Delayed compensation: Rera Act overrides agreement of sale
PANCHKULA BENCH OF HARYANA REAL ESTATE REGULATORY AUTHORITY DECIDES PRINCIPLE OF AWARDING RELIEF TO ALLOTTEES IN PRERERA PROJECTS
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.
PAYMENT OF GST AND DELAYED POSSESSION
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. ”