Real Estate (Regulation and Development) Act, 2016 popularly known as RERA Act was enacted with an intent of bringing efficiency and transparency in real estate sector and to protect the interest of buyers in the real estate sector. Real Estate sector was running on the whims and fancies of the builders, and they often failed to deliver the possession of apartment units to the homebuyers even after a prolonged delay on their account. Prior to enactment of RERA Act, redressal mechanisms were available, but they were not efficient as it used to take awfully long time. One of the major objectives of enactment of RERA Act was to provide for a speedy adjudicating mechanism for expediate dispute redressal.
Section 18 of RERA Act bounds on the Builder to return the money of the homebuyer along with delay penalty and compensation in case there is default in delivering the timely possession of the apartment unit. The RERA Act also bounds the Builder to compensate the homebuyer in case it fails to discharge any other obligations mentioned in the Act or the rules and regulations made thereunder.
Promoter Unable to Deliver Possession:
According to Section 18 (1) of RERA Act, the homebuyer is entitled to get refund of whole of the money invested by him in Builder’s project along with the interest and including compensation if the Builder:
- Fails to deliver possession in accordance with terms and conditions laid down in the Agreement to Sale (often called the Builder Buyer Agreement or BBA).
- Is unable to complete the Housing Project in due time specified in the BBA.
- Fails to deliver possession on account of discontinuance his business due to revocation of his project under this act or for any other reasons.
Section 18 (1) provides two kinds of rights to the homebuyers i.e. Right to get Refund of their money along with Interest and Right to get Compensation.
Right to get Refund under Section 18 RERA
The right to seek refund provided to the homebuyer by the RERA Act is an unqualified and absolute right. That means it is up to the homebuyer if he wishes to stay in the Project or wants the money back. The same has been established by the Hon’ble Supreme Court in Imperia Structures Ltd. Vs. Anil Patni and Another where it was held that Section 18 confers an unqualified right upon an allottee to get refund of the amount deposited with the promoter and interest at the prescribed rate, if the promoter fails to complete or is unable to give possession of an apartment as per the date specified in the home buyer’s agreement.
Earlier while deciding upon the refund cases the RERA authorities of different states used to link the same with the stage of construction. These authorities would normally not pass a refund order in case the Builder had received occupancy certificate or when the construction was at an advance stage. But with the supreme court’s ruling coming it has been a settled that the Right of Allottee to seek refund is an unqualified right. It has been very clear that this right of allotee is independent of any contingency and stipulations and the homebuyers can seek refund if any of the conditions laid down in the Act are fulfilled.
The same has been reiterated by the Hon’ble Supreme Court in the case of Newtech Promoters and Developers Pvt. Ltd. Vs. State of U.P. where the hon’ble Court noted that the legislative intention and mandate is clear that Section 18(1) is an indefeasible right of the allottee to get a return of the amount on demand, if the promoter is unable to handover possession in terms of the agreement for sale or failed to complete the project by the date specified and the justification which the promotor wants to tender as his defence as to why the withdrawal of the amount under the scheme of the Act may not be justified appears to be insignificant and the regulatory authority with summary nature of scrutiny of undisputed facts may determine the refund of the amount which the allottee has deposited, while seeking withdrawal from the project, with interest, that too has been prescribed under the Act.
It is further provided by the RERA Act that that where the homebuyers do not intend to withdraw from the project, they shall be paid interest by the Builder for every month of delay till the time of possession. The interest for delay in possession of flat cannot be denied on the fact that there is no registered agreement to sell. In a recent order dated 17.06.2022, Maharashtra Real Estate Appellate Tribunal observed that merely because there is no registered agreement between a developer and home buyer, interest relief for delayed possession under section 18 cannot be denied. In the absence of a formal agreement, any other document such as an allotment letter, brochure, template or email communication mentioning the date of possession can be considered to work out the delay in possession.
Right to get Compensation under Section 18 RERA
Apart from non-delivery of the possession by the Builder on the account of conditions mentioned above, the buyer is also entitled to seek compensation under Section 18(2) and 18(3) of the act. The promoter is liable to pay compensation to the buyer if:
- There is a loss caused to the buyer due to defective title of land.
- Promoter fails to discharge any obligations under RERA Act, or the Rules and Regulations made thereunder.
- Promoter fails to comply with terms and conditions of the Agreement to Sell.
The right to decide the compensation is vested in the Adjudicating Officer appointed by the RERA Authority. If a homebuyer is seeking compensation under this section, he/she has to move file a complaint separately before the adjudicating officer. The RERA Authority does not have the jurisdiction over such matters and cannot decide on the matters of compensation.
The Hon’ble Supreme Court has cleared doubts over the ambiguity about the Powers of Authority and Adjudicating Officer for granting Refund and Compensation and in Newtech Promoters and Developers Pvt. Ltd. Vs. State of U.P. (supra) the Hon’ble court noted that when it comes to refund of the amount, and interest on the refund amount, or directing payment of interest for delayed delivery of possession, or penalty and interest thereon, it is the regulatory authority which has the power to examine and determine the outcome of a complaint. At the same time, when it comes to a question of seeking the relief of adjudging compensation and interest thereon, the adjudicating officer exclusively has the power to determine the compensation.
Conclusion:
The scheme of the Section 18 of RERA Act is to return the allottee, his life savings with interest as computed by the authority. It is held by the judiciary that such a right of seeking refund vested in the buyer by the provisions of Section 18 is absolute and unqualified. Moreover, it is left at the will of the homebuyer that he could either file a complaint for the refund with interest or a complaint for seeking compensation. The provisions mentioned under section 18 act have proved to be very efficacious in protecting the interest of buyers and may buyers have been able to claim back from promoters their hard-earned money along with the specified interest.
Writer’s Opinion:
RERA is a faster and efficacious remedy, and the homebuyers can generally get the refund of their money along with interest within 2-3 years from filing the RERA Complaint, which is faster than any other remedy available. Therefore, in case of builder-buyer disputes where the Builder has failed to deliver the timely possession of flat it is advisable to file a RERA Complaint.