Ms. Simmi Sikka Vs M/S Emaar MGF Land Limited

Ms. Simmi Sikka Vs M/S Emaar MGF Land Limited

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Ms Simmi Sikka approached the Real Estate Regulatory Authority with respect to certain grievances on a real estate project undertaken by the respondent-company. Ms Sikka booked shop No.EPS-SF-019 which was situated in the project Emerald Plaza at Emerald Hills, Gurugram, undertaken to be constructed by the respondent-company. 

The total area of the shop was 928.65 square feet. The complainant made three payments against the booking which included an advance of Rupees 30 Lakhs, and two payments of Rupees 21,74,234 and Rupees 6,96,472 made on the 21st of March 2014. This advance was to be counted towards early payment rebate with interest @ 12% on 19.04.2014. The buyer agreement was finally signed on 09.05.2014. It was agreed that the said project was to be completed within 30 months from the date of execution of the agreement. 

The complainant has further alleged that a sum of Rs 58,000/ – was deposited in the income tax department on behalf of the respondent and as such a total sum of Rupees 59,28,706/ – was paid by the complainant for the shop. The remaining 60% amount along with payment/cost and car parking was to be paid on 25.09.2017.

After the payments made by the complainant, the complainant finally claimed that there was a default on part of the respondent-company as they did not follow the schedule of construction agreed between the parties. Accordingly, no construction took place for 2 years and the agreed hand over date, 9th November 2016, was breached. It was claimed that the interest accrued on the amount was 15,62,055 rupees as compounded from the month of September 2017.

Even after all the correspondences on part of the complainant which highlighted the said delay, no action was taken on part of the respondent-company. On the contrary, a notice was sent by the respondent-company requiring the payment of 20,00,000 rupees on 25.08.2017.

The complainant also claimed that the customer care staff further informed her that the carpet area was reduced and that the revised carpet area stood at 510 sq.ft.

The possession letter was finally issued on 22.02.2018. This was two whole years after the agreed possession delivery date. The counsel for the complainant thus prayed for the payment of interest for every month of delay till the handing over of the possession. The amount prayed for also included the shortfall of covered area 228 sq. ft. 

Following were the contentions made by the respondent,

a)     Non-registration of the project. It cited that the definition provided under Rule 2 (1) (o) of the Haryana Real Estate (Regulation and Development) Rules, 2017 as the Rules could not apply retrospectively.

b)     As per the Haryana Building Code, 2017, after the submission of the occupancy certificate if there is no response from the competent authority then the certificate would be deemed as an issued one. Accordingly, the deemed date of occupancy certificate was earlier than the actual occupancy certificate. 

c)      Non-maintainability of the complaint about compensation and interest, the same was maintainable only before an adjudicating officer under Rule 29 of the said rules and Section 31 and 71 of the Act 2016.   

Arguments made by the Complainant

The complainant argued that the authority had the jurisdiction to entertain and adjudicate the complaint. The reason cited by the respondent was the fact that they had applied fo an occupancy certificate before the said rules came into force. It was argued by the complainant that the rules could not contradict the enabling act and if ever there was a contradiction, then the enabling act would prevail. To further substantiate the complainant cited the observation of the Delhi High Court[i] where it provided with the hierarchy of laws while deciding on the conflict between the SEBI Act and certain other rules. It was the Act which would prevail over such contradictory rules.

The preliminary objection raised by the respondent citing that the definition under the Rules[ii] did not cover the unregistered project did not absolve them of their liability. For determining the fact whether the respondent was required to register the property, Section 3(1) of the RERA, 2016 was relevant. Under this section, it was mandatory for the promoter to register the property within the 3-month period. This covered all the on-going projects if the same project on the date of commencement of the Act had not received any completion certificate. This was in general contradictory to the rules cited by the respondent which unnecessarily expanded the definition of on-going projects which in turn helped the respondent to escape liability.  Hence, the respondent was liable to register their property under Section 3(1) of RERA, 2016.

Regarding the second issue raised by the respondent, the complainant stated that the respondent applied for the occupancy certificate for the commercial complex of the said project only. Hence, the said exemption under the Rules only applied to the said part of the complex. Further, the assumption of the said deemed occupancy certificate[iii] by the respondent was wrong as certain important statutory requirements were not fulfilled by the respondent in the present case. No NOC from the fire department was obtained for this purpose. This application was an incomplete one which means that the sub-code 4.10 of the Haryana Building Code, 2017 was not applicable in this case. An incomplete application was an invalid application under the eyes of the law. Thus, the assumption of the deemed occupancy certificate did not apply. This could not be used as an escape route by the respondent to not register their project.

Regarding the third issue, the complainant had the right to file a complaint[iv] if she was aggrieved by the act of promoter if he violated any section of the Act (in this case non-registration of the project). Furthermore, the issue that only the adjudicating officer could hear this matter as provided in the Act[v] was wrong on part of the respondent. The complainant had prayed for the fulfilment of the obligations by the promoter and the payment by the promoter, of the interest on the amount, for every month of delay till handing over of the possession. 

FINDINGS OF THE AUTHORITY

The findings of the authority as decided on 19.06.2018 have been enumerated as under:

a)  Applicability of the Act– The most important finding of the Authority under this case was that the Real Estate (Regulation and Development) Act, 2016 was not restricted to registered projects only. The Authority found that even if certain projects had been exempted under the Act[vi], these projects still remained within the ambit of the Act. The provisions which dealt with registration and obligation were applicable only to the registered projects. But, the obligations post the expiry of a registration project were also applicable to promoters who did not register their real estate projects. Any kind of projects suffering from structural defects was included under the Act and the aggrieved could file a complaint in case possession delivery date of the real estate was within 5 years prior to the date the complaint was being made. If aggrieved by the violation of any provisions of RERA, 2016 and the Haryana Real Estate (Regulation and Development) Rules, 2017, then a complaint may be filed by them if the real estate project was within the ambit of section 2 (z) (n)[vii] of RERA, 2016. 

b)      Registration of projects– It is mandatory for the new projects to be registered as provided in section 4(1) read with exemptions given under section 3 (2) of the Act. It was also clarified that the date of providing the completion certificate was a decisive aspect as to whether the project was required to be registered. In case the completion certificate for a real estate project was provided prior to the enactment of the Act then no registration is required. But any project, including those whose completion certificate was provided after the commencement of the Act, is required to be registered under the Act. The same applies to ongoing projects as well. As the Rules came into force in 2017, the period for applying the registration may be treated as 3 months from the date of notification of the rules. 

The mere filing of an application and that too an incomplete application would not be treated as completion of the project. Where the occupation certificate is provided on or before the publication of Rules, it would be exempted from the registration process. But, where the development projects are still going on (though, part occupation certificates have been issued) and have not been completed then the same would not be exempted. In such cases, one month time will be provided to the promoters to apply for registration. After the end of this period, penal proceedings will be initiated against any promoters who fail to register. In cases where the occupation certificate has been issued to the promoter but the date of completion of the application and other requisite documents were after the publication of the said rules then such projects shall also not be exempted. Unregistered projects by the promoter will be a violation of not only section 3(1) but also section 4(1) as these need to be registered by the project irrespective of the fact of advertisements, marketing etc. before the completion or post the completion of the project. 

c)   Jurisdiction– The separation of functions on certain actions under the Act was cleared by the authority. These were as follows:

1)      Adjudication of compensation not only under sections 12, 14, 18 and section 19 but also the failure of the promoter to discharge any obligations imposed him under this Act or the rules or any regulations or the agreement of sale is within the domain of the adjudicating officer.

2)  Anything other than the compensation part is to be decided by the authority. There was further clarification given on the powers that the authority had which were power to issue directions from time to time to promoters, allottees or real estate agents under section 37, the power to impose penalties in case of violation of provisions under section 38(1) and power to ensure compliance of obligations cast upon the promoter under section 34(f) of the Act. Further, under section 35(1), on suo-motu powers, it can ask the promoters and real estate agents to furnish in writing such information or explanation relating to the affairs as the authority may require.  

DECISION BY THE AUTHORITY-

Finally, it was decided by the authority that- a) The authority had the jurisdiction to decide the present complaint as it dealt with non-compliance by the promoter, b) The Real Estate (Regulation and Development) Act, 2016 came into force on 01.05.2018 and the respondent had not received the completion certificate from the concerned authorities which means that there was a legal obligation on the respondent to get the project registered with the authority within three months from 01.05.2017, c) Not having the occupation certificate or part occupation certificate on the date of publication of the Haryana Real Estate (Regulation and Development) Rules, 2017 will mean that exemption on registration is not applicable. A 3-month period can be given to the promoter to register the project by the authority. If still there is no compliance then the penalty will be imposed, d) Incomplete application is an invalid application. All the statutory requirements need to be fulfilled first to make the deemed occupation certificate. The liability is thus not absolved and the exemption under sub-code 4.10 of the Haryana Building Code was not applicable in the present case, e) It was agreed that the respondent had fulfilled the obligation of payment of interest on the advance amount of rupees 30,00,000 and f) It was also accepted by the authority that the complainant be paid interest at the prescribed rate of every month of delay till handing over the possession on account of the failure on part of the promoter to give possession in accordance with the agreement. The interest was to be paid at the prescribed rate of 10.45% per annum on 29,00,706 rupees from the due date of possession to the offer of possession. And finally, as there was a reduction in the area of the said unit, the complainant is to be only charged for the area being offered and not for the total area as proposed in the agreement.

SIGNIFICANCE OF THIS ORDER- 

The present order is in line with the aims and objectives of the RERA, 2016. The objective of the act is provided herein below-

“An Act to establish the Real Estate Regulatory Authority for regulation and promotion of the real estate sector and to ensure the sale of plot, apartment or building, as the case may be, or sale of real estate project, in an efficient and transparent manner and to protect the interest of consumers in the real estate sector and to establish an adjudicating mechanism for speedy dispute redressal and also to establish the Appellate Tribunal to hear appeals from the decisions, directions or orders of the Real Estate Regulatory Authority and the adjudicating officer and for matters connected therewith or incidental thereto.”[viii]

This order fulfils two important aims of the Act- 1) it clarifies the powers of the institutions which are duly established under the Act and 2) redressing the grievances which may arise. Thus, it culminates to a more transparent system in place.

A lot of other aspects were important which need to be highlighted- 1) Unregistered projects also comes within the ambit of the Act. This removes the restriction in the legislation and expands its extent and applicability. It imposes a kind of restriction on the promoters who cannot make non-registration as an excuse to not be bound by the RERA, 2016 and other rules and regulations. This escape route is thus closed. 2) The order also separates the jurisdictions of the Authority and the Adjudicating Officer. The Authority is to look into non-compliance cases while the Officer is to adjudicate upon compensation cases. 3) The conflicts in Rules and Regulation and Act have also been addressed. 4) The scope of the redressal mechanism under section 18[ix] of the Act has also been discussed at length in this order. The constitutionality of section 18 had been challenged before the Bombay High Court in 2017 which had upheld its constitutionality as it protected the interests of the allottees. It was observed by the Bombay High Court in this case[x] as follows:

“The plain language of Section 18{1)(a) shows that 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, he would be liable to return the amount received by him together with interest including compensation. In case the allottee does not intend to withdraw from the project, the promoter is liable to pay interest for every month’s delay till handing over of possession. The purpose of Section18{1}{a) is to ameliorate the buyers in the real estate sector and balance the rights of all the stakeholders. The provisions of RERA seek to protect the allottees and simplify the remedying of wrongs committed by a promoter. The intention of RERA is to bring the complaints of allottees before one Authority and simplify the process.” It was further stated that where the terms and conditions have been breached, the allottee has two options: 1) Where the allottee wishes to withdraw from the project he can demand any kind of remedy from the promoter which includes payment of interests by promoter and compensation to the allottee and 2) Where the allottee refuses to withdraw then he shall be paid by the promoter every month till the delay in handing over of the possession[xi]. Hence, the ameliorative aspect of Section 18 where the possession is not given by the promoter has been looked into in this order to highlight the importance of the rights of the allottees in such cases.


Pooja Ghosh Law Circa Intern

Pooja Ghosh

Author

Pooja hails from Uttaranchal University, Dehradun, and she spends most of her time in Reading, debating, writing articles and poetry. Her Interest area lies in laws for Real estate and contemporary laws. For any clarifications, feedback, and advice, you can reach her at poojaddun2011@gmail.com

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