Summary of MahaRERA ruling in case of Suresh V Swamy v/s L&T Limited

Suresh V Swamy v/s Larsen & Turbo Limited (MahaRERA, Mumbai) 

Recently in the case of Suresh V Swamy v/s Larsen and Turbo Limited, the Maharashtra Real Estate Regulatory Authority (MahaRERA) has given its judgment which has clarified certain questions of law which were in debate since long. In this article, we have made an attempt to summarize the key questions answered by MahaRERA through it judgment.

Background of the case:

The customer has filed complaint before the authority against the promoter for getting interest on his investment on promoter’s failure to hand over the possession of his booked flat No’ 301, Tower T8 of promoter’s registered project Emerald Isle situated at village Tungwa, Taluka Kurla on agreed date, September 2017. The project has received occupancy certificate in December 2018 and the proposed revised date of completion of Project was 31 December 2018.

Questions answered by the MahaRERA authority

1. Jurisdiction of the Real Estate Regulatory Authority (RERA) is co-extensive with the registration of the Project?

It has been held that, the RERA authority is having jurisdiction over the project even though the project has received Occupancy Certificate. Because, the registration granted under Section 5(3) of RERA shall be valid for a period declared by the promoter under sub-clause (C) of clause (1) of sub-section (2) of section 4 of RERA for completion of the project or phase thereof, as the case may be.

This provision therefore does not show that on the receipt of the occupancy certificate the registration of the project shall lapse.

2. Even if it is taken for granted that registration of the project lapses on the completion of the project, the issue involved is whether the Authority loses its jurisdiction on completion of the project or not?

The authority has answered this question as negative for the following reasons:

a) Section 7 of the Act provides for cancellation/revocation of the registration of the project. However, section 8 thereof casts obligation on the Authority to carry out remaining development work on lapse or revocation of registration of project.

b) Section 14(3) of the Act provides that in case of any structural defect or any other defect in workmanship, quality or provision of services or any other obligations of the promoter as per the agreement for sale relating to such development is brought to the notice of the promoter within five years from the date of handing over the possession, the promoter is duty bound to rectify such defects without further charge within 30 days. In the event of promoter’s failure to rectify such defects within such time, the aggrieved allottees shall be entitled to receive appropriate compensation in the manner as provided under the Act.

c) Section 17 of the Act requires the promoter to execute a registered conveyance deed in favour of the allottee of the apartment and register the conveyance deed in favour of the society regarding undivided proportionate title in the common areas within three months from the issuance of the occupancy certificate. The promoter is duty bound to hand over documents, plans to society of the allottees within 30 days from obtaining the occupancy certificate

d) Section 33 of the Act provides that it is the function of the Authority to ensure the compliance cast upon the promoter, allottee or real estate agent under the Act, Rules and Regulations made The Real Estate Regulatory Authority while performing its role as regulator has the duty to see that the promoter discharges the duties imposed by the Act and if he fails then the Authority has the jurisdiction to rectify the error.

e) Section 31 of the Act which provides that any aggrieved person can file a complaint with the Authority or the Adjudicating Officer against any Promoter/ allottee or real estate agent if they violate or contravene any provision of RERA or Rules or Regulations framed thereunder. Therefore, if the cause of action arises which gives right in favour of the aggrieved person and creates obligation or liability on promoter, allottee or real estate agent as per the provisions of the Act, the Authority retains its jurisdiction because section 79 of the Act bars the jurisdiction of Civil Court from entertaining any suit or proceedings in respect of any matter which the Authority or the Adjudicating Officer or the Appellate Tribunal is empowered by or under the Act to determine.

Therefore, it has been held that the jurisdiction of the Authority is not lost only because of the receipt of the occupancy certificate or on the completion of the project or when the possession is offered

3. Provisions of RERA applied to the agreements entered under the MOFA?

The Hon,ble Bombay High Court in the case of Neelkamal Realtors Suburban Pvt. Ltd. v/s Union of India’s judgment 2017 KC online Bom 9302 has observed that – ” Under provisions of section 18, the delay in handing over the possession would be counted from the date mentioned in the agreement for sale entered into by the Promoter and the allottee prior to its registration under RERA. The RERA does not contemplate the re-writing of the contract.”

Basis the aforesaid observation, the authority has held that the provisions of RERA are applicable to the agreements for sale though they have been entered into prior to the registration of project under RERA.

The Hon’ble Bombay High Court in aforesaid case has also dealt with section3,6,8 & 18 of RERA and they have recorded that these provisions are to some extent retroactive or quasi retroactive and the parliament has power to legislate even such provisions

4. Whether arbitration clause bars the jurisdiction of the authority?

It has been held by the Apex court in its judgment HDFC Bank Ltd v/s Satpal Singh Baxi MANU/DE/5308/2012 and Hemangi Enterprise v/s Kamajeet Singh Ahluwaliya 2017 STPL 13227 that particular enactment creates special rights and obligations and gives special power to the Tribunal which are not in Civil Court such as tribunal constituted under Rent Control Act and the Industrial Disputes Act, the dispute arising under the said enactments cannot be arbitral otherwise other disputes are arbitral.

RERA established under Section 20 of the Act has special powers under Section 31 of the Act to adjudicate the dispute between the aggrieved person on one hand and the promoter, allottee, real estate agent on the other for violation or contravention of the provisions of RERA, Rules and Regulations made thereunder. This case arises out of Section 18 of the Act for which a separate special forum has been provided by RERA and hence, the jurisdiction lies with the Authority and it cannot be delegated to the Arbitrator despite the provisions°, the Arbitration and Conciliation Act and the Arbitration Clause of the agreement.

5. Section 18 of the Act is mandatory or optional?

The allottee gets option either to continue i n the project and claim interest on his investment till getting the possession or withdraw from it. Section 18 of the Act, provides that when the 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 word ‘shall’ indicates that this provision is mandatory and it is the absolute right of the allottee which accrues on account of promoter’s fa lure either to complete the apartment or to give its possession in accordance with the terms of the agreement for sale or on the date specified therein for completion of it. This right cannot be denied to the allottee by contending that the interest of the promoter would be prejudiced. Therefore, section 18 is mandatory.

6. Builder is liable to pay interest under Section 18 of RERA even though they have revised date of completion on M ahaRERA portal?

Under the provisions of RERA, the promoter is given a facility to revise the date of completion of project and declare the same under section 4 of the Act. The Act does not contemplate re-writing of contract between the flat purchaser and promoter. The promoter has revised the date of completion of the project while registering the project unilaterally without the consent of the allottees The promoter i s therefore, bound by the contractual obligation to hand over the possession of the f I at on agreed date and not by the declared date. Accordingly, the customer is entitled to get interest on his investment at prescribed rate on promoter’s’ failure to hand over the possession of the flats on the agreed date.