Last Updated on October 13, 2020 by Satish Mishra
This is a post of Sandwoods Infratech Projects RERA Punjab Complaint wherein the refund was allowed by the Adjudicating officer with interest as per rate stipulated in RERA Punjab Rules.
Judgment Digest:
Kanisth Ganeriwala and Another vs Sandwoods Infratech Projects Pvt. Ltd.
&
Parika Ganeriwala and Another vs Sandwoods Infratech Projects Pvt. Ltd.
In this judgment of the Punjab Real Estate Regulatory Authority, there were two cases arising from the same household and with similar circumstances, where the developer had defaulted in delivering the possession. The developer had not only received more than the agreed amount, but failed to deliver the possession twice. The decision scrutinises the provisions of the Act and points out the difference between offering possession and offering lawful possession. According to the Real Estate (Regulation and Development) Act, 2016, a completion certificate is a certificate “issued by the competent authority certifying that the real estate project has been developed according to the sanctioned plan, layout plan and specifications, as approved by the competent authority under the local laws”. A construction is not considered valid without this certificate. The following discussion will show how this is important for offering possession.
The judgment is accessible at https://rera.punjab.gov.in/pdf/OrdersJudgementsAO/20200615OJbyAOGCNo12432019TRAO00422019.pdf
Facts of the Case
This common order was issued with respect to two complaints because the facts of both cases were similar and the complaint was on the same cause of action for a single project against the same developer-respondent. The complainants in both instances had applied for a flat under the subvention scheme and were allotted flats numbered 169 and 172 respectively. The respondent had assured that the possession would be handed over in 36 months plus 6 months grace period. The complainants had to pay equated instalments till the delivery of the possession. They had paid more than the sale price, however, possession was not handed over. The developer had issued a letter on 13th September 2018, which was claimed to be the possession letter but the same itself mentioned that the units were in the pre-possession stage and were getting ready for the possession. They had not obtained an occupancy certificate or completion certificate. The complainants also argued that in their previous complaints, the Bench of the Chairperson of the Authority had directed the respondent to hand over the possession till February 2019. In case of failure on their part, the complainants could re appeal to the Authority for refund of the amount deposited. Since they had failed, the buyers had filed this present appeal seeking the refund.
Also Read- CONSUMER COMPLAINT AGAINST SANDWOODS INFRATECH PROJECTS MOHALI
Issues of the case
- Whether the respondent was at fault under the Real Estate (Regulation and Development) Act, 2016?
- Whether the complainants were entitled to a refund?
Case Laws Cited
None
Findings of the Court
The developer-respondent raised preliminary objections in their written reply with respect to the maintainability of the complaint. They contended that they had applied for a completion certificate, which had not been issued, but would be deemed to be so under Section 272 of the Punjab Municipal Corporation Act, 1976. In the letter dated 1st March, they had asked the complainants to come forward and take the possession by paying the due balance. They submitted that they had not violated any provisions of the Act. Accordingly, the complaint was not maintainable.
Further, they argued that the Authority did not have any territorial jurisdiction to entertain this appeal as per clause 27 of the agreement. The matter should have been referred for arbitration as per Section 8 of the Arbitration and Conciliation Act, 1996. The units were complete in all respects. If there had been any delay, it was to be compensated as per the terms and conditions of the agreement dated 27th October 2014. The possession had already been offered and a completion certificate applied for. They denied all the remaining averments and requested for dismissal.
Also Read- RERA PUNJAB COMPLAINT SANDALWOOD INFRATECH PROJECTS PVT LTD
The court observed that Kanisth Ganeriwala and Parika Ganeriwala had earlier filed two complaints before the Authority which had been decided by the Chairperson on 08th January 2019. In that order, the bench had said that there was undoubtedly a delay in handing over the possession and that in the ordinary course of things, the complainants were entitled to a refund. However, it was not considered appropriate that they would be allowed to withdraw at that stage since the respondent was offering the possession. Any real estate project was mainly built with the funds deposited by the allottees and it was in the interest of the sector that projects near fruition were allowed to reach their logical end. At the time of the registration, the developer had been granted time till December 2021 and they could not be forced to deliver possession prior to this date. The respondent was then ordered to hand over the possession till February 2019.
It was further seen that the Flats bearing number 169 and 172 had been booked by the complainants for an actual amount of Rs. 41,80,000/- each for an area of 1325 square feet. The buyers agreements had been executed on 27th October 2014 and 28th May 2014. The complainants had respectively deposited Rs. 42,90,666/- and Rs. 43,98,288/-. Possession had to be delivered in 36 months plus 6 months, i.e., by the end of April 2018 and November 2017 respectively. The respondent had failed to do so. They were granted time till February 2019 in the order passed by the Chairman, but they had not complied with it either and failed to deliver the possession to the buyers till the present proceedings.
The bench rejected the argument of the counsel that there was an arbitration clause no. 25 in the agreement/allotment letter and accordingly the Authority had no jurisdiction to adjudicate the matter. They had referred to Section 8 of the Arbitration and Conciliation Act but Sections 79, 88 and 89 of the RERA Act provide that despite an arbitration clause, the remedy under it still subsists.
Also Read- View Latest Order of RERA Punjab Authority Against Sandwoods Infratech Projects
Another submission was that possession had been offered on two occasions and that the completion certificate had been applied for. The complainants were themselves not interested and therefore were not entitled to a refund. This was dismissed because they did not have the completion certificate and the mere fact that they had applied for it did not imply they had been issued the same. Without the completion certificate or occupancy certificate, they were not in a position to legally offer possession. According to an RTI put on record, they had been issued no completion or partial completion certificate. The offer of possession letters dated 13th September 2018 and 1st March 2019 held no weight. They were at fault since they had not offered lawful possession to the complainants despite the order of the Chairman.
The law recognises that the developers who use the money of the allottees are bound to pay interest when there is a delay beyond the agreed time. The RERA Act does not contemplate that the existing contracts need to be rewritten for the purchaser to claim benefits under it. Its provisions mainly apply prospectively but to some extent it is retroactive. The vested or accrued rights are not affected by it. The Bombay High Court has opined that interest is to be paid from the date of the payment till the amount is refunded. The Punjab State Real Estate (Regulation and Development) Rules 2017 prescribes the proforma for agreement for sale, clause 5 of which states that time is of the essence to both parties and the developer should abide by the schedule. Clause 7 deals with possession and clause 7.5 provides that the allottee has the right to cancel or withdraw from the project. When the allottee withdraws without any fault of the promoter, the latter is entitled to forfeit 10% of total consideration, and balance is to be returned within 90 days of cancellation. The court found that the allottees were not at fault in this case and the promoter was under an obligation to hand over the possession. Clause 9.2 of the proforma provides the following in case of default by the developer the allottee is entitled to :
- Stop making further payments until the construction milestone is reached without any penal interest.
- Terminate the agreement in which case the promoter has to refund the entire amount paid under any head towards the purchase along with interest.
- Interest, in case the buyer does not wish to withdraw.
Also Read-RERA Punjab Complaint against Country Colonizers Private Limited
Per the clause, the promoter is liable to refund the entire amount received under any head with interest. The respondent had not offered lawful possession to the complainants within the agreed time, nor after the order passed on 08th January 2019. The respondent was found to be at fault under Section 18. It states that when a developer fails to complete or is unable to give possession by the date specified or due to discontinuance of his business, he is liable to return the money paid by the buyer. In case the buyer does not wish to withdraw, he is liable to pay interest for every month of delay. Subsection (3) also provides that if the promoter fails to fulfil any obligations under the Act or any rules made under it, or any of the terms of the sale agreement, he is liable to pay compensation to the allottees. In accordance with these provisions, the respondent was directed to refund Rs. 42,90,666/- in Kanisth Ganeriwala vs Sandwoods Infratech and Rs. 43,98,288/- in Parika Ganeriwala vs Sandwoods Infratech.
Also read-RERA Punjab Complaint against Country Colonizers Private Limited
The complainants were also found to be entitled to interest on the amount paid by them. The developer had been taking the benefit of interest on the amount and the same could not be denied to the buyers. Each complainant was granted interest on the principal amount at the prescribed rate of the highest marginal cost of lending rate of State Bank of India plus 2%. This rate was awarded as per Rule 16 of the Act and applied from the dates of the payment till realisation.
Further, the buyers were awarded compensation for mental agony. They were unable to purchase the flats and reside therein so as to seek remedy under the Act. They would have suffered on this account and incurred expenses for the claim. Although compensation has not been defined in the Act, it is contained in other statutes like Workman Compensation Act and Land Acquisition Act. It could be granted under pecuniary and non-pecuniary heads and in view of Section 72, which states the factors to be considered while granting it. The court awarded Rs. 1,25,000/- as compensation under all heads including mental agony and litigation expenses.
The following was the final order:
| Kanisth Ganeriwala
(complaint no. GC 1243/2019) |
Parika Ganeriwala
(complaint no. GC 1242/2019) |
|
| Principal Amount | 42,90,666/- | 43,98,288/- |
| Interest | At the highest marginal cost of lending rate of State Bank of India plus 2% on the principal from the date of the respective payments till realisation. | At the highest marginal cost of lending rate of State Bank of India plus 2% on the principal from the date of the respective payments till realisation. |
| Compensation | 1,25,000/- | 1,25,000/- |
The respondent was to pay the amount within 60 days from the passing of the order. It was allowed that if any amount had already been paid to the complainants on account of delay in possession, it would be adjusted against the same.
Also Read- Meena Lal vs Sandwoods Infratech Private Limited Judgment before Chairperson RERA Punjab
Conclusion
Thus the complainants were granted a spectrum of relief under the Act. It was observed that mere offer of possession is not valid in itself unless the developer has the stipulated documents and consequently a legal basis to offer possession. An application for a completion certificate cannot be deemed to be an issuance thereof. The respondent had not offered possession on the two aforementioned occasions. The Real Estate (Regulation and Development) Act, 2016 has provided for stricter compliances for the promoters and developers due to rampant incompetence. Property developers, who were earlier the stronger party, now have to comply with the requirements of the Act or face a heavy penalty. Even though it is new, numerous appeals are filed under it seeking relief. The State Real Estate Regulatory Authorities have been especially established for speedier trials.
For case specific advice, please contact best/top/expert RERA Punjab Legal Experts/Real Estate Lawyers/Attorneys in Chandigarh Panchkula Mohali Zirakpur Kharar Derabassi.
This post is written by Jigyasa Kharbanda.
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