Last Updated on April 17, 2024 by Satish Mishra
Post covers Arrest Showcause Notice Penalty In Rera Executions. Can builder be arrested under RERA via showcause Notice or Section 63 Penalty is discussed in detailed.
According to Section 63 of the Real Estate (Regulation and Development) Act, 2016, the promoter of a project is liable to pay a penalty of up to 5% of the estimated project cost if they do not comply with the orders of the Authority. The penalty is for each day the promoter continues to default.
Who Can Give Refund Interest Compensation in RERA?
That there is no dispute to the proposition of law as laid down in Newtech Promoters’ case (Supra), wherein the Hon’ble Apex Court has laid down that when there is a dispute with respect to the refund of the amount, and interest on the refund amount, or directing payment of interest for delayed delivery of possession, or penalty and interest thereon, it is the Regulatory Authority which has power to examine and determine the outcome of the complaint. At the same time, when it comes to a question of seeking the relief of adjudging compensation and interest thereon under Sections 12, 14, 18 and 19, the Adjudicating Officer exclusively has the power to determine, keeping in view the collective reading of Section 71 read with Section 72 of the Act.
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CAN ORDERS PASSED BY HARYANA RERA AUTHORITY BE EXECUTED BY ADJUDICATING OFFICER?
A big yes in terms of M/s International Land Developers Private Limited vs. Aditi Chauhan and Others decided by Punjab and Haryana High Court.
Executions under Section 40 of the Act, so, the provisions of Section 63 can be invoked for recovery of the amount payable under an order of the Authority?
Section 63 nowhere provides that the provisions contained therein can be invoked only in respect of specific kind of order passed by the Authority and irrespective of the fact that the proceedings have been initiated under Section 40 of the Act, penalty under Section 63 can also be simultaneously imposed on the appellant-promoter to realize the amount.
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Let us have a thorough look and Section 40 & 63 of the Act, which are as follows”
“Section 40: Recovery of interest or penalty or compensation and enforcement of order, etc. (1) If a promoter or an allottee or a real estate agent, as the case may be, fails to pay any interest or penalty or compensation imposed on him, by the adjudicating officer or the Regulatory Authority or the Appellate Authority, as the case may be, under this Act or the rules and regulation made thereunder, it shall be recoverable from such promoter or allottee or real estate agent, in such manner as may be prescribed as an arrears of land revenue.
(2) If any adjudicating officer or the Regulatory Authority or the Appellate Tribunal, as the case may be, issues any order or directs any person to do any act, or refrain from doing any act, which it is empowered to do under this Act or the rules or regulations made thereunder, then in case of failure by any person to comply with such order or direction the same shall be enforced, in such manner as may be prescribed.”
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“Section 63: Penalty for failure to comply with orders of Authority by promoter. If any promoter, who fails to comply with, or contravenes any of the orders or directions of the Authority, he shall be liable to a penalty for every day during which such default continues, which may cumulatively extend up to five per cent., of the estimated cost of the real estate project as determined by the Authority.”
It is explicit that Section 40 & 63 deal with two different purposes. As per Section 40, a procedure has been laid down for recovery of the amount which is payable by the party in terms of an order passed by the Authority against such party; whereas, Section 63 empowers the Authority for imposing penalty in appropriate cases where a party has failed to comply with its order.
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Section 63 nowhere provides that the provisions contained therein can be invoked only in respect of a specific kind of order passed by the Authority.
In fact, the use of expression ‘any order’ in Section 63 clearly lays down that the Authority irrespective of adopting the procedure provided in Section 40, has jurisdiction to impose penalty under Section 63 on promoter who fails to comply with any of its order. In fact, the provision of Section 63 has to be construed as additional powers bestowed upon the Authority to impose penalty on promoter who fails to comply its order.
In the “M/s International Land Developers Private Limited versus Aditi Chauhan and others” as said judgment, there is no reference to Section 63 of the Act, and there is nothing to show that there is any bar in invoking the said section in the facts and circumstances of a given case.
PREAMBLE OF RERA ACT:
“An Act to establish the Real Estate Regulatory Authority for regulation and promotion of the real estate sector and to ensure sale of plot, apartment or building, as the case may be, or sale of real estate project, in an efficient and transparent manner and to protect the interest of consumers in the real estate sector and to establish an adjudicating mechanism for speedy dispute redressal and also to establish the Appellate Tribunal to hear appeals from the decisions, directions or orders of the Real Estate Regulatory Authority and the adjudicating officer and for matters connected therewith or incidental thereto.”
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Sub-section (1) of Section 40 stipulates that the manner of recovery of payment of interest, penalty and compensation, may be prescribed (by rules) for recovery as an arrear of land revenue and does not postulate any other method of such recovery; however sub-rule (1) of Rule 27 empowers the AO/Authority/Tribunal to enforce any order passed by it under Section 40 (without specifying any particular sub-section thereof), as if it were a decree or an order made by a civil court in a suit pending before it.
Government can frame rules (Section 84), deals with sub-sections (1) and (2) of Section 40 separately, therefore, so as to not render the provisions of sub-section (1) of Section 40 of the Act otiose, as regards the phrase “as an arrears of land revenue”, we hold that Rule 27 of the Rules should actually have provided a mechanism separately for giving effect to the provisions of sub-sections (1) and (2) of Section 40, but we would not hold Rule 27 to be ultra vires the provisions of the Act, firstly because there is actually no challenge in the petition to the vires of the said rule; and second, holding so would ‘abrogate’ the machinery provision for enforcement of the provisions of Section 40.
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Rule 27 of the Rules of 2017-
- Enforcement of order, direction or decision of adjudicating officer, Authority or Appellate Tribunal —
(1) Every order passed by the adjudicating officer or the Authority or the Appellate Tribunal, as the case may be, under the Act or rules and the [regulation] made thereunder, shall be enforced by an [adjudicating officer or] the Authority or Appellate Tribunal in the same manner as if it were a decree or a order made by a civil court in a suit pending therein; and it shall be lawful for the adjudicating officer or the Authority or the Appellate Tribunal, as the case may be, in the event of its inability to execute the order, send such order to the civil court, to execute such order.
(2) The court may, for the purposes of compounding any offence punishable with imprisonment under the Act accept an amount as specified in the Table.
As has been done by various States including the State of Maharashtra [reference the judgment of the Bombay High Court in Marvel Sigma Home (supra)], the Government of Haryana should have provided for a separate mechanism qua enforcement of different kinds of orders as per the two provisions of Section 40, i.e. sub-sections (1) and (2).
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Settlement of Controversy under Section 40 RERA by High Court Chandigarh
Though, the mechanism provided under Rule 27 of the Rules, to realize the amount as if it were a decree or an order made by the Civil Court in a suit pending therein, is not in accordance with mechanism as provided in Section 40 of the Act, which stipulates that the payment of interest, penalty and compensation is to be realized as an arrears of land revenue, but, merely on this account, the process initiated by the learned Adjudicating Officer cannot be declared null and void because our own Hon’ble High Court in authority International Land Developers Private Limited’s (Supra), in para no.94 has settled the same.
Till such mechanism is provided by the State of Haryana by making the proper amendment in Rule 27 of the Rules, the recovery of the amount can be realized by the Adjudicating Officer of the Authority treating it as a decree or an order made by Civil Court in a suit pending therein, specifically when, as referred above, the Rule 27 of the Rules, has not been held to be ultra vires to the provisions of the Act by the Hon’ble Punjab and Haryana High Court.
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Can Adjudicating Officer (AO) Issue Arrest Warrants?
Now it is established that the learned Adjudicating Officer is empowered for enforcement of the order, direction or decision of Adjudicating Officer, Authority or the Appellate Tribunal, in the manner as if it were decree or order passed by the Civil Court, let us have a look at Order 21 Rule 30 of the CPC, which is as follows:
“30. Decree for payment of money – Every decree for the payment of money, including a decree for the payment of money as the alternative to some other relief, may be executed by the detention in the civil prison of the judgment debtor, or by the attachment and sale of his property, or by both.”
Now if the order is payment of money, then it can be executed by the detention in civil imprisonment of the judgment debtor, or by attachment and sale of his property, or by both.
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Regarding arrest and detention in civil imprisonment, the relevant provision in the CPC is Order 21 Rule 37 and the same is as follows: –
“37. Discretionary power to permit judgment debtor to show cause against detention in prison. –
(1) Notwithstanding anything in these rules, where an application is for the execution of a decree for the payment of money by the arrest and detention in the civil prison of a judgment-debtor who is liable to be arrested in pursuance of the application, the Court shall, instead of issuing a warrant for his arrest, issue a notice calling upon him to appear before the Court on a day to be specified in the notice and show cause why he should not be committed to the civil prison: Provided that such notice shall not be necessary if the Court is satisfied, by affidavit, or otherwise, that, with the object or effect of delaying the execution of the decree, the judgment debtor is likely to abscond or leave the local limits of the jurisdiction of the Court.
(2) Where appearance is not made in obedience to the notice, the Court shall, if the decree holder so requires, issue a warrant for the arrest of the judgment-debtor.”
Further, as per clause (2) of Rule 37 of the CPC, if appearance is not made in obedience to the notice, the Court (Adjudicating Officer) shall, if the Decree Holders so requires can issue a warrant of arrest of the judgment debtor.
So, Adjudicating Officer is legally empowered to issue warrants as stipulated under Order 21 Rule 37 of the CPC.
Needless to say that the civil imprisonment of the judgment debtor would be in accordance with Order 21 Rule 39 of the CPC, wherein, the decree holders are required to deposit subsistence allowance, with the Court (learned Authority/learned Adjudicating Officer) as ordered by the Court (learned Authority/learned Adjudicating Officer).
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Can you file Cross Objections in RERA?
There is no provision to entertain the cross-objections at the instance of an aggrieved person. Hence, the cross-objections, filed by the complainant, are rejected being not maintainable as per M/s Ireo Grace vs Dalip Chand and others.
RERA Appeals are allowed purely in the interest of justice and fair play so as to grant an opportunity to the appellant to defend itself before Punjab and Haryana High Court at Chandigarh.
It is evident that the clause forcing the allottee to accept the possession of plot on “as is where is” basis is unreasonable and hence, hit by Section 23 of the Indian Contract Act, 1872. There is no justification in forcing the allottee to take possession of the plot unless the same could be utilized for the purpose of construction of the residential house upto the maximum permissible unit. In a developed colony, a purchaser of a residential house has a reasonable expectation that he will be able to complete construction of his dream house without encountering further issues such as the removal of hanging overhead high tension electricity wire or removal of encroaching branches of trees standing in the adjoining plot. The provision in the brochure that requires the allottee to accept the possession of the plot ‘as is where is’ is not only contrary to the public policy but also void under Section 23 of the Indian Contract Act, 1872. If there is a significant disparity in the bargaining power and position between the two contracting parties, the Indian Courts may deem such a special clause to be against public policy, human rights and prohibited by law as unfair and unreasonable. Hence, the Court has no reservations in declaring such a provision to be unconscionable and unenforceable as declared in Mandeep Kumar versus PDA Patiala, through Chief Administrator.
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Time limit for Execution of RERA Order?
The order will say so. Usually somewhere between 45-90 days for compliance of RERA Order. RERA Rules of States differ for these. So check your with your local RERA Lawyer Advocate.
Hope this posts answers all your queries related to Arrest Showcause Notice Penalty in RERA Executions.
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