Sachin Tomar and Ors vs Ensaara Metropark Luxora Infrastructure Pvt, Ltd.

This article attempts to discuss the issues regarding applicability of Section 18 of RERA in absence of Agreement to sale.

Issues:

1. Whether Section 18 of RERA will operate in the absence of written agreement for sale?

2. Whether, the complainant allotee are entitled for refund?

Provisions:

Section 18 Return of amount and compensation

18. (1) If the promoter fails to complete or is unable to give possession of an apartment, plot or building,

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

(b) 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.

Fact of the Case:

In the present case the allotee booked the flat No. A-302 in the project called ‘ENSAARA MEETROPARK PHASE I’ located at Besa-pipla Road, Mouza- pipla, Tehsil and District _ Nagpur. Promoter issued the allotment letter in confirmation of the said booking and as per clause of the said allotment letter the promoter shall give the possession by 31st March,2017 or a date up to 3 months after.

Due to delay in possession the allotee cancelled the unit and request the promoter to refund the amount. however, promoter failed to refund the amount therefore the complaint before MahaRERA Authority was filed by the allotee. The allottee asked the relief of refund of Rs.5.30 Lacs plus interest.

In the said complaint the MahaRERA held that that” ..... if the Complainants are willing to continue in the said project, are directed to execute the agreement for sale as per the provisions of section 13 of the Real Estate (Regulation and Development) Act 2016 and the rules and regulations made thereunder within 30 days from the date of this Order. The Respondent shall handover possession of the said apartment, with Occupancy Certificate, to the Complainants before the period ending December 31st, 2019. Consequently the matter is hereby disposed of.

The said order of MahaRERA Authority challenged by the allotee by filing an appeal before the MahaRERA Appellate Tribunal on the ground that the allotee is entitled to get refund under section 18 of RERA , the promoter has already accepted the request of the allottee to exit from project, MahaRERA did not considered the pleading of complaint, the allotment letter issued by promoter itself and is couched in such a fashion that it incorporates all requisite elements of an agreement, promoter has unilaterally extended the possession delivery Date, order passed by the MahaRERA is neither specific nor clear as to whether the reliefs sought therein are granted or rejected.

In support of his contention, the allotee relied upon the judgement passed by The Hon’ble Apex Court in the matter of Imperia Structure Ltd. -vs- Anil patani [2020 SCC online SC894], judgement of the Hon’ble Bombay High Court in the case of Neelkamal Realtors Suburban pvt. Ltd, -vs- Union of India & Ors.[(2017) SCC Online Bom 9302, The decision of Hon’ble Bombay High Court has observed in G. Swaminathan _vs_ Shivram Co-operative Housing Society and Ors. 1983(2) Bom CR 548 that registration of agreement for sale is not condition precedent to seek remedy under Section 8 of MOFA and under Section 18 of RERA.

The promoter in his submission stated that the complainant in the present case is not an allotee, delay, in the project execution is not attributable to promoter and the same is due to delay in getting various government permissions, promoter has not given any definitive date of possession, allotee have not complied with the terms of the allotment letter, therefore, they have no liberty to cancel allotment letter, document executed between the parties ought not be termed as an agreement and bind a party.

While deciding the appeal the MahaRERA Appellate tribunal observed that as per the set ed positions of law as decided by the Hon’ble Bombay High Court in the matter of Neelkamal Realtors Suburban Pvt Ltd & Anr. vs. Union of India & Ors. (supra), provisions of the RERA are squarely applicable in the instant case. Accordingly, appellants and respondent are Allottees and promoter respectively under the provisions of the Act. Consequently, the said sale transaction including the Allotment letter dated 25th November 2015 in the instant case ls also entirely covered under the Act and are within the purview of the Act of 2016, even though the allotment letter has been issued during the MOFA regime. Moreover, in case of conflict/s, provisions of the said Act of 2016 will prevail as per Section 88 of the Act.

Further, in respect of issue regarding applicability of Section 18 in absence of agreement for sale, the MahaRERA Appellate Tribunal has relied upon the judgement in the matter of Jyoti K, Narang and Anr. vs. CCI Projects Pvt. Ltd. in appeal No. AT 10841, wherein, it has been authoritatively held that section 18 is applicable even in the absence of an agreement for sale.

Further, The Hon’ble Bombay High Court in its judgement dated 30 August 2021 in the case of The Bombay Dyeing & Manufacturing Company Limited Vs, Ashok Narang & Ors. held in para 41 that,

“41. Section 2(c) defines an agreement for sale entered into between the promoter and the allottee. It is necessary to note that Section 2(c) does not say that an agreement has to be in writing entered between the promoter and the allottee.......”

“.... Thus, there is a considerable force ln the argument on behalf of the respondents that Section 18 read with Section 2(c) of the Act of 2016, which defines an agreement for sale in terms do not provide for the requirement of a written agreement of sale...... “

“........Had the legislature intended the agreement referred to in Section 18 also to be in writing/ nothing prevented it from doing so.”

Further, the MahaRERA Appellate Tribunal observed that the provision of Section 18 contains the word “(a) in accordance with the terms of the agreement for sale or as the case may be duly completed by the date specified therein”.

Therefore, this section also provides eligibility for other documents too as mentioned in the phrase” or as the case may be. Accordingly, agreement for sale need not be in writing and any other document containing requisite contents of the agreement will suffice.

On the basis of above observation, the MahaRERA Appellate Tribunal held that written agreement for sale is not prerequisite for the allottee’s right to accrue under section 18 of the Act.

In respect of the issue regarding maintainability of the appeal, the promoter submitted that allotee during the hearing in complaint proceeding before MahaRERA to continue with the project and to sign and execute agreement for sale. Therefore, the impugned order is a consent order passed by MahaRERA, however, the MahaRERA Appellate Tribunal observed that complainants have not given any explicit expressed consents to continue in the project. As such, perusal of record more particularly the email exchanges undertaken between the parties clearly reveal that complainants have been constantly/consistently pursuing for the refund of complete paid.

Therefore, the impugned order is not a consent order and complainants have not given expressed consents in writing to continue in the project.

Further, in respect of the issue regarding refund of the amount to the allotee, the Hon’ble Appellate Tribunal relied upon the judgement of the Hon’ble Supreme court in the matter of M/s, Newtech Promoters and Developers Pvt. Ltd vs. State of Uttar Pradesh & Ors, [2021 SCC Online 1044] dated 11th November 2021 wherein it is held that “Allottees right under the Act to seek refund/ claim interest for delay is unconditional & absolute, regardless of unforeseen events or stay orders of the Court/Tribunal”.

In view of the above judgment the MahaRERA Appellate Tribunal held that impugned order dated 21st March 2019 passed by MahaRERA is not sustainable, suffers from infirmities and warrants interference in this appeal as determined herein above. Complainants are entitled for refund of the paid amounts of Rs. 5,30,331/- with interest and loan processing fees of Rs 11,000/-.

Conclusion:

Written agreement for sale is not prerequisite for the allottee’s right to accrue under section 18 of the Act. Accordingly, agreement for sale need not be in writing and any other document containing requisite contents of the agreement will suffice.