In a significant ruling, RERA orders compensation to four home buyers

In a significant ruling, the Puducherry Real Estate Regulatory Authority (RERA) has ordered compensation for four home buyers who were denied the promised apartment or refund of the advance payment. In the ruling, T. Arun, Housing Secretary and chairman of the Interim Regulatory Authority, Puducherry, deemed that the buyers were entitled to refund of the amount paid for the project so far along with interest in accordance with the Rule 15 of the Puducherry Real Estate (Regulation and Development) (General) Rules, 2017, without prejudice to any other remedy available. In its first order since it was constituted in the Union Territory, RERA ordered that the four allottees be refunded the total amount paid (which ranged from ₹28-36 lakh) along with interest rate of 9.4 % against the respective due dates for possession in 2017 - the total amount to be refunded ranged in the ₹42-56 lakh range. Also holding the respondents liable for the penal actions for violations as prescribed under the Act, the RERA imposed a total penalty of ₹54,19,077 on the respondents to be remitted with the RERA account within a period of 30 days. While a penalty of ₹36,12,718 was slapped under section 59(1) of the Act (extending up to 10% of the estimated cost of the real estate project) and ₹18,06,359 invoking section 61 of the Act which prescribes the maximum penalty extending upto 5% of the estimated cost. The penalty is to be remitted within a period of 30 days of the order receipt by respondents. The RERA also barred the respondents from selling/leasing or allotting/booking any remaining flats/land in the present project, till the compliance of this order. Further, no withdrawal from the bank account of the projects to be made till payment as ordered is made to the complainant and penalty is deposited into the account of Authority or any alienation of any movable and immovable assets of this project till compliance of this order. The case pertains to complainants booking residential flats as per sale agreement with the land owners under development agreement-cum-Power of Attorney in 2014 with one Srinivasan, Proprietor of M/s Vaishali Constructions. As per the agreement, the project was to be completed and handed over to the complainants on or before end of 2017. Midway into the project, a registered sale deed was executed conveying the undivided share of land to each of the complainants through their promoter and power of attorney agent M/s. Vaishali Constructions. It was only after RERA took force that it came to light that Mr. Srinivasan had deviated from the sanctioned plan and that a revised plan awaited approval of the Planning Authority before registration of the project under RERA. In a twist to the case, Mr. Srinivasan, died in 2019 leaving behind his wife and daughter as legal heirs. After construction halted and timelines were violated by promoters, the complainants opted to withdraw from the project and sought refund of entire amount with compensation. However, the legal heirs disowned any liability to complete the construction or refund the amount paid, and sought to be discharged from the enquiry and absolved from any liability. The respondents contended that they do not fit the definition of the term Promoter, or construed as “the person who sells the plot or Apartment” as mentioned in the Act. They claimed that the Development Agreement -cum -Power of Attorney Deed is one on a principal-to-principal basis and not a Partnership Agreement or a Joint Venture Agreement. The said Agreement is not a Profit Sharing Agreement between them and the Promoter/Builder. The respondents, as land owners, had granted only development rights to the builder who had agreed to construct at his own cost and hand over 10 apartments to respondents. Only the builder who had been authorised to construct at his own cost and sell 18 apartments out of the total 28 apartments, was entitled to the entire profit from the project. However, RERA order noted that the failure of the respondents to hand over possession amounts to contravention of the provisions of the RERA Act, 2016. Having paid a substantial amount of the consideration price to the respondents and interest amount to the financial institutions, the purchaser is unable to obtain possession of that flat as the same has not been completed even after such a long period which is the subject matter of present case. While citing RERA orders in States such as Maharashtra and Karnataka, Mr. Arun ruled that under Sub Section “zk” of Section 2 of RERA where the person who constructs or converts a building into apartments or develops a plot for sale and the person who sells apartments or plots are different person, both of them shall be deemed to be the promoters and shall be jointly liable as such for the functions and responsibilities specified under this Act or the rules and regulations made thereunder. As to whether the landowner is a promoter, the Authority ruled in the affirmative referencing the term “causes to be constructed” in the definition of a promoter that brings the landowner within the ambit of definition, the RERA order said.

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Printable version | May 11, 2022 1:33:13 am | https://www.thehindu.com/news/cities/puducherry/in-significant-ruling-rera-orders-compensation-to-four-home-buyers/article65401405.ece