RERA- Reliefs Against the Developers

Real Estate (Regulation and Development) Act, 2016 or popularly known as "RERA" has changed how real estate business is conducted. This act was a game changer and has organised the most disorganised sector, brought in transparency and restored faith of consumers in the Real Estate sector. If you are a consumer of real estate and have not capitalised on the increased transparancy brought by RERA then you are setting yourself up for a failure. Today's blog we will dive into the specifics under RERA and key aspects of the act. There are multiple misconceptions about the remedy RERA provides to a customer and it would help you to know what you can and cannot claim under the act.

The customer can approach the RERA Authority as his first forum to voice his grievance. RERA Tribunal can be approached against the decision of RERA Authority. Important thing to note is that only an Allottee (technical name for a customer) can approach the RERA for remedy. RERA is the easiest and most approachable authority under the judicial plethora. A complaint is very easy to file, the consumer can do it online himself with limited data. All you need is Rs.5000 and copy of your agreement or booking form. Format for complaint is predefined and the Authority does not mandate legal representation. Even a consumer can approach the authority on his own.  Key points to remember are :-

1.  Mention your Email Id and Phone Number clearly in your complaint and your login id
2. Serve one set of complaint to the Developer/ Respondent
3. Address of the Complainant should be complete
4. Keep the Language of your complaint simple
5. Mention all facts of the case eg. Booking date, amount paid till date, registration date etc.
6. Reliefs claimed should be what the authority is authorised to give and not otherwise

An alternate that the consumer can use is Conciliation Forums. Complaint can be filed with payment of Rs 1000 only. This is a much more faster remedy available. In conciliation you get to meet the Developer directly in presences of arbitrators from Consumers Association and Promoters associations like CREDAI, MBVA, NAREDCO etc and in my experience it has resulted in quicker resolution of grievances. Conciliation though not mandatory for developer to attend, Developers prefer resolution by conciliation as they are sealed orders signed by both parties and the same do not get published. It is also easier for the consumer as the Representation (lawyers) of the Developer do not get involved in this stage and meeting the Owner directly ensures meaningful dialogue between the consumer and the developer.

Now lets explore a few key remedies you can claim under RERA, the first being a claim of "Refund" under section 18. Section 18 (1) states " If the promoter fails to complete or is unable to give possession of an apartment, plot or building,—

in accordance with the terms of the agreement for sale or, as the case may be, duly completed by the date specified therein; or 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,

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. "

In simple words if the Developer offers delayed possession or if possession is not in accordance with the agreement, then you can claim refund of all amounts paid to Developer along with interest by leaving the project or stay with the project and claim interest from date of delayed possession. Misconception most prevalent amongst customers is that they can claim rental loss, interest paid to banks and also interest under section 18 from the Developer. The interest rate claimable is also defined under RERA which is State Bank of India's Marginal Cost of Lending plus 2 %. SBI MCLR presently is 7% hence you can claim 9% per annum from the Developer. Important to note is the words "Return the Amounts recieved by him". This means any GST, Stamp Duty , other charges, processing fees, legal fees paid by you are not claimable under section 18 of Maharera from the Developer. A consumer should balance this understanding of what and how much he can claim refund before cancelling his apartment with the Developer.

Lets explore a few landmark cases. I have tried and summarised cases based on my limited understanding using non technical language so that the readers can decipher the key understandings under RERA. The first Landmark judgement to explore is ' Neelkamal Realtors Suburban Pvt. ... vs The Union Of India And 2 Ors'. The Developers questioned the validity of RERA and the Hon'ble Bombay High Court laid down the foundation to understanding the consumer beneficial regulation. The High court upheld the restrospective application of the act stating that if Completion Certificate has not been acquired by the Promoter then the commercial contract is still ongoing and there is no retrospective application in true sense. The high court upheld the registration and maintainance of 70% bank account seperately and also mandating its usage under RERA. The Provision was upheld for the fair reason of Protecting the Rights of the Consumers and Restraining the Misuse by the Promoters of their powers.

Further, while addressing the issue with regard to revocation under Section 7 & 8 of RERA, Hon’ble Mr. Justice Naresh Patil stated as under:

“We are of the view that a proper construction of the provisions would mean that even in case of lapsing of or on revocation of registration, the authority shall not mechanically terminate the registration of the promoter or injunct him to act as a promoter, but in the facts of a case would take necessary steps in the interest of allottees permitting the promoter to carry on the remaining development work It shall not be interpreted to mean that in every case a promoter who fails to complete the project under the extended time under Section 6 would get further extension as of right. In that sense, there is no divesting of rights in the property from the promoter to the authority.”

With regard to the interest payable on default and delay under Section 18 of RERA, the High Court clarified that the rate of interest as mentioned under RERA is of a compensatory nature for the investment made by the people and shall not be perceived as a penal provision. The detailed judgement explores other provisions of the act too and is a landmark judgement to interpret the intent behind the act.

The Bench, while upholding the provisions of RERA said, “RERA is not a law relating to only regulating concerns of the promoters but its object is to develop the real estate sector, particularly the incomplete projects, across the country. The problems are enormous and it’s time to take a step forward to fulfill the dream of the ‘Father of the Nation- To wipe out tears from every eye.” Full order is available at https://indiankanoon.org/doc/82600930/

The Next case we shall analyse is "Rohit Chawla Vs. Bombay Dyeing & Mfg Private Limited" Brief facts of the case were that the Allottee booked a unit in Island City project of the Developer based on the Sample flat and brochure shown to the customer at the time of booking.  As possession offered was not inline with the Sample flat and brochure shown by the Developer the Allottee claimed refund along with interest. Maharea authority denies the claim of Allottee stating that the provisions of RERA do not apply retrospectively. Maharera Tribunal set aside the order of Maharera authority and laid down key principles that the liability of promoter to compensate the allottee and refund of the amount along with interest due to incorrect/false information in the brochure (provision of section- 12) and delay or failure to give the possession as per agreement for sale (provision of section-18) are not retrospective in nature and the same are compensatory in nature, therefore it is retroactively applicable.

In "Sanvo Resorts Pvt Ltd Vs. Rahul Harish Ghole & Shruti Harish Ghole" Developer cited the reason Of Change In Competent Authority And Delay In Permissions From Various Authorities Like Nhai, Aai, Mjp as reasons for delay in Possession. Both the Maharera Authority and later the Maharera Tribunal granted relief to the Allottee granting refund of entire amount along with Interest.

In "Mr. Vijay J Salien Vs. Kneepad Real Estate Pvt Ltd" it was held that even though  Agreement to Sale was not registered and only Letter of Allottment was issued to the Allottee relief was granted to the Allottee based on the letter of Allottment. It was also stated that it was not mandatory to have possession date mentioned on the Booking form and it can be assumed that 3 years from date of allottment is a reasonable date of possession expected by the Allottee.

In "M/s Xander Finances Pvt Ltd Vs. L&T Financial Consultants Ltd" the Promoter landed in Jail. Not only relief of refund and interest was granted to allottees the Maharera authority created charge on the land till the dues were paid to Allottees.

In "Vaibhav Singh Vs Radius and Deserve Builders LLP" the allottee claimed refund on the basis of material change in facts by the Developer. In this Case the Developer changed date of possession from 2020 to 2024 and Area of flat increased from 221 Sq ft to 225 Sq ft resulting in increased consideration of Rs 75600/-. It was held that these facts are enough to invoke provisions of section 12 of the Act and granted refund to the Allottee.

What is essential to note that RERA is a beneficial legislation. But customers should not carry the misconception that they get whatever is demanded against the developer. The choice of Borrowing and buying an apartment is solely exercised by the Customer. If customers possession is delayed the fact that the customer is paying extra rentals, paying interest on his loan are all irrelevant when it comes to remedy under the RERA. The need of the hour is to be more vigilant before a puchase decision is taken by you rather than looking for remedy post fact. 

My suggestion as a practicing RERA Professional would be to avoid conflict as much as you can. A co-operative attitude towards the developer would result in more productive solution. No developer wants to loose a customer willingly and understanding reasons for delay will help consumers come up with a mutually acceptable solution. Piling up cases in RERA is delaying many decisions and may not be the quickest remedy. Conciliation forums are a brilliant tool available to consumers and should be explored as much as we can. This is Part 4 of the Real Estate series and I would love to hear your thoughts on this.

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Saransh Dey