant asked for a refund, with interest.
CONTENTIONS BY THE COMPLAINANT–
- The complainant contended that they paid 97% of the consideration of the booked flat. Furthermore, it was also informed by the complainant that under the subvention scheme, the respondent paid interest up to August 2016, under the tripartite agreement. After August 2016, the installments with interest were paid by the complainant. Hence, they demanded back the consideration amount, with the interest at the rate of 21%, along with the compensation, from the respondent.
- Stamp duty and registration charges should also get refunded.
CONTENTIONS BY THE RESPONDENT–
- The respondent contended that the construction of the property is at an advanced stage and that there is a willingness to hand over the possession of the flat to the complainant, by December 2017.
- Regarding the delay, communication through a letter (September 2016) and a few emails (between March and April 2017) were also made by the respondent, during which the complainants did not respond. Thus, due to this conduct, delivery of the possession was delayed.
- Also, there was a problem in obtaining the occupation certificate of the parking lot. A commencement certificate was not provided and approvals and sanctions were not being granted to the respondent by the authorities of Development Control Regulations for Greater Mumbai, which brought a pause in the construction of the property.
- It is in fact, the responsibility of the complainant to bear the charges of the stamp duty and registration, which is non-recoverable as the money went to the government.
- Moreover, the respondent also contends that the agreement regarding the sale was executed on the 1st of March, 2014, hence RERA does not have the jurisdiction to consider this grievance.
PRINCIPLES LAID DOWN–
- Relevant part of section 18 of RERA reads as under- “Return of amount and compensation’’ – “(1) If the promoter fails is unable to give possession of an apartment plot or building, according to the the terms of the agreement for sale or, whatever the case may be, duly completed by the date specified therein, he would be liable on demand to the allottees, in case the allottee wishes to withdraw from the project, without prejudice to any other remedy available, to return the amount received by him in respect of that apartment, plot, building as the case may be, with interest at such rate as may be prescribed in this behalf including compensation in the manner as provided under this Act:” Hence, the complainants are entitled to get the compensation.
- Cancellation of the agreement is inevitable because of its default and therefore, the complainant cannot be held liable to bear any burden when the transaction is frustrated. Section 72 of RERA mandates that while adjudging the quantum of compensation or interest, the Adjudicating Officer shall have due regard to the factors (a) the amount of disproportionate gain or unfair advantage, wherever quantifiable, made as a result of default and (b) the amount of loss caused as a result of default.
- Complainants claim interest at the rate of 21% p.a. This cannot be accepted for the obvious reason that section 18 of RERA allows the interest at the specified rate and the rules framed under the Act provide that it shall be at the highest marginal cost of lending rate of interest of S.B.I. plus 2%. Hence, the complainants cannot get interest more than the rate fixed by the Law.
- It is an unfair trade practice on the part of the builder to collect money from the prospective buyers without obtaining the required certificate and permission from the concerned authorities.
- The claimants’ right to claim their money back or to claim possession continues from August 2016 till the date of filing of this complaint. If the cause of action survives after coming into force of RERA, MahaRERA gets jurisdiction over all the disputes about the eligible real estate projects requiring registration.
The order was given in favor of the complainant. It was held that the deed of cancellation of the agreement should be executed and the respondent would bear its cost.
Rs. 1.,94,04,986/ – with interest at S.B.I.’s highest marginal cost of lending rate plus 2% from01.05.2017 till the payment. The compensation at the rate of 9% on the amounts mentioned, and Rs. 20,000/- towards the cost of the complaint; these were the compensations that were to be provided. This judgement promotes the rights of the buyers and protects them from false promises made by sellers. All clearances must be made before agreeing to the purchase and selling of property. This will ensure that no delay takes place in the project also the buyers would be protected against the unfair usage of their money, by the sellers.
NAME OF THE JUDGE- Hon’ble Shri B.D. Kapadnis.
DATE OF THE JUDGEMENT- 13th October 2017.
SUBJECT AREA- REAL ESTATE REGULATORY AUTHORITY ACT, 2016.
EDITED BY- PRANJAL NEERAJ SINGH
COLLEGE- UNIVERSITY OF MUMBAI LAW ACADEMY (SEMESTER II)