In this post we will discuss about the quasi-retroactive application of the RERA ACT, 2016 and whether it is applicable when the transactions are still in the process even though the sale agreements had been executed before the Act came into force.
Judgment Digest: Anjana Goyal and Another vs Sushma Buildtech Ltd.
This recent judgment of the Punjab Real Estate Regulatory Authority considered the matter of delayed possession when the entire project was still behind the deadline. The complaint was filed under Section 31 of the Real Estate (Regulation and Development) Act 2016, which empowers an aggrieved person to file a complaint with the authority or the adjudicating officer against a promoter or a real estate agent if they have violated any provision of the Act or any rules made under it. Among the most common complaints is delayed possession. There have been instances where possession is deferred for more than a decade without justification. However, this case is unique in the sense that one of the contentions was that the complaint was premature and the respondents had given some compensation to the petitioners. The following discussion will show how the home buyers are now given a stronger hand and the developers are made answerable for all their actions.
The judgment can be accessed at Anjana Goyal and Another vs Sushma Buildtech Ltd.[1]
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Facts of the Case
On 11th March 2015, an allotment letter was issued in the name of the complainants for Unit no. 10 situated on the 4th floor of project ‘ Homework’ developed by the respondents in village Singhpura, Zirakpur. The unit was 440.80 sq. feet in area and its basic sale price was Rs. 12 lakhs. The parties entered into a buyer’s agreement on 26th March 2015, according to which the possession was to be delivered within a period of 36 months + 6 months of a grace period, i.e., 42 months at most. The possession had not been handed over even at the date of the hearing. They had prayed for early possession and interest for the period of the delay.
The respondents had submitted a detailed reply to the complaint. They contended that in the present case, an Agreement for Sale as prescribed under Punjab State Real Estate (Regulation and Development) Rules 2017 did not exist due to which relief could not be sought under the Act. Further, the date of the completion of the project was 26th July 2022, so the complaint was also premature. On the merits other than the legal issues, it was pointed out that the possession of the unit was offered to the complainants on 2nd April 2018. They had been given an ‘assured return’ under the agreement and were therefore not entitled to any other relief.
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Issues of the case
- Was the RERA Act applicable in the case?
- Whether the complainants were entitled to relief under the Act in the light of the various contentions put forth by the respondents?
Case Laws Cited
- M/s. Silver City Constructions Pvt Ltd vs State of Punjab (through Secy. Deptt. of Housing and Urban Development and others[2]
- Janta Land Promoters Pvt Ltd vs Abhimanyu Singh Vinayak and Another[3]
- Magic Eye Developers Pvt Ltd vs Yogesh Tomar[4]
Findings of the Court
With regard to the first question, the court relied on the judgments cited above. In Appeal no. 49 of 2018 (Silver City) the Appellate Tribunal had held that the provisions of the Act would apply across the board to all the projects which were ongoing at the time this Act was enacted. This was reaffirmed in Appeal no. 16 of 2018 (Janta Land Promoters). The court held that since these decisions were still in force, the agreement not being in accordance with Form ‘A’ did not invalidate the claim of the complainants. They further quoted the order given by Haryana Real Estate Appellate Tribunal in Appeal no. 138 of 2019, in which it was held that the provisions of the Act were quasi retroactive to some extent. It will be applicable where the transactions are still in the process even though the sale agreements had been executed before the Act came into force. Thus, the first question was answered in positive and the Act was indeed applicable.
As for the second question: The respondent’s contention, that the appeal was premature because the date of completion of the project was yet to arrive, was rejected. They had themselves submitted that the possession was offered on 2nd April 2018. They could not be allowed to simultaneously contend that they were not bound to deliver the possession till the deadline in 2022. The court declared that it was clear that there was a delay in handing over possession to the complainants. Per the Buyer’s agreement, possession was to be handed over in a maximum of 42 months, which period had expired on 25th September 2018. The submission that possession had been offered on 2nd April 2018 was also not accepted because the letter issued on this date was silent on the matter of possession. It simply sought a payment from the complainants for an amount of Rs. 22,039/-.
The respondent had also stated that the Occupation Certificate for the project was obtained on 21st January 2019. An Occupation Certificate or Occupancy Certificate is a document issued by a competent authority permitting the occupation of a building which has provision for civic infrastructure. Any offer of possession before obtaining the occupation certificate would not be valid. There was no other contention that an offer was made after the occupation certificate was obtained. Hence, the delay in handing over possession was established.
The court further observed that the respondent might have given ‘assured return’ to the complainants. However, an ‘assured return’ is a procedure not mentioned in the Act. The only relief under it is payment of interest at a prescribed rate.
Thus, the court on the basis of the above observations allowed the complaint and directed the respondent to pay interest for the period of the delay beginning from 25th September 2018 till the actual delivery of the possession. The court also directed the complainants, making them bound to take possession within 2 months from the date it would be offered. Further, the amount paid as ‘assured return’ was to be set off against the interest due to avoid unjust enrichment of the complainants.
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Conclusion
Thus the court ruled in favour of the complainants, answering in affirmative for both the issues of the case. All the contentions of the developer were rejected and were also held to be inconsistent throughout.
The Real Estate (Regulation and Development) Act 2016 has reversed the power quotient between the homebuyers and the developers-promoters. While before, the developers kept the upper hand of the transaction and were the stronger party, now the buyers and investors are vested a much better position. The Real Estate Regulatory Authority and the Real Estate Appellate Tribunal offer a speedier remedy in the case of property-related disputes. The Act came into force on 1st May 2017. It was not meant to be retrospective, yet the ongoing projects were to be registered within 3 months of the commencement of the Act under Section 3.
Since the enforcement of this Act, its retrospective nature has been a matter of debate. Various appeals had been filed against the provisions that were to apply to all the ongoing projects whose agreements had been executed on a previous date. In one such petition, the Bombay High Court had ruled that the projects already completed were not at all affected. Accrued and vested rights of any of the parties were also not affected. It has also been held that the provisions of RERA are not retrospective in nature. They may to some extent be retroactive or quasi retroactive.
RERA has surged in stricter compliances for the developers because the very purpose of the Act is to protect private transactions in the real estate sector. The range of punishment and penalties goes from interest at a prescribed rate to even imprisonment. However, it does not prescribe for anything like an ‘assured return’. The court thus could not have adjudicated upon its issue under the Act, but could only set it off against the remedy they could grant. Consequently, this was directed to be done in the present following the principle of unjust enrichment.
References
As given in footnotes
https://www.lexology.com/library/detail.aspx?g=f56bf142-4483-46a2-a451-0a15aa321b2e
This post is written by Jigyasa Kharbanda
For case specific advice on real estate matters related to delay compensation, delay interest one may contact top/best expert Rera Lawyers in Chandigarh Panchkula Mohali Zirakpur Derabassi Kharar Mullanpur Baltana.
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[1] Complaint no. GC 1288 of 2019
[2] Appeal no. 49 of 2018 PbREAT
[3] Appeal no. 16 of 2018 PbREAT
[4] Appeal no. 138 of 2019 HrREAT
