Homebuyers put their hard-earned money into real estate ventures in the hopes of one day owning their ideal home. But when the builders fail to deliver possession of their flats even after a significant delay, their hopes are dashed. The Consumer Protection Act, of 2019, safeguards consumers' rights to relief and compensation for poor service and unfair trade practices against builders, however, redressals can take a long time. Thus, the Real Estate (Regulation and Development) Act, 2016 was passed by the parliament to protect and secure the investments made by home buyers and to provide quick relief to those who were experiencing a delay in receiving possession of their residential properties.
According to the Real Estate (Regulation and Development) Act, 2016, a real estate project must be registered with the Real Estate Regulatory Authority beforehand; as a result, a project cannot be promoted or advertised for sale without doing so.
What Is Delayed Possession?
Delayed possession refers to a delay in giving the home buyer ownership of the apartment within the agreed-upon time frame under the agreement. One of the most significant concerns in India's real estate market is the delayed possession of flats or plots to home buyers. Home buyers have frequently complained to courts and tribunals in recent years about promoters and developers delaying the ownership of their apartments. Home buyers are usually left defenceless and handicapped in such situations of delayed or non-possession of properties even after paying the full consideration in accordance with the provisions of the development agreement prior to 2016, as there was no specific regulation governing the real estate sector in India.
Nevertheless, the enactment of the Real Estate (Regulation and Development) Act, 2016 (“RERA”), and the judiciary's tough stance against such builders have helped shape the law and the legal ramifications relating to promoters' and builders' delayed possession of flats in India.
Any aggrieved person who believes that the RERA has been violated or contravened, including the Delay in Possession, may file a complaint with the Authority or the Adjudicating Officer. Refunds of cash and compensation are the two options available to buyers under the RERA in the event of a possession delay or any other infraction.
REAL ESTATE REGULATORY AUTHORITY (RERA)
Allottees are defined as someone to whom a plot, apartment, or building has been allotted, sold, or otherwise transferred by promoters. It doesn't include an individual to whom the property or apartment is given for rent.
According to Section 12 of the RERA, any person who makes an advance or a deposit based on information in the advertisement, prospectus, or on the basis of a model apartment, plot, or building and suffers any loss or damage as a result of such an incorrect or false statement shall be compensated by the promoter in the manner as provided by the RERA. However, if the person who was impacted by such an inaccurate or deceptive statement, plans to back out of the project, he will receive a full refund of his investment plus the required interest.
If an allottee decides to withdraw from the project, Section 18 of the RERA provides a refund of the money received by the promoter in relation to the apartment, plot, or building, along with the prescribed rate of interest and compensation as prescribed under the RERA in the event that the promoter is unable to give possession in accordance with the terms of the Agreement for sale or is not duly completed by the date specified therein, or due to the discontinuance of his business.
The complaints under the RERA can be filed for any claim amount but in the cases where the occupancy certificate has already been granted, a complaint cannot be filed. It allows the buyers to get the total refund of payment with interest or monthly interest till handing over of possession by the builder. The RERA clears out each case typically within 60 days and its court fees vary from Rs. 1,000 to Rs. 5,000 from state to state with the litigation costs within Rs. 25,000 to Rs. 75,000 (with execution).
The RERA provides for the filing of complaints with the authority or the adjudicating officer under Section 31:
More on Section 31:
(1) Any aggrieved person may file a complaint with the Authority or the adjudicating officer, as the case may be, for any violation or contravention of the provisions of this RERA or the rules and regulations made thereunder against any promoter allottee or real estate agent, as the case may be.
Explanation. — For the purpose of this sub-section “person” shall include the association of allottees or any voluntary consumer association registered under any law for the time being in force.
(2) The form, manner, and fees for filing a complaint under sub-section (1) shall be such as may be [prescribed].
Complaints can be filed against developers, builders, and agents with the regulatory authority or the adjudicating officer.
It is now a settled position in law that the allottee holds an unqualified right to seek a refund of the amount. The Supreme Court of India in the case of Newtech Promoters and Developers Pvt. Ltd. v. State of U.P. held that the allottee holds the right of refund on demand as an unconditional absolute right if the promoter fails to give possession of the unit within the time stipulated under the terms of the agreement regardless of unforeseen events or stay orders of the Court/Tribunal, provided that the allottee wishes to withdraw from the project. Prior to the enactment of RERA, the cases of the refund were contingent upon the stage of construction, and the refund was not given when the construction was at an advanced stage. Now, the unqualified right of the allottee to seek a refund is not dependent on any contingencies or stipulations. Thus, the unqualified right of the allottee to seek a refund is not dependent on any contingencies or stipulations.
Passed in 1986, Consumer Protection Act enables the buyers to file a complaint for ‘deficiency in service against the builder. Continuing from 1986, this act is successfully established with its Appellate Body District Forum State Consumer Dispute Resolution Commission (“SCDRC”) to National Consumer Dispute Resolution Commission (“NCDRC”) and NCDRC to Supreme Court. Under this act, the buyers can file complaints in the Dispute forum claiming up to Rs. 50 Lakh, while filing the complaint in SCDRC for Rs 50 lakh to Rs. 2 Crore and in NCDRC for more than Rs. 2 Crore. It enables the buyers to get a refund with interest or possession with delay compensation for mental harassment, litigation costs, etc.
The actions that must be taken in order to submit a complaint against the developer to the relevant consumer court are as follows:
Legal Notice: The first and most important step is to write a legal notice to the developer and request any available legal remedies, such as compensation for the delay.
The second stage is waiting a predetermined amount of time for the developer to respond.
Complaint Preparation: The third stage is to prepare a petition or complaint outlining all the relevant facts, supporting proof, etc. in the event that the response is unsatisfactory or there is no response at all.
Filing of Complaint: The next step is to go to the proper consumer court and submit a complaint or petition against the developer.
In the case of Laureate Buildwell Pvt. Ltd. v. Charanjeet Singh the Supreme Court has upheld the adverse findings and observations of the NCDRC against the builder to the effect where such builder has taken refuge against a National Green Tribunal (NGT) order to justify a delay in construction and therefore possession, equity cannot be claimed if the builder also continues to demand payment instalments from the allottee, including penal interest.
Rights of Home Buyers
Section 19 under Chapter 5 of the RERA lays down certain rights and duties of the home buyers or allottees which have been listed below:
1. RIGHT TO OBTAIN INFORMATION: The homebuyer has the right to information about the project, including sanctioned blueprints, layout plans, the RERA registration number, and specifications that the appropriate authority has approved.
2. RIGHT TO KNOW COMPLETION SCHEDULE: The home buyer has the legal right to be informed of the project's completion schedule, including any arrangements for water, sewage, electricity, and other facilities and services that are included in the terms and conditions of the selling agreement.
3. RIGHT TO CLAIM POSSESSION: The home buyer has the right to claim possession of the property including the common areas in case all the relevant formalities have been completed and necessary remuneration has been paid.
4. RIGHT TO CLAIM REFUND: If a builder violates the terms of the purchase agreement or is unable to transfer ownership of the property as agreed, the buyer has the right to file a complaint with the RERA and request a refund of the money paid, as well as interest and compensation from the developer. The developer may also be required to stop operating as a developer if his registration has been suspended or revoked. Developers will have one more opportunity to set a fair delivery deadline; if they fail to do so, they will be required to pay the necessary fines. If the buyer is dissatisfied with RERA's ruling, they may also submit a complaint with the Appellate Tribunal.
5. RIGHT TO HAVE DOCUMENTED: Following the developer's transfer of physical possession of the property, the home buyer has a right to all pertinent paperwork and designs, including those for shared spaces.
6. RIGHT IN CASE OF ANY DEFECTS: Within five years of taking possession, if there are any structural flaws or issues with the property's quality, the builder is required to make repairs within 30 days at no additional cost to the buyer.
Rights of Real Estate Developers
1. LICENSEE RIGHTS
The landowner grants the developer a "licence" to enter his property with full rights and authority to begin, continue, and finish the development as directed by the permission issued. This "licence" that the landowner has provided to the developer is in the nature of a personal licence, and the developer will under no circumstances assign his title, right, or interest to any other party. In a JDA, the word "licensee" must be used. The developer will thereafter be the sole owner of all rights held by a licensee. When there is a disagreement between the landowner and the developer, this becomes crucial.
2. DEVELOPMENT RIGHTS
Legally, the term "land" refers to both the full title to the land as well as the rights that come with it. In a Joint Development Agreement, the landowner gives the developer the right to develop a project on his property in exchange for a fee. In other words, the owner of the land grants a person (developer/builder) permission to build a structure on the land, and this permission is known as "development rights." These "development rights" can be easily swapped, sold, or transferred.
3. RIGHT TO SEEK APPROVALS
The developer is allowed to enter into separate contracts in his name with the architect, contractor, and other parties in order to complete the development at his own expense and risk. A Joint Development Agreement between the landowner and the developer commits the developer to take full responsibility for the development work.
If the builder does not complete or is unable to give possession of the apartment, plot, or building, or if the allottee wishes to withdraw from the project, the allottees hold an unqualified and unconditional absolute right to seek a refund of the amount, without being dependent on any contingencies, with interest. The authority alone has the right to direct allottees to receive such a refund. The main thing to keep in mind is that the complainant must be a bona fide buyer who has been wronged by the builder/respondent to fulfil its contractual obligations and adopted unfair trade practices.
Civil Appeal No. 7042 of 2019