U.P. RERA recently passed a detailed and exhaustive order against Hebe Infrastructure Pvt. Ltd. (Mahagun Mantra 1 & 2) bringing major relief to homebuyers who are forced to take possession without valid Occupancy Certificates. Further, aspects like payment of delay penalty compensation to the allottee and non-payment of "Pre-EMIs" by the developer under the Subvention Plan were also taken into consideration and were later decided in favor of the allottee.
The precise case of the Complainant (Allottee) was regarding the delayed possession of the allotted unit and the non-payment of delay penalty compensation thereupon. Further, the Complainant (Allottee) also complained about the fact that the developer had defaulted in the payment of Pre-EMIs under the Subvention Plan.
Through the Order dated 01.08.2022 passed by UP RERA following three main issues were considered. –
Whether the agreements executed prior to the existence of RERA fall within its purview?
Whether the project of the developer got delayed due to ‘Force Majeure Events'?
Whether the Complainants should be paid Delay Interest Penalty for the delayed project?
While deciding on the First Issue, RERA cited the recent judgment of M/s. Newtech Promoters and Developers Pvt. Ltd. v. State of U.P. and others [1] and held that all "ongoing projects" which commenced prior to the Act and for which the completion certificate had not been issued, come under the ambit of the Act.
Regarding the Second Issue, it was contended by the Developer that the project got delayed due to several 'Force Majure Events' which were out of their control such as stoppage of work due to Supreme Court orders, Demonitisation Policy, and COVID-19 pandemic. RERA observed that Supreme Court had in the case of M.C. Mehta v. Union of India [2] had directed for stoppage of construction activities in Delhi and NCR region for a period of about 68 days. Hence, the Developer is liable to get a relaxation of 68 days in the time period of completion of the project. Further, the COVID-19 period of six months between 25.03.2020 and 25.09.2020 was considered a "Force-Majure Event".
Regarding the Third Issue, it was the Complainant’s case that since he has not been given possession of the allotted unit within the time period mentioned in the Builder Buyer Agreement, the Developer is liable to pay the Delay Interest Penalty until possession of the allotted unit is handed over.
Further, the Complainants placed on record their Builder-Buyer Agreements according to which it was clear that the project has been delayed, and the situation warrants that delay interest penalty should be paid to the Complainants from the date of allotment till the date when either the O.C/C.C. is obtained by the Respondent builder, or, the possession is given to them, whichever happens later.
As far as the rate of interest is concerned, the learned Authority referred to Real Estate (Regulatory and Development)(Agreement for Sale/Lease) Rules, 2018 notified by the State Government under the Real Estate (Regulatory and Development) Act, 2016. According to Clause 9.2(i) of the said Rules, consequence of event of default by the promoter has been laid down by virtue of which an Allottee is entitled to terminate the agreement in which case the promotor will have to refund the entire amount of money paid by the Allottee towards the purchase of the apartment along with interest at the rate equal to MCLR (Marginal Cost of Lending Rate) on home loan of State Bank of India + 1% within 45 days of receiving the termination notice.
Further, the question as to till what date the interest is to be given was decided on the basis of Civil Appeal No. 6649-50/2018 Supertech Ltd. V Rajni Goyal according to which the interest is to be paid up to the date till the O.C./C.C. is obtained, or, the possession is given, whichever comes later. Thus, the developer was held liable to pay the delay interest penalty from the date of default given in the BBA till the date when O.C./C.C. is obtained or the possession is given, whichever comes later.
Thus, the order can be summarised as follows-
The Developer was directed to complete all the facilities related to allotted unit as mentioned in the BBA and deliver its possession to the complainant latest by 31st December 2022 along with O.C./C.C.
The Developer shall be liable to pay the delay interest penalty on the consideration amount deposited by the Complainant at the rate of MCLR + 1% from the date of default given in the BBA till the date when O.C./C.C. is obtained or the possession is given, whichever comes later. This amount shall be adjusted in the final demand, if any, to paid by the allottee, otherwise, if there are no such dues left, the same shall be refunded back to the allottee.
The period of six months, i.e., from 25.03.2020 to 25.09.2020 shall be excluded for the purpose of calculating the delay interest penalty.
The Developer has to adjust any such amount in the final demand to be paid by the Complaintant which has to be paid/reimbursed by them as EMIs/Pre-EMIs in accordance with any Agreement/MOU entered with Bank (Subventaion Scheme)
The Developer cannot demand any other charges from the allottees while handing over the possession other than those mentioned in the Builder Buyer Agreement.
Any violation of the said order shall be punishable under the provisions of Section 63 of the RERA Act, 2016.
The complaints on behalf of Mr. Tinu Singh in the said order was filed and argued by S&D Legal Associates in association with its Partners and Associates based in Delhi/NCR.
[1] 2021 SCC Online SC 1044.
[2] Civil Appeal No. 13029/1985.
Read Order: