In a recent ruling by the Maharashtra Real Estate Appellate Tribunal (MahaRERA), the tribunal denied relief for delayed possession to an appellant due to the absence of monetary consideration. This case, Smt. Durgavati w/o Sabhajeet Yadav vs. Jangid Homes Pvt. Ltd, highlights the complexities of real estate transactions and the specific conditions under which buyers can seek compensation for delays. Here, we delve into the background, legal issues, and implications of this judgment.
Background:
In 1972, the landowner leased the property to the appellant, Smt. Durgavati. She subsequently constructed stable premises, a residential house, a go-down, and a commercial premises measuring approximately 250 sq. ft. Through a registered deed of conveyance dated 30th October 2007, they transferred and conveyed all their rights, title, and interest in the aforementioned land, along with the stable premises, residential house, go-down, and commercial premises, to the promoters for a consideration of Rs. 1,11,00,000/-.
Subsequently, both parties executed a registered agreement for sale on 18th July 2009. According to this agreement, the promoters agreed to sell the commercial shop, measuring 250 sq. ft. (carpet area), in the rehabilitation building free of cost, as per the obligations outlined in the deed of conveyance dated 30th October 2007. Through a deed of confirmation dated 5th March 2011 and an agreement for sale, the promoters committed to handing over possession within 24 months after obtaining the commencement certificate.
The promoters initiated the redevelopment of the property, “Jangid Annex” in Mumbai. As per the agreement for sale, they were obligated to deliver possession of the unit within 24 months after obtaining the commencement certificate, i.e., by 21st October 2012. However, the promoters failed to fulfill this commitment. Upon inquiry, the Appellant discovered through several communications with the Building Proposal Department that a stop work notice had been issued to the promoters due to unauthorized construction of an additional basement in the redevelopment project.
As the construction of the project was ongoing, the promoters registered the project with MahaRERA and declared the date of completion as 31.12.2018. Since the promoters didn’t handover possession of the unit even after passing the date, the complaint was filed with RERA Authorities claiming compensation for a sum of Rs.1 lakh p.m. from 2012 till the date of handover.
During the trial, the promoters argued that the Appellants are lessees of the land and that the disputed property had been sold for redevelopment, resulting in numerous litigations causing delays. Furthermore, they contended that the complainants had not made any monetary payment for the subject unit, as it was allotted to them in exchange for the assignment of development rights related to the land, as per the conveyance deed. Therefore, they argued that the complaint was not maintainable.
The learned Authority passed an order that the complainant is seeking specific performance of the conveyance deed dated 30.10.2007 hence the matter is a civil dispute. The MahaRERA has no jurisdiction to try and entertain disputes of this nature. Accordingly, the learned Authority has dismissed the complaint for want of jurisdiction. Aggrieved by the order, appeal was preferred.
Issues:
- Whether complainants are entitled to relief as sought in the complaint?
- Whether the impugned order call for interference in this appeal?
Legal Provisions:
Sec.2 (d) “allottee” in relation to a real estate project, means the person to whom a plot, apartment or building, as the case may be, has been allotted, sold (whether as freehold or leasehold) or otherwise transferred by the promoter, and includes the person who subsequently acquires the said allotment through sale, transfer or otherwise but does not include a person to whom such plot, apartment or building, as the case may be, is given on rent”
Sec. 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.
Analysis:
Firstly, it’s necessary to analyze whether the Appellant falls within the definition of “Allottee.” According to Section 2(d) of the RERA Act, 2016, an allottee is interpreted as the person to whom a plot, apartment, or building has been allotted, sold, or otherwise transferred by the promoter. If the promoter transfers the unit to a person by any means other than allotment, that person also qualifies as an “Allottee.”
While the definition does not explicitly mention “consideration,” it should not be construed to imply that the owner has not paid any consideration to the promoter for the unit’s allotment. In accordance with the deed of conveyance, the land was sold to the promoters for development, and in return, the promoters agreed to allot the unit.
In this case, the consideration under the agreement for sale takes the form of satisfaction of the allottee’s share in the redevelopment project rather than monetary payment. It exemplifies the allocation and sale of constructed properties along with land, with the consideration being the fulfillment of the Appellant’s claim in the relevant project. Therefore, the absence of monetary consideration does not exclude the Appellant from the definition of “Allottee.”
The Appellant further argued that the Project is a Real Estate Project (REP), developed by the respondent as the “Promoter,” with the Appellant as the “Allottee,” and the project is registered under RERA. Therefore, the Allottees are eligible for relief under Section 18 of the Real Estate (Regulation and Development) Act, 2016.
Additionally, it was contended that the Appellant did not seek specific performance for the breach of conveyance but rather compensation for the delayed possession.
Secondly, the agreement of sale stands as the fundamental document for determining any relief under Section 18 of the RERA. In this instance, interest becomes payable until the date of possession if the promoter fails to deliver the unit in accordance with the terms stipulated in the agreement for sale or by any specified date therein. Section 18 of the RERA Act, 2016 specifies that if the promoter fails to complete or is unable to provide possession of an apartment, plot, or building as per the agreement for sale or by the specified date due to discontinuation of business as a developer, whether due to suspension or revocation of registration under the Act or any other reason, the allottee or homebuyer has an absolute right to seek a refund of the amount along with interest at a rate prescribed for such cases. If the allottee chooses not to withdraw from the project, they are entitled to receive interest from the promoter for every delay in handing over possession of the unit at a rate as prescribed.
Conclusion:
The Appellant sought interest due to a delay in obtaining possession. It was apparent from the available records that no payment was made to the promoter for the unit in question; it was allotted free of charge. Despite qualifying as an allottee, the Appellant was deemed ineligible for relief under Section 18 of the RERA due to the consideration clause in the agreement, which stated a value of NIL. Consequently, the REAT determined that the Appellant was not entitled to interest for the delayed possession. Citing a Supreme Court ruling, the REAT stated that the appellants had the option to pursue damages through the civil court or seek relief as consumers under the Consumer Protection Act by approaching the Forum against the builder as a service provider.
Case Reference: Smt. Durgavati w/o Sabhajeet Yadav Vs. Jangid Homes Pvt. Ltd (Maharashtra Real Estate Appellate Tribunal), Appeal no. AT006000000010746 of 2018, Date of Judgment: 03.05.2024
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