De­layed com­pen­sa­tion: Rera Act over­rides agree­ment of sale

Hindustan Times (Chandigarh) - Estates - - FRONT PAGE - Mu­niesh­wer A Sa­gar mu­niesh­­gar@hin­dus­tan­


PANCHKULA: Giv­ing a boost to home buyer rights against de­fault­ing de­vel­op­ers, the Haryana real es­tate reg­u­la­tory au­thor­ity (Panchkula) has held that in mat­ters of com­pen­sa­tion due to de­layed pos­ses­sion, the pro­vi­sions of the Real Es­tate (reg­u­la­tory and de­vel­op­ment) Act and the state rules made there­un­der will over­ride the terms of sale agree­ments be­tween buyer and de­vel­oper of an on­go­ing project.


The or­der came in the case, ‘Madhu Sa­reen vs B PTP Ltd and oth­ers’. Com­plainants in the case, allottees of flats in a BPTP real es­tate project in Faridabad, said the de­vel­oper had of­fered them de­layed pos­ses­sion and that also only on pay­ment to es­ca­lated price, en­hanced area cost and GST, etc.


There were nine is­sues be­fore the au­thor­ity, out of which on eight it took a unan­i­mous de­ci­sion. How­ever, on what should be the quan­tum of de­lay com­pen­sa­tion tobe paid by the de­vel­oper, there was a split de­ci­sion.

Find­ing the de­vel­oper guilty, the au­thor­ity di­rected the de­vel­oper to pay com­pen­sa­tion to allottees. In their ma­jor­ity de­ci­sion, mem­bers Anil Ku­mar Pan­war and Dil bag Singh Si­hag, held that the de­vel­oper is li­able to pay as per the pro­vi­sions of the R era Act and the state Rera rules. This over­rides the terms and con­di­tions of the sale agree­ment.

Mem­bers ob­served ,“The leg­is­la­ture while aim­ing to en act R era was con­scious of the fact that the ad­e­quate pro­vi­sions would be re­quired to deal with not only new projects to be set up af­ter com­ing into force of R era but also to deal with on­go­ing projects which had started prior to com­ing into force of Rera and were not com­plete by the time the R era was en­forced. That is why the leg­is­la­ture made it manda­tory for the pro­mot­ers even to get their on­go­ing projects reg­is­tered.”

The ex­pres­sion‘ agree­ment for sale’ used in Rera is ap­pli­ca­ble to new and on­go­ing projects and the pro­vi­sions of Rera must be con­structed and in­ter­preted in the lan­guage used by the leg­is­la­ture with­out any fur­ther ad­di­tion or dele­tion of words, ar­gued the mem­bers. While the sale agree­ment in the case man­dated buyer to pay in­ter­est at 18% in case of de­fault, it only asked the de­vel­oper to pay at 2.7% in case of his/ her de­fault .“The buyer’ s agree­ment is, there­fore, wholly dis­crim­i­na­tory and heav­ily lean sin favour of the pro­moter with re­gard to the pay­ment of com­pen­sa­tion to the pro­mote rand the buyer for their re­spec­tive de­fault towards dis­charge of their obli­ga­tions ,” the mem­bers added.

They also re­ferred to the judge­ment of Bom­bay HC in Neel kamal Real­tors Sub­ur­ban Pvt Ltd vs Union of In­dia, which had stated that Rera is not ret­ro­spec­tive in na­ture, but retroac­tive in op­er­a­tion.

The leg­is­la­ture has dis­ap­proved the dis­par­ity in agree­ment for sale by en­sur­ing Sec­tion 2(za) of Rera that such com­pen­sa­tion li­a­bil­ity for both of them shall be equal and fur­ther man­dat­ing un­der Ex­pla­na­tion (b) of Haryana real es­tate rules that such clauses of any agree­ment for sale as are con­trary to the pro­vi­sions of the Act, rules and reg­u­la­tions will be void ab-in it io, ex­plained the au­thor­ity in its judge­ment.

“This au­thor­ity must avoid tinker­ing of statu­tory pro­vi­sions for the sake of up­hold­ing the leg­isla­tive man­date and also for en­sur­ing a fair deal and just de­ci­sion for the com­plainants,” held the mem­bers.

The ma­jor­ity view also re­ferred to a de­ci­sion of Na­tional Con­sumer Dis­putes Re­dres­sal Com­mis­sion (NCDRC), New Delhi that has termed dis­crim­i­na­tory sale agree­ments as un­fair trade prac­tices since it pro­vided an un­fair ad­van­tage of the colon is er over the buyer. The NCRDC de­ci­sion was up­held by the Supreme Court.

Sig­nif­i­cantly, chair­man Ra jan Gupta, in his dis­sent­ing note ar­gued that the pro­vi­sions of the Act re­gard­ing ex­tent of de­layed pos­ses­sion com­pen­sa­tion should be ap­pli­ca­ble only from the date when the Act came into force.

As per the pro­vi­sions of the agree­ment, com­plainant shave to be com­pen­sated equiv­a­lent to the hold­ing charges at ₹5 per sq ft for ev­ery month of de­lay un­til the ac­tual date of hand­ing over the pos­ses­sion.

“Af­ter com­ing into force( of the Act), clause 3.3 of the sale agree­ment, both the par­ties will com­pen­sate each other in re­spect of their de­fault equiv­a­lent to State Bank of In­dia MCLR (mar­ginal cost of funds based lend­ing rate) plus two per­cent. The said rule, there­fore, shall be ef­fec­tive with prospec­tive ef­fect. Prior to that, pro­vi­sions of the agree­ment shall be ap­pli­ca­ble,” said the chair­man.


Com­plainants had also sought au­thor­ity in­ter­ven­tion in ab solv­ing them from pay­ing the GS Ton ac­count of de­layed pos­ses­sion.

Re­gard­ing the GST, ar­gu­ments of the com­plainant were that GST came into force in 2017, there­fore, it is fresh tax.

The pos­ses­sion of the apart­ment was sup­posed to be de­liv­ered by Novem­ber 2014, there­fore the tax which has come into ex­is­tence af­ter the deemed date of de­liver should not be levied be­ing un­jus­ti­fied.

The au­thor­ity held that the apart­ment pos­ses­sion has been de­layed by more than four years. “Had it been de­liv­ered by the due date or even with some jus­ti­fied pe­riod of de­lay, the in­ci­dence of GST would not have fallen up on buy­ers. It is the wrong­ful act on the part of re­spon­dent in not de­liv­er­ing the project in time due to which the ad­di­tional tax has be­come payable. ”

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