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Introduction:

The Real Estate (Regulation and Development) Act, 2016 came into operation on May 1st, 2016, with the goal of safeguarding the rights of buyers in the real estate market and establishing an adjudicating system for quick dispute resolution. It is an act to establish a framework that efficiently and transparently manages and handles concerns such as project delivery delays, property pricing, construction quality, title, etc. This article discusses the most common causes for bringing about litigation against promoters.

Reasons to bring about litigation 

1. Delay in possession by the Builder

2. No delivery at all 

3. Failure to deliver as promised 

4. Diversion of funds

5. non-disclosure of carpet area 

1. Delay in possession of the builder: 

Under the Real Estate (Regulation and Development) Act, 2016 (RERA), a buyer can register a complaint and send a legal notice to the builder for delay in possession, or they can move their case from a Consumer Dispute Redressal Commission (CDRC) to the State Real Estate Regulatory Authority. According to this Act, a builder must pay SBI MCLR + 2% interest on the property’s worth for delayed possession of units. Home purchasers who are dissatisfied with their purchases have the right to approach either the National Consumer Dispute Commission or their State Real Estate Regulatory Authority

Selecting the forum for dispute resolution causes hassle. The Real Estate (Regulation and Development) Act, 2016 (RERA) has made it easy for purchasers to submit a complaint while making it difficult for builders to deviate from the project’s delivery schedule.

2. No delivery at all: 

The Real Estate (Regulation and Development) Act, 2016 (RERA) is generally seen as pro-allottees. In the instance of restarting a delayed project, the Act permits the promoter to select a new time limit for completion at the time of registering the project with the Real Estate (Regulation and Development) Act, 2016 (RERA). Despite project delays, the promoters have adequate time to satisfy new obligations by paying substantially lower costs to the Buyers in the form of compensation for the prolonged term as per the contractual agreement with the Buyer.

On the buyer side, numerous other platforms have been formed to defend purchaser’s interests and offer them with a rigorous system via which they may express their concerns to the authorities.

Civil Remedy: Buyers can file Recovery of money suit under the Civil Procedure Code,1904.

Criminal Remedy: Buyers can file a criminal case under the Criminal Procedure Code, 1974.

3. Delivery not as promised: 

Builders frequently entice customers by making a slew of extravagant promises that they do not keep when it comes to handing over the keys. The buyer is forced to go from pillar to post in order to obtain delivery of their apartment, and when it is ultimately delivered, it lacks all of the amenities promised by the builder in the beginning, such as a clubhouse and a swimming pool.

According to section 10 of The Real Estate (Regulation and Development) Act, 2016(RERA), the real estate agent shall not make a false or misleading representation concerning the services. If he does so, he shall be penalized under Section 62 of the Act where he will be liable to a penalty of ten thousand rupees for every day till such default ends.

4. Diversion of funds: 

Builders have long been accused of diverting and abusing money earned from property bookings. There have also been several infamous examples when builders failed to deliver projects after collecting payments from consumers.

Because there were no rules governing the use of cash acquired from allottees, the real estate industry has been completely involved in the act of diversion of funds. As a result of the financial crisis, the bulk of real estate developments are being delayed.

5. Non-disclosure of carpet area: 

Another improvement brought about by the Real Estate (Regulation and Development) Act, 2016 (RERA) is the disclosure of carpet area to homebuyers by builders. Prior to the establishment of the act this was not a requirement for builders. Because of the Act, purchasers are more mindful of various factors, one of which is plainly carpet area. Builders may face significant difficulties if the exact carpet area is not disclosed.

Case Laws: 

1. Bindu R Jaisingh V/s Ekta Parksville Homes Pvt. Ltd 

The Complainant purchased an apartment in the Respondent’s project ‘Brooklyn Park Phase II’ in Virar, following which ownership was promised to be transferred by June 2017 but was refused. The Authority directed the parties to execute and register the sale agreement within 45 days of the date of this Order, with possession scheduled for June 2019. Furthermore, the Respondent was directed to hand over possession of the aforementioned flat to the Complainant by the end of June 2019, failing which the Respondent would be forced to pay the Complainant interest commencing July 1, 2019.

2. Mr. Pravin Kumar Gambhir Vs. M/s Greenbay Infrastructures Pvt. Ltd 

In this case the complainant who is the allottee filed a complaint requesting a return of the amount paid to date plus 24 percent interest due to the builders delay in possession. The authority ruled that the complainant may obtain ownership of the property after paying the remaining money to the respondent who is the promoter to do so within a month. Furthermore, if the complainant refuses to take ownership of the property, he is entitled to a return of the sum paid, less any interest, within 45 days of obtaining the order.

3. Deepak Vasant Kunjeer Vs. IDEB Grand Reality Pvt. Ltd. 

In this case, the complainant who is the allottee cancelled his allotment since the development was not going according to the agreed-upon dates, but the respondent did not reimburse his money as promised. The complainant further claimed that the respondent had already sold the flat to a third party. The court instructed the respondent to assign another unit to the complainant in the same project with the same per square foot carpet area rate and to negotiate a new agreement for sale within 45 days of the date of this ruling. Furthermore, the respondent must deliver possession of the said apartment to the complainant before the end of the month of December 2019, failing which the respondent must pay the complainant interest from January 1, 2020, until the actual date of possession, on the entire amount paid by the complainants to the respondent.

This blog is written by Brian Lobo, a student of St. Joseph’s College of Law.

References:     

[1] Ramesh Agrawal, causes of litigation under The Real Estate Regulation and Development Act, 2016(RERA), Tax guru, (18-07-2022; 2:30pm) https://taxguru.in/corporate-law/causes-litigation-rera.html

[2] Nidhi Verma, Legal Remedies for stalled projects, Rera filing, 18-07-2022; 3:00pm,

https://www.rerafiling.com/rera-article-detail.php/688/legal-remedies-for-stalled-projects.

[3] Shivendra Pratap Singh, Real estate agent made false promise: How to take legal action? , Kanoonirai ,(18-07-2022 ; 2:30pm ) , https://www.kanoonirai.com/real-estate-agent-made-false-promise-how-to-take-legal-action/#:~:text=False%20information%20or%20promise%20about,Section%2062%20of%20the%20Act.

[4] Bindu R Jaisingh V/s Ekta Parksville Homes Pvt. Ltd.(2018/MH/Centrik/44/MAHARERA)

[5] Mr. Pravin Kumar Gambhir Vs. M/s Greenbay Infrastructures Pvt. Ltd, (2018/UP/Centrik/18/UPRERA

[6] Deepak Vasant Kunjeer Vs. IDEB Grand Reality Pvt. Ltd.,(2017/MH/centrik/21/MAHARERA)

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Author Bio

Smriti Legal LLP is a sector focused law firm headquartered at Bengaluru with associated offices nationwide. The firm specializes in RERA litigation and legal advisory services under The Real Estate (Regulation and Development) Act, 2016 (www.smritilegal.com) Contact: +91 97400 12005 View Full Profile

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