Rajasthan RERA Grants Compensation for Delayed Possession Despite Builder’s Enforcement Directorate Challenge
Case – Vasudev Takwani & another Versus M/s Riddhi Siddhi Infra Projects Pvt. (Complaint No.RAJ-RERA-C-2023-6065)
The Rajasthan Real Estate Regulatory Authority (RERA), presided over by Justice RS Kulhari as the Adjudicating Officer, recently issued a significant ruling, directing a builder to compensate a homebuyer for a delayed possession, despite the builder’s assertion that the delay was caused by an Enforcement Directorate (ED) investigation.
Background Facts
In the case of Vasudev Takwani & another Versus M/s Riddhi Siddhi Infra Projects Pvt.1, the homebuyer had booked a flat in the “SKY 25” project for a total sale consideration of Rs. 15,76,251/-. An agreement for sale was executed between the complainant and the builder on 27/05/2013, stipulating that the flat would be handed over by the end of December 2014. However, despite the homebuyer paying Rs. 15,06,964/- towards the total consideration, the builder failed to deliver possession within the stipulated timeframe.
Legal Proceedings:
Aggrieved by the delay, the homebuyer filed a complaint (No. 2019-3326) before the Rajasthan RERA. In its order dated 30/11/2022, the Authority directed the builder to hand over possession of the allotted flat to the homebuyer and register the sale deed. Additionally, the homebuyer sought compensation of Rs. 20 Lacs for the delay along with litigation costs.
Contentions of Both Parties:
Complainant: The complainant argued that despite paying over 90% of the sale consideration, possession was not granted within the stipulated timeframe. The agreed possession date was 1/12/2014, based on the JDA-approved map. The complainant asserted that they had been paying interest on the amount paid to the respondent and could have utilized or rented out the flat if possession had been timely. Therefore, the complainant sought compensation of Rs. 20 lakhs for the delay along with litigation costs.
Builder (Respondent):
The respondent contended that the delay was due to an Enforcement Directorate investigation and other issues, despite efforts to expedite the project’s completion. The respondent claimed to have sent registered letters to the complainant on 10/10/2017 and 28/12/2017, urging them to take possession and register the sale deed. However, the complainant did not respond or tender the remaining dues, leading to the delay.
Authority Order:
The Rajasthan RERA held the builder accountable for violating Section 18 of the Real Estate Regulation and Development Act 2016, which mandates possession within the stipulated timeframe. Consequently, the Authority ordered the builder to compensate the homebuyer with Rs. 2,70,000/- for the delayed period and Rs. 50,000 for mental agony and litigation costs. The amount was to be paid within 45 days, failing which interest would accrue at 6% per annum. Despite the builder’s claims regarding the Enforcement Directorate investigation causing the delay, the Authority dismissed this contention, noting that the investigation occurred outside the period stipulated in the agreement for sale.
Legal Principle:
The ruling draws upon Section 18(1) of the Real Estate Regulation and Development Act 2016, emphasizing the obligation of the promoter to provide possession within the agreed timeframe. Furthermore, it underscores the provision for compensation to allottees in cases of delayed possession. The Authority referred to Section 18(1) of the Real Estate Regulation and Development Act 2016, which reads as follows:
18. Return of amount and compensation.
(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.
The Authority rejected the builder’s claim that the Enforcement Directorate investigation caused the delay. They pointed out that the investigation happened between 2015 and 2016, well outside the agreed-upon handover date of December 2014. The ruling is grounded in the principle that if a promoter fails to deliver possession on time, the allottee is entitled to compensation for the delay, as established in the case of M/s. Newtech
Promoters and Developers Pvt. Ltd. vs. State of U.P.2 This compensation is justified by considering the financial loss to the allottee, including potential returns on investment, and the wrongful advantage gained by the promoter.
Conclusion: The Rajasthan RERA’s ruling in the case of Vasudev Takwani & another Versus M/s Riddhi Siddhi Infra Projects Pvt. exemplifies the authority’s commitment to safeguarding homebuyers’ interests and ensuring accountability in real estate transactions. By upholding the obligation of builders to provide possession within agreed timeframes, despite external challenges like Enforcement Directorate investigations, the Authority sets a precedent for ensuring timely delivery of properties and just compensation for delays. This case underscores the importance of regulatory oversight in promoting transparency and fairness in the real estate sector.
1 Complaint No.RAJ-RERA-C-2023-6065
2 CIVIL APPEAL NO(S). 6745 – 6749 OF 2021 (Arising out of SLP(Civil) No(s). 3711-3715 OF 2021)
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