Last Updated on May 3, 2019 by Legalseva.net
This one question has given headaches to not only homebuyers/consumers but even RERA Punjab and RERA Panchkula/Gurugram Lawyers in general who find it extremely difficult to understand the true intent of legislature behind the act. And I am one of that RERA Haryana and RERA Punjab advocate.
My answer to this utter simple question is Yes but let us see how RERA Authorities in Punjab and Haryana at Chandigarh interpret the statute.
For RERA Punjab, the controversy is settled by the judgment of Justice Bhalla (then Chairperson of RERA Punjab Appellate Authority) who has been able to sever the powers of RERA Authority and Adjudicating officer. You might read the entire findings of the judgment here.
Now the post is entirely my opinion and nobody else’s. So it may be wrong. Please do not construe this is a general opinion or law of the land. For Haryana RERA Appellate Authority headed by Justice Darshan Singh, things are yet to be sorted out and whether the RERA Authorities can entertain complaint of refund is to be ascertained.
Also Read- HOW TO GET COMPENSATION FROM ADJUDICATING OFFICER
Now, why I say they can give refund is here:
Let us see what entitles us to make a complaint under RERA Act. Read Section 31 of RERA.
31. (1)Any aggrieved person may file a complaint with the Authority or the adjudicating
officer, as the case may be, for any violation or contravention of the provisions of this Act or
the rules and regulations made thereunder against any promoter allottee or real estate agent,
as the case may be.
Explanation.—For the purpose of this sub-section “person” shall include the
association of allottees or any voluntary consumer association registered under any law for
the time being in force.
(2) The form, manner and fees for filing complaint under sub-section (1) shall be such
as may be specified by regulations.
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Here it clearly says complaint can be made either to Authority or Adjudicating Officer (AO).
Now let us see what sort of complaint can be made to AO w.r.t. to Section 71 & 72.
71. (1) For the purpose of adjudging compensation under sections 12, 14, 18 and
section 19, the Authority shall appoint in consultation with the appropriate Government one
or more judicial officer as deemed necessary, who is or has been a District Judge to be an
adjudicating officer for holding an inquiry in the prescribed manner, after giving any person
concerned a reasonable opportunity of being heard:
Provided that any person whose complaint in respect of matters covered under sections
12, 14, 18 and section 19 is pending before the Consumer Disputes Redressal Forum or the
Consumer Disputes Redressal Commission or the National Consumer Redressal Commission,
established under section 9 of the Consumer Protection Act, 1986, on or before the
commencement of this Act, he may, with the permission of such Forum or Commission, as the
case may be, withdraw the complaint pending before it and file an application before the
adjudicating officer under this Act.
(2) The application for adjudging compensation under sub-section (1), shall be dealt
with by the adjudicating officer as expeditiously as possible and dispose of the same within
a period of sixty days from the date of receipt of the application:
Provided that where any such application could not be disposed of within the said
period of sixty days, the adjudicating officer shall record his reasons in writing for not
disposing of the application within that period.
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(3) While holding an inquiry the adjudicating officer shall have power to summon and
enforce the attendance of any person acquainted with the facts and circumstances of the
case to give evidence or to produce any document which in the opinion of the adjudicating
officer, may be useful for or relevant to the subject matter of the inquiry and if, on such
inquiry, he is satisfied that the person has failed to comply with the provisions of any of the
sections specified in sub-section (1), he may direct to pay such compensation or interest, as
the case any be, as he thinks fit in accordance with the provisions of any of those sections.
72. While adjudging the quantum of compensation or interest, as the case may be,
under section 71, the adjudicating officer shall have due regard to the following factors,
namely:—
(a) the amount of disproportionate gain or unfair advantage, wherever
quantifiable, made as a result of the default;
(b) the amount of loss caused as a result of the default;
(c) the repetitive nature of the default;
(d) such other factors which the adjudicating officer considers necessary to the
case in furtherance of justice.
Also Read- REFUND AND COMPENSATION UNDER RERA PANCHKULA AND PUNJAB
Now as it is clearly written the domain of AO is limited to compensation or interest only, the power of refund is only vested with RERA Authority. If the legislature would have thought of dispensing the function of even Refund to AO, then they would have explicitly written it in the Act i.e. Section 71 & 72.
Also the RERA Punjab and Haryana RERA Panchkula and Haryana RERA Gurugram Authorities interpreted it in the same manner. That’s why there were two forms for complaint Form M & Form N.
Form M- Complaint to RERA Authority
Form N- Complaint to Adjudicating Officer (AO)
Now, why I say RERA Authority has the power to grant refund is from the following observations from the Act:
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Section 32 Clause (a)
32. The Authority shall in order to facilitate the growth and promotion of a healthy,
transparent, efficient and competitive real estate sector make recommendations to the
appropriate Government of the competent authority, as the case may be, on,—
(a) protection of interest of the allottees, promoter and real estate agent;
The protection of interest lies in the domain of RERA Authority and not with AO.
Section 34 clause (f) & (g)
34. The functions of the Authority shall include-
(f) to ensure compliance of the obligations cast upon the promoters, the allottees
and the real estate agents under this Act and the rules and regulations made thereunder;
(g) to ensure compliance of its regulations or orders or directions made in exercise
of its powers under this Act;
The timely delivery of possession is the most important and crucial obligation in any of the real estate transaction. The major grievance of most homebuyers is on incessant delay in projects. The Authority is equipped with powers to ensure compliance of this obligation and not the AO.
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Section 35, further says that Authority is deemed to be a civil court of competence and has ample powers to conduct an enquiry.
35. (1) Where the Authority considers it expedient to do so, on a complaint or suo motu,
relating to this Act or the rules of regulations made thereunder, it may, by order in writing
and recording reasons therefor call upon any promoter or allottee or real estate agent, as the
case may be, at any time to furnish in writing such information or explanation relating to its
affairs as the Authority may require and appoint one or more persons to make an inquiry
in relation to the affairs of any promoter or allottee or the real estate agent, as the case
may be.
(2) Notwithstanding anything contained in any other law for the time being in force,
while exercising the powers under sub-section (1), the Authority shall have the same powers
as are vested in a civil court under the Code of Civil Procedure, 1908 while trying a suit, in
respect of the following matters, namely:—
(i) the discovery and production of books of account and other documents, at
such place and at such time as may be specified by the Authority;
(ii) summoning and enforcing the attendance of persons and examining them on
oath;
(iii) issuing commissions for the examination of witnesses or documents;
(iv) any other matter which may be prescribed.
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Even the powers to issue interim orders and directions are vested with Authority and not with AO. Read Section 36 & 37.
36. Where during an inquiry, the Authority is satisfied that an act in contravention of
this Act, or the rules and regulations made thereunder, has been committed and continues to
be committed or that such act is about to be committed, the Authority may, by order, restrain
any promoter, allottee or real estate agent from carrying on such act until the conclusion of
such inquiry of until further orders, without giving notice to such party, where the Authority
deems it necessary.
37. The Authority may, for the purpose of discharging its functions under the provisions
of this Act or rules or regulations made thereunder, issue such directions from time to time, to
the promoters or allottees or real estate agents, as the case may be, as it may consider
necessary and such directions shall be binding on all concerned.
Even the Authority is vested with powers to impose interest as conferred to AO under Section 72 which many say is different form of interest.
The entire issue now comes down to this whether the interest given by Authority and AO is different and if yes then how?
To me, yes it is different but for Punjab RERA Appellate Authority’s judgment in Sandeep Mann’s case, it is same. My views are contrary to this finding but since the confusion is now settled for form M & N, let it be as it is.
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Let us see the definition of Interest as per RERA Act as per Section 2 of RERA Act:
(za) “interest” means the rates of interest payable by the promoter or the allottee,
as the case may be.
Explanation.—For the purpose of this clause—
(i) the rate of interest chargeable from the allottee by the promoter, in case
of default, shall be equal to the rate of interest which the promoter shall be liable
to pay the allottee, in case of default;
(ii) the interest payable by the promoter to the allottee shall be from the
date the promoter received the amount or any part thereof till the date the amount
or part thereof and interest thereon is refunded, and the interest payable by the
allottee to the promoter shall be from the date the allottee defaults in payment to
the promoter till the date it is paid;
Also Read- Delay Compensation In RERA.
Now for clarification let us read Section 12, 14, 18 & 19
12. Where any person makes an advance or a deposit on the basis of the information
contained in the notice advertisement or prospectus, or on the basis of any model apartment,
plot or building, as the case may be, and sustains any loss or damage by reason of any
incorrect, false statement included therein, he shall be compensated by the promoter in the
manner as provided under this Act:
Provided that if the person affected by such incorrect, false statement contained in the
notice, advertisement or prospectus, or the model apartment, plot or building, as the case
may be, intends to withdraw from the proposed project, he shall be returned his entire
investment along with interest at such rate as may be prescribed and the compensation in the
manner provided under this Act
For First part compensated in the manner – goes to AO
In case of withdrawal from project- return of investment along with prescribed interest and compensation in manner prescribed.
Here term ‘And’ is used as disjunctive i.e. in addition to.
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Section 14 (3) is only relevant for above discussion:
(3) In case any structural defect or any other defect in workmanship, quality or provision
of services or any other obligations of the promoter as per the agreement for sale relating to
such development is brought to the notice of the promoter within a period of five years by
the allottee from the date of handing over possession, it shall be the duty of the promoter to
rectify such defects without further charge, within thirty days, and in the event of promoter’s
failure to rectify such defects within such time, the aggrieved allottees shall be entitled to
receive appropriate compensation in the manner as provided under this Act.
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This only talks about compensation so it goes to AO straight away.
Coming to Section 18 where the biggest confusion lies:
18. (1) If the promoter fails to complete or is unable to give possession of an apartment,
plot or building,—
(a) in accordance with the terms of the agreement for sale or, as the case may be,
duly completed by the date specified therein; or
(b) due to discontinuance of his business as a developer on account of suspension
or revocation of the registration under this Act or for any other reason,
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he shall 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:
Provided that where an allottee does not intend to withdraw from the project, he shall
be paid, by the promoter, interest for every month of delay, till the handing over of the
possession, at such rate as may be prescribed.
(2) The promoter shall compensate the allottees in case of any loss caused to him due
to defective title of the land, on which the project is being developed or has been developed,
in the manner as provided under this Act, and the claim for compensation under this subsection shall not be barred by limitation provided under any law for the time being in force.
(3) If the promoter fails to discharge any other obligations imposed on him under this
Act or the rules or regulations made thereunder or in accordance with the terms and conditions
of the agreement for sale, he shall be liable to pay such compensation to the allottees, in the
manner as provided under this Act.
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For 18 (1)- interest at prescribed rate including compensation in manner prescribed.
Proviso- if he wishes to stay then only interest prescribed is given
18(2)- Talks about compensation for defective title of land.
18(3)- In case of failure to discharge obligation, then compensation is only available.
The title of Section clearly says Return of amount and compensation. The legislature has manifestly not written word ‘return of amount’ in Section 71 & 72 leaving the AO out of the purview of granting refund and this is what has arisen into a dispute.
But I say, they have done it with a purpose since refund is a big question in any real estate transaction and that must be heard by a group of members which is Authority not just a individual which is AO in this case (lone Judicial Member). So if the Authority is sitting in a group to which AO is a part and hearing these matters make sense.
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Now as per RERA Act, let us see what Authority is:
(i) “Authority” means the Real Estate Regulatory Authority established under
sub-section (1) of section 20;
21. The Authority shall consist of a Chairperson and not less than two whole time
Members to be appointed by the appropriate Government.
So the Authority as per definition comprises of two member not just one which is currently happening in RERA Punjab but Haryana RERA Panchkula and Gurugram Authorities are working in tandem with AO and sitting in group so the quoram stands completed in this score.
Let us not leave Section 19 here:
(4) The allottee shall be entitled to claim the refund of amount paid along with interest at such rate as may be prescribed and compensation in the manner as provided under this Act, from the promoter, if the promoter fails to comply or is unable to give possession of the apartment, plot or building, as the case may be, in accordance with the terms of agreement for sale or due to discontinuance of his business as a developer on account of suspension or revocation of his registration under the provisions of this Act or the rules or regulations made thereunder.
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Interest at prescribed rate and compensation in the manner illustrated above.
But if you see Section 71 & 72 minutely, the word is interest or compensation not both. So one can claim either interest or compensation. So the AO cannot grant both simultaneously and infact only one relief as the case may be.
Interestingly the interest for AO is not the one prescribed, so the interest here is somewhat different to as that of which RERA Authority can give and that is why I say, question of Refund rightly belongs to RERA Authority and not to AO. Read Section 18 from above if you want to understand my contention.
Now that the controversy of RERA Punjab is settled and what is left is now with Haryana RERA Appellate Tribunal at Chandigarh to decide this big question which has left many homebuyers and top/best/expert RERA Lawyers in lurch but the question is soon to be decided so don’t worry. Even before the publishing of this post, it would be pronounced, I may assume.
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It is relevant to mention, the relevant rules of Haryana RERA Rules 2017 coinciding with the above topic. Let’s have them here as well:
28. (1) Any aggrieved person may file a complaint with the Authority for any
violation of the provisions of the Act or the rules and regulations made
thereunder, save as those provided to be adjudicated by the adjudicating
officer, in Form ‘CRA’, in triplicate, which shall be accompanied by a fees as
prescribed in Schedule III in the form of a demand draft or a bankers cheque
drawn on a Scheduled bank in favour of “Haryana Real Estate Regulatory
29. (1) Any aggrieved person may file a complaint with the adjudicating officer
for interest and compensation as provided under sections 12, 14, 18 and 19 in
Form ‘CAO’, in triplicate, which shall be accompanied by a fee as mentioned
in Schedule III in the form of a demand draft or a bankers cheque drawn on a
Scheduled bank in favour of “Haryana Real Estate Regulatory Authority”
and payable at the branch of that bank at the station where the seat of the said
Authority is situated.
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INTEREST PAYABLE BY PROMOTER AND ALLOTTEE AND TIMELINES FOR REFUND
15. An allottee shall be compensated by the promoter for loss or damage
sustained due to incorrect or false statement in the notice, advertisement,
prospectus or brochure in the terms of section 12. In case, allottee wishes to
withdraw from the project due to discontinuance of promoter’s business as
developers on account of suspension or revocation of the registration or any
other reason(s) in terms of clause (b) sub-section (I) of Section 18 or the
promoter fails to give possession of the apartment/ plot in accordance with
terms and conditions of agreement for sale in terms of sub-section (4) of
section 19. The promoter shall return the entire amount with interest as well
as the compensation payable. The rate of interest payable by the promoter to
the allottee or by the allottee to the promoter, as the case may be, shall be the
State Bank of India highest marginal cost of lending rate plus two percent. In
case, the allottee fails to pay to the promoter as per agreed terms and
conditions, then in such case, the allottee shall also be liable to pay in terms
of sub-section (7) of section 19:
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Provided that in case the State Bank of India marginal cost of lending rate
(MCLR) is not in use, it shall be replaced by such benchmark lending rates
which the State Bank of India may fix from time to time for lending to the
general public.
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Presently both the RERA Authorities are of the view that for awarding prescribed interest under the act, there is no need of enquiry as defined for adjudicating officer and thus the authority is competent to award it. RERA Authority Panchkula and Gurugram has further went on to say that if the payments are not disputed by builder then there is no need to have an enquiry by like that of an adjudicating officer and the interest here to be awarded doesn’t comes under the compensation. It can be measure as a simple interest on investment like we do have it for banks.
Now the term interest is the bone of contention before Haryana RERA Appellate Authority situated at Chandigarh.
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If the Authority thinks on the line of Supreme Court as below:
Ashok Shankar Pandey vs. UOI (2007) 3 Supreme Court cases, 545, their Lordships have further observed that interest is not penalty of punishment but it is actual accretion on capital. As interest includes the compensation it means that payment of interest is nothing but payment of compensation.
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Then can a complainant seek compensation again under Form N if he has stayed on rented premises? Since interest is a form of compensation, then can again compensation be sought?
These are some of the clinching questions which one awaits to be answered by Haryana RERA Appellate Authority shortly.
Lets us hope all the confusion surrounding whether RERA Authority Panchkula/Gurugram can order refund or not is cleared in coming days.
Till then stay tuned to LegalSeva for latest RERA updates and Judgments and happenings in Punjab and Haryana. Seeking free legal from any of the expert/top/best RERA Punjab , RERA Panchkula and RERA Gurugram Lawyers will come handy when thinking of filing a complaint/case with them..
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This post is written by Advocate Satish Mishra. For more info, please dial 99888-17966
Disclaimer: This is just my personal view and not the law of land. So one must construe it to be a legal advice.
