Kerala High Court
Unnikrishnan Chandran Pillai vs Tata Reality Infrastructure ... on 14 July, 2022
IN THE HIGH COURT OF KERALA AT ERNAKULAM
PRESENT
THE HONOURABLE MRS. JUSTICE M.R.ANITHA
THURSDAY, THE 14TH DAY OF JULY 2022 / 23RD ASHADHA,
1944
MSA NO. 4 OF 2021
(FROM THE ORDER DATED 12/08/2021 IN REFA NO.21/2021 OF
THE KERALA REAL ESTATE APPELLATE TRIBUNAL)
(FROM THE ORDER DATED 16/10/2020 IN COMPLAINT
NO.185/2020 OF KERALA REAL ESTATE REGULATORY AUTHORITY)
APPELLANT/COMPLAINANT:
UNNIKRISHNAN CHANDRAN PILLAI,
10D, OLIVE WOOD STOCK, STADIUM LINK ROAD,
KALOOR, KOCHI, 682 017.
BY ADVS.
JOHNSON GOMEZ
S.BIJU (KIZHAKKANELA)
SANJAY JOHNSON
JOHN GOMEZ
SREEDEVI S.
ENLIN MARY RODRIGUS
MOHAMED SHEHARAN
DINOOP P.D.
SANJITH JOHNSON
RESPONDENTS 1 AND 2:
1 TATA REALITY INFRASTRUCTURE LTD.,
E BLOCK, VOLTAS COMPOUND, TB KADAM MARG,
CHINCHPOKIL, MUMBAI 400 033 REPRESENTED BY ITS
CHAIRMAN
2 RELATIONSHIP MANAGER,
TATA REALITY AND INFRASTRUCTURE LTD. ,
TRITVAM, GOSHREE PACHALAM LINK RD, KOCHI 682
018.
M.S.A.Nos.04/2021 2
& 05/2021
BY ADVS.
ISAAC THOMAS
V.ABRAHAM MARKOS
ABRAHAM JOSEPH MARKOS
P.G.CHANDAPILLAI ABRAHAM
ALEXANDER JOSEPH MARKOS
SHARAD JOSEPH KODANTHARA
THIS MISC. SECOND APPEAL HAVING COME UP FOR
HEARING ON 22.06.2022, ALONG WITH MSA.5/2021, THE COURT
ON 14.07.2022 DELIVERED THE FOLLOWING:
M.S.A.Nos.04/2021 3
& 05/2021
IN THE HIGH COURT OF KERALA AT ERNAKULAM
PRESENT
THE HONOURABLE MRS. JUSTICE M.R.ANITHA
THURSDAY, THE 14TH DAY OF JULY 2022 / 23RD ASHADHA,
1944
MSA NO. 5 OF 2021
(FROM THE ORDER DATED 12/08/2021 IN REFA NO.27/2021 OF
THE KERALA REAL ESTATE APPELLATE TRIBUNAL)
(FROM THE ORDER DATED 23/04/2021 IN CCP NO.110/2020 OF
THE ADJUDICATING AUTHORITY)
APPELLANT/COMPLAINANT:
UNNIKRISHNAN CHANDRAN PILLAI
AGED 55 YEARS
10D, OLIVE WOOD STOCK, STADIUM LINK ROAD,
KALOOR, KOCHI-682017.
BY ADVS.
JOHNSON GOMEZ
SANJAY JOHNSON
JOHN GOMEZ
SREEDEVI S.
MOHAMED SHEHARAN
DINOOP P.D.
RESPONDENTS 1 AND 2:
1 TATA REALITY INFRASTRUCTURE LIMITED
E BLOCK, VOLTAS COMPOUND, TB KADAM MARG,
CHINCHPOKLI, MUMBAI-400033.
2 RELATIONSHIP MANAGER,
TATA REALITY AND INFRASTRUCTURE LTD., TRITVAM,
GOSHREE PACHALAM LINK RD., KOCHI-682018.
M.S.A.Nos.04/2021 4
& 05/2021
BY ADVS.
V.ABRAHAM MARKOS
ABRAHAM JOSEPH MARKOS
ISAAC THOMAS
P.G.CHANDAPILLAI ABRAHAM
ALEXANDER JOSEPH MARKOS
SHARAD JOSEPH KODANTHARA
THIS MISC. SECOND APPEAL HAVING COME UP FOR HEARING ON
22.06.2022, ALONG WITH MSA.4/2021, THE COURT ON
14.07.2022 DELIVERED THE FOLLOWING:
M.S.A.Nos.04/2021 5
& 05/2021
M.R.ANITHA, J
******************
M.S.A.Nos.04 of 2021
&
05 of 2021
----------------------------------------------------
Dated this the 14th day of July, 2022
JUDGMENT
These appeals have been filed under Section 58 of the Real
Estate (Regulation and Development) Act, 2016, against the
common order dated 12.08.2021 in REFA Nos.21 & 27 of 2021 on
the files of the Kerala Real Estate Appellate Tribunal, Ernakulam.
2. M.S.A.No.4/2021 has been directed against the order
in REFA No.21/2021 which was preferred against the order
passed by the Kerala Real Estate Regulatory Authority (for short,
K-RERA), Thiruvananthapuram on 16.10.2020 in Complaint
No.185/2020 and M.S.A.No.5/2021 has been directed against the
order in REFA No.27/2021 which was filed against the order of
the learned Adjudicating Officer (A.O.) attached to K-RERA dated
& 05/2021
23.04.2021 in CCP No.110/2020.
3. Appellant booked an apartment in July, 2019 in the
multi-storied residential apartment project named 'Tritvam' at
Marine Drive in Kochi launched by the first respondent. He paid
total amount of Rs.16 lakhs towards advance amount. Advance
payment was received by the first respondent before executing
the agreement as provided under Section 13 of the Act. However,
in October 2019, the promoter requested the appellant to make
payment of the amount required for registration of the sale
agreement. For that appellant requested by letter to cancel the
booking of the apartment on the ground of inability to raise the
money and also requested the promoter to return the advance
amount of Rs.16 lakhs paid by him, to which, the promoter sent
a reply letter intimating that out of Rs.16 lakhs received, an
amount of Rs.15,16,667/- is liable to be forfeited in view of the
default on the part of the appellant and expressed willingness to
return Rs.83,333/-. Aggrieved by that reply, the appellant
approached K-RERA with a complaint No.185/2020, claiming
advance payment with interest along with Rs.5 lakhs towards
& 05/2021
compensation. Further he made a request for imposing penalty
for violation of Section 13.
4. The respondents contended that the complaint is not
maintainable before K-RERA and contended that provisions of the
Act would not apply. The claim is also contended to be not
maintainable under Section 18 of the Act. K-RERA dismissed the
complaint reserving the right of the appellant to approach the
Adjudicating Officer in Form N under Section 71 of the Real
Estate (Regulation & Development) Act, 2016 r/w. Rule 37 of the
Kerala Real Estate (Regulation & Development) Rules, 2018.
Against which, REFA No.21/2021 was filed.
5. Appellant also filed CCP No.110/2020 before the A.O.
claiming the advance amount of Rs.16 lakhs with interest and
also compensation of Rs.5 lakhs. The A.O. dismissed the
complaint finding that the power to order return of amount with
interest is upon the K-RERA. It is also found that claim under
Section 18 of the Act is not maintainable since he has made a
claim on the ground of his own default and not on account of any
default on the part of the respondents. Aggrieved by that order
& 05/2021
REFA No.27/2021 was filed before the Kerala Real Estate
Appellate Tribunal (in short 'Tribunal') and by the impugned
common order, Tribunal disposed the matters and the operative
portion of the order reads as follows:
1. In a case where compensation is claimed by an
allottee addition to the advance amount and
interest, the jurisdiction to decide the claim shall
be with the Adjudicating Officer attached to the
Real Estate Regulatory Authority.
2. When the claim of the allottee is only for
advance amount with interest, the jurisdiction to
decide the same shall be with the Real Estate
Regulatory Authority, and the Adjudicating
Officer shall be the exclusive authority when the
claim is only for compensation under Section 12,
14, 18 and 19 of the Act.
3. When an issue regarding registration is raised
before the Adjudicating Officer, as to whether a
given project is liable to be registered under the
Act, the Adjudicating Officer shall direct the
party to approach the Real Estate Regulatory
Authority for orders regarding registration within
such time fixed the Adjudicating Officer failing
which, the Adjudicating Officer himself shall
address the Real Estate Regulatory Authority,
and refer the matter of registration to be decided
& 05/2021
by the Real Estate Regulatory Authority. Till a
decision on the issue of registration is taken, and
orders are passed by the Real Estate Regulatory
Authority, the Adjudicating Officer shall keep the
matter pending, and shall proceed with the
matter after a decision is taken by the Real
Estate Regulatory Authority.
4. Dismissal of the appellant's application in CCP
No.110/2020 dated 23/4/2021 by the learned
Adjudicating Officer is confirmed without
prejudice to the right of the appellant to
approach the appropriate forum for the reliefs.
5. The findings of the Real Estate Regulatory
Authority in the appellant's Complaint
No.185/2020 that the Real Estate Regulatory
Authority has no jurisdiction to decide the claim
for compensation clubbed with advance amount
and interest is confirmed, but the complaint is
remitted to Kerala Real Estate Regulatory
Authority for the purpose of initiating appropriate
proceedings and passing orders appropriately in
the matter of registration of the given project,
and also for initiating necessary action for
imposition of penalty and otherwise, for the
alleged violation of Section 13 of the Act, if such
violation is proved."
6. When the matter came up for hearing, the learned
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counsel for the appellant would submit that he is challenging
paragraph Nos.4 and 5 of the above order alone in this
proceedings.
7. When the matter came up for admission the following
substantial question of law has been formulated:
"(i) Whether Clause 21 of Annexure A of Kerala
Real Estate (Regulation and Development) Rules, 2018
forms part of the Rules since the same is included as
part of the statutory form of the agreement for sale.
(ii) Whether Clause 21 has to be treated as a
mandatory Rule especially in view of the note attached
to Annexure A Form.
(iii) Whether the term "in accordance with the
terms of agreement for sale" as used in several
provisions of the Act refers to the terms and conditions
contained in Annexure A to the Kerala Real Estate
(Regulation and Development) Rules, 2018?"
8. In addition, the following substantial question of law is
also formulated:
(iv) Promotor on violating the express provisions
under Section 13(1) of the Act whether can deny the
benefit under the proviso to Section 11(5) of the Act to
the allottee?
& 05/2021
9. Records were called for. Heard both sides.
10. A three Judges Bench of the Hon'ble Apex Court in
M/s. Newtech Promoters and Developers Pvt. Ltd v. State
of U.P. & Ors. [MANU/SC/1056/2021] have made a detailed
probe to various provisions of the Real Estate (Regulation and
Develoopment) Act, 2016 (in short 'the Act') and the Uttar
Pradesh Real Estate (Regulation and Development) Rules, 2016
and considered the question whether the Act 2016 is
retrospective or retroactive in its operation and what will be its
legal consequence if tested on the anvil of the Constitution of
India. Following questions were dealt with:
"1. Whether the Act 2016 is retrospective or
retroactive in its operation and what will be its legal
consequence if tested on the anvil of the Constitution
of India?
2. Whether the authority has jurisdiction to direct
return/refund of the amount to the allottee under
Sections 12, 14, 18 and 19 of the Act or the
jurisdiction exclusively lies with the adjudicating
officer under Section 71 of the Act?
3. .......................
4. .......................
& 05/2021
11. Chapter II of the Act, 2016, deals with registration of
real estate projects and its mandatory nature. It has been
discussed in paragraph No.33 of M/s. Newtech Promoters
which reads thus:
"Under Chapter II of the Act 2016, registration of
real estate projects became mandatory and to
make the statute applicable and to take its place
under sub-Section (1) of Section 3, it was made
statutory that without registering the real estate
project with a real estate regulatory authority
established under the Act, no promoter shall
advertise, market, book, sell or offer for sale, or
invite persons to purchase in any manner a plot,
apartment or building, as the case may be in any
real estate project but with the aid of proviso to
Section 3(1), it was mandated that such of the
projects which are ongoing on the date of
commencement of the Act and more specifically the
projects to which the completion certificate has not
been issued, such promoters shall be under
obligation to make an application to the authority
for registration of the said project within a period of
three months from the date of commencement of
the Act. With certain exemptions being granted to
such of the projects covered by sub-section (2) of
Section 3 of the Act, as a consequence, all such
& 05/2021
home buyers agreements which has been executed
by the parties inter se has to abide the legislative
mandate in completion of their ongoing running
projects."
12. The term "on going project" has also been dealt with
in paragraph No.34. Paragraph Nos.34, 37, 41 and 54 are
relevant to be extracted, which read thus:
"34. The term "ongoing project" has not been so
defined under the Act while the expression "real
estate project" is defined under Section 2(zn) of the
Act which reads as under:-
"2(zn) "real estate project" means the
development of a building or a building
consisting of apartments, or converting
an existing building or a part thereof
into apartments, or the development of
land into plots or apartments, as the
case may be, for the purpose of selling
all or some of the said apartments or
plots or building, as the case may be,
and includes the common areas, the
development works, all improvements
and structures thereon, and all
easement, rights and appurtenances
belonging thereto;"
37. Looking to the scheme of Act 2016 and
& 05/2021
Section 3 in particular of which a detailed discussion
has been made, all "ongoing projects" that
commence prior to the Act and in respect to which
completion certificate has not been issued are
covered under the Act. It manifests that the
legislative intent is to make the Act applicable not
only to the projects which were yet to commence
after the Act became operational but also to bring
under its fold the ongoing projects and to protect
from its inception the inter se rights of the stake
holders, including allottees/home buyers, promoters
and real estate agents while imposing certain duties
and responsibilities on each of them and to regulate,
administer and supervise the unregulated real estate
sector within the fold of the real estate authority.
41. The clear and unambiguous language of the
statute is retroactive in operation and by applying
purposive interpretation rule of statutory
construction, only one result is possible, i.e., the
legislature consciously enacted a retroactive statute
to ensure sale of plot, apartment or building,
real estate project is done in an efficient and
transparent manner so that the interest of
consumers in the real estate sector is protected
by all means and Sections 13, 18(1) and 19(4)
are all beneficial provisions for safeguarding the
pecuniary interest of the consumers/allottees. In
& 05/2021
the given circumstances, if the Act is held
prospective then the adjudicatory mechanism
under Section 31 would not be available to any
of the allottee for an on-going project. Thus, it
negates the contention of the promoters
regarding the contractual terms having an
overriding effect over the retrospective
applicability of the Act, even on facts of this
case.
54. From the scheme of the Act 2016, its
application is retroactive in character and it can
safely be observed that the projects already
completed or to which the completion certificate has
been granted are not under its fold and therefore,
vested or accrued rights, if any, in no manner are
affected. At the same time, it will apply after getting
the on-going projects and future projects registered
under Section 3 to prospectively follow the
mandate of the Act 2016. ..............."
13. As per Section 3(1), the respondent's project will come
under the "on going project" since the project is not over and
completion certificate is not issued and it is obligatory for the
respondent to make an application to the Authority for
registration of the project. So directions in that regard in the
& 05/2021
impugned order passed by the Tribunal has already been
answered by the dictum laid down in Newtech Promoters and
Developers Pvt. Ltd., referred above. So, the respondent is
bound to register the project under the Act.
14. Next is with regard to the claim of the appellant for
return of advance amount. The dismissal of the appellant's
application in CCP No.110/2020 by the Adjudicating Officer was
confirmed by the Appellate Tribunal by which the Adjudicating
Officer has found that the jurisdiction of the Adjudicating Officer
does not extend to all individual disputes other than the
adjudgment of compensation as specifically indicated in sub-
section 1 of Section 71 of the Act and the jurisdiction of authority
extend to every aspect under the Act except the sole jurisdiction
of adjudgment of compensation vested with the Adjudicating
Officer.
15. In M/s.Newtech Promoters the Apex Court while
answering point No.2 as to whether Authority has jurisdiction to
return/refund of the amount to the allottee under Sections 12,
14, 18 and 19 of the Act or the jurisdiction exclusively lies with
& 05/2021
the adjudicating officer under Section 71 of the Act has been
discussed in paragraph Nos.83, 84, 85, 86, which read thus:
83. So far as the single complaint is filed
seeking a combination of reliefs, it is suffice to
say, that after the rules have been framed, the
aggrieved person has to file complaint in a
separate format. If there is a violation of the
provisions of Sections 12, 14, 18 and 19, the
person aggrieved has to file a complaint as per
form (M) or for compensation under form (N) as
referred to under Rules 33(1) and 34(1) of the
Rules. The procedure for inquiry is different in
both the set of adjudication and as observed,
there is no room for any inconsistency and the
power of adjudication being delineated, still if
composite application is filed, can be segregated
at the appropriate stage.
84. So far as submission in respect of the
expeditious disposal of the application before the
adjudicating officer, as referred to under sub-
section (2) of Section 71 is concerned, it pre-
supposes that the adjudicatory mechanism
provided under Section 71(3) of the Act has to be
disposed of within 60 days. It is expected by the
regulatory authority to dispose of the application
expeditiously and not to restrain the mandate of
& 05/2021
60 days as referred to under Section 71(3) of the
Act.
85. The provisions of which a detailed reference
has been made, if we go with the literal rule of
interpretation that when the words of the statute
are clear, plain and unambiguous, the Courts are
bound to give effect to that meaning regardless
of its consequence. It leaves no manner of doubt
and it is always advisable to interpret the
legislative wisdom in the literary sense as being
intended by the legislature and the Courts are not
supposed to embark upon an inquiry and find out
a solution in substituting the legislative wisdom
which is always to be avoided.
86. From the scheme of the Act of which a
detailed reference has been made and taking
note of power of adjudication delineated with the
regulatory authority and adjudicating officer,
what finally culls out is that although the Act
indicates the distinct expressions like 'refund',
'interest', 'penalty' and 'compensation', a conjoint
reading of Section 18 and 19 clearly manifests
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
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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 under
Sections 12, 14, 18 and 19, the adjudicating
officer exclusively has the power to determine,
keeping in view the collective reading of Section
71 read with Section 72 of the Act. If the
adjudication under Sections 12, 14, 18 and 19
other than compensation as envisaged, if
extended to the adjudicating officer as prayed
that, in our view, may intend to expand the ambit
and scope of the powers and functions of the
adjudicating officer under Section 71 and that
would be against the mandate of the Act 2016.
16. So from the above without any further discussion it
can be concluded that even if a single application seeking
combination of reliefs like return of money and interest as well as
compensation have been claimed the aggrieved person has to file
in different format i.e. if there is violation of provisions under
Section 12, 14, 18 and 19 a complaint as per Form (M) has to be
filed before the K-RERA under Rules 36(1) of Kerala Real Estate
(Regulation and Development) Rules, 2018 and for compensation
& 05/2021
in Form N under Rule 37(1) of the Rules and that segregation can
be made at appropriate stage. So when the appellant herein filed
a composite petition claiming combination of reliefs like return of
advance amount, interest as well as compensation, the
compensation part of it has to be separated and given to the A.O
and the other complaint has to be decided by the K-RERA since
the scheme of the Act provide the power of adjudication with the
A.O and the refund, interest, penalty it is the K-RERA which has
power to examine and determine the outcome of the compliant.
Whereas when a question seeking the relief of adjudging
compensation and interest thereon under Sections, 12, 14, 18
and 19 came up the A.O exclusively has power to determine in
view of Section 71 r/w Section 72 of the Act. It is also made clear
that the adjudication under Sections 12, 14, 18 and 19 other
than compensation if extended to the A.O it may intend to
expand the ambit and scope of the power and functions of the
A.O under Section 71 and that would be against the mandate of
the Act, 2016.
17. Now the main question for consideration before this
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Court is whether the advance amount of Rs.16 lakhs claimed by
the appellant is entertainable by the K-RERA. The A.O has found
that the claim for return of amount with interest solely based on
the fact that the appellant was constrained to cancel the booking
of apartment due to his inability to raise the necessary funds for
paying the total amount of apartment will not come within the
purview of sub-section (1) of Section 18 or sub-section (4) of
Section 19 to claim return of amount with interest and to seek
compensation. The Tribunal also confirmed that finding of the A.O
without prejudice to the right of the appellant to approach the
appropriate forum for the reliefs.
18. According to the learned counsel for the appellant, the
total cost of the project is Rs.1,51,66,674/-. But, as advance, an
amount of Rs.16 lakhs has been received from him. He would
contend that Section 13(1) specifically prohibits acceptance of a
sum more than ten per cent of the cost of the apartment, plot,
or building as advance payment or an application fee, from a
person without first entering into a written agreement for sale
with such person. He would also contend that as per Rule 10 of
& 05/2021
the Rules the agreement for sale shall be in the form in Annexure
A and sub-rule (2) of Rule 10 provides that any application letter,
allotment letter, agreement or any other document signed by the
allottee in respect of the apartment, plot or building prior to the
execution and registration of the agreement for sale for such
apartment, plot or building shall not be construed to limit the
rights and interests of the allottee under the agreement for sale
or under the Act or the Rules or the Regulations made
thereunder. He would also relies upon term 21 attached to
Annexure A agreement for sale which reads thus:
BINDING EFFECT: Forwarding this Agreement to
the Allottee by the Promoter does not create a
binding obligation on the part of the Promoter or
the Allottee until, firstly, the Allottee signs and
delivers this Agreement with all the schedules
along with the payments due as stipulated in the
Payment Plan within 30 (thirty) days from the date
of receipt by the Allottee and secondly, appears for
registration of the same before the concerned Sub-
Registrar as and when intimated by the Promoter.
If the Allottee(s) fails to execute and deliver to the
Promoter this Agreement within 30 (thirty) days
from the date of its receipt by the Allottee and/or
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appear before the Sub-Registrar for its registration
as and when intimated by the Promoter, then the
Promoter shall serve a notice to the Allottee for
rectifying the default, which if not rectified within
30 (thirty) days from the date of its receipt by the
Allottee, application of the Allottee shall be treated
as cancelled and all sums deposited by the Allottee
in connection therewith including the booking
amount shall be returned to the Allottee without
any interest or compensation whatsoever.
So, according to him, as per term 21 attached to Annexure A
even if the promoter cancel the application of the allottee he is
bound to return all sums deposited by the allottee in connection
therewith including the booking amount.
19. The learned counsel would also relies on Section 18 of
the Act and gave emphasis on sub-section (3) of Section 18
which provides that if the promoter fails to discharge any other
obligations imposed on him under this Act or the rules or
regulations made thereunder or in accordance with the terms and
conditions of the agreement for sale, he shall be liable to pay
such compensation to the allottees, in the manner as provided
under this Act. He would further relies on Section 11(5) of the
& 05/2021
Act which empowers the promoter to cancel the allotment but
only in terms of the agreement for sale. Proviso to sub-section 5
of Section 11 further provides that the allottee may approach the
Authority for the relief, if he is aggrieved by such cancellation and
such cancellation is not in accordance with the terms of the
agreement for sale, unilateral and without any sufficient cause.
20. Learned counsel for the respondents on the other hand
would contend that either Section 11(5), 18(3) or 18(5) will not
come to the rescue of the appellant to claim return of advance
amount since all those Sections applies in different context.
21. Section 11 comes under Chapter III under the caption
"Functions and Duties of Promoter" with regard to creating of
web page on the website of the K-RERA and enter all the details
of the proposed project as provided under sub-section (2) of
Section 4, in all the fields provided, for public viewing, the
advertisement of different future developments. He is also bound
to provide the information to the allottee regarding the
sanctioned plans, layout plans along with the specifications
approved by the competent authority and is also responsible to
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obtain completion certificate or occupancy certificate etc.
22. Section 18 of the Act deals with return of amount and
compensation which is relevant in this context to be extracted,
which reads thus:
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
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the promoter, interest for every month of delay,
till the handing over of the possession, at such
rate as may be prescribed.
(2) The promoter shall compensate the allottees
in case of any loss caused to him due to defective
title of the land, on which the project is being
developed or has been developed, in the manner
as provided under this Act, and the claim for
compensation under this subsection shall not be
barred by limitation provided under any law for
the time being in force.
(3) If the promoter fails to discharge any other
obligations imposed on him under this Act or the
rules or regulations made thereunder or in
accordance with the terms and conditions of the
agreement for sale, he shall be liable to pay such
compensation to the allottees, in the manner as
provided under this Act.
23. Section 18 provides that if the promoter fails to
complete or is unable to give possession of the apartment, plot or
building in accordance with the terms of agreement for sale or
duly completed by the date specified therein or due to
discontinuance of his business as a developer on account of
suspension or revocation of the registration under the Act or by
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any other reason he is liable on demand of the allottee 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. Sub-section (3)
provides that if the promoter failed to discharge any other
obligations imposed on him under this Act or the rules or
regulations or in accordance with the terms and conditions of
agreement for sale, he shall be liable to pay compensation to the
allottees. It is true that sub-section (3) of Section 18 only speaks
about the compensation to be payable on failure of the promoter
to discharge any obligation imposed on him under the Act, rules
or regulations. One thing to be noted while analysing Section 18
is that the liability casts upon the promoter to return the amount
received on satisfaction of the conditions like failure on his part to
complete or unable to give possession in accordance with the
terms of agreement or due to discontinuance of his business as
the developer on account of suspension or revocation of
registration under the Act etc.
24. Section 16 of the Act deals with the obligations of the
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promoter. Section 19 of the Act deals with the rights and duties
of the allottees. Sub-section 4 of Section 19 provides that the
allottees is entitled to claim the refund of the amount paid along
with interest as well as compensation as provided under the Act
from the promoter, if the promoter fails to comply or is unable to
give possession of the apartment, plot or building as the case
may be, in accordance with the terms of agreement for sale or
due to discontinuance of his business as a developer on account
of suspension or revocation of his registration etc. So none of the
provisions under the Act expressly enables the allottee to claim
the return of advance on his unilateral cancellation of the booking
of the apartment, prior to the execution of agreement for sale.
25. Section 13 of the Act prohibits the promotor to accept
the sum more than 10% of the cost of the apartment or building
as advance payment or an application fee from person without
first entering into a written agreement for sale with such person
and register the said agreement for sale. The appellant has got a
specific contention that the sale consideration of the apartment
unit booked is Rs.1,51,66,674/- whereas, according to the
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respondent, total consideration of the unit is Rs.1,68,48,685/-.
But, on perusing the records it would go to show that the sale
consideration of the unit booked as per the application submitted
by the appellant with respect to the Unit 6A is Rs.1,51,66,674/-
as borne out from the records and Annexure-R3 in the records
called for from K-RERA. If that be so, admittedly Rs.16,00,000/-
received by the respondent from the appellant would be in excess
of 10% as provided under Section 13. The A.O as well as the
K-RERA found concurrently that if respondent received more than
10% of the cost of apartment in advance payment in violation of
Section 13, according to the A.O whether the appellant is entitled
for any relief based on it or on the basis of Section 13 of the Act
read with Clause 21 prescribed under Annexure-A agreement for
sale are matters to be considered by the Authority not the A.O.
The Tribunal while disposing the matter remitted the complaint to
the Authority for initiating appropriate proceedings and passing
orders in the matter of registration of the given project and also
for initiating necessary action for imposition of penalty and
otherwise for the alleged violation of Section 13 of the Act, if
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such violation is proved. Learned counsel for the respondent also
would contend that the course open to the Authority is only to
initiate proceedings for violation of Section 13 of the Act and
there is no provision in the Act or Rules for return of advance
amount since the appellant himself unilaterally withdrawn from
the project.
26. How far that contention of the respondent can be
sustained in law is the point for determination mainly in these
appeals.
27. Section 12 of the Act provides that where any person
makes an advance or a deposit on the basis of the information
contained in the notice, advertisement or prospectus or on the
basis of any model apartment, plot or building as the case may
be, and sustains any loss or damage by reason of any incorrect,
false statement included therein, he shall be compensated by the
promoter in the manner as provided under the Act. Proviso to
Section 12 further states that if the person affected by such
incorrect, false statement contained in the notice, advertisement
or prospectus, or the model apartment, plot or building, intends
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to withdraw from the proposed project, he shall be returned his
entire investment along with interest at such rate as may be
prescribed and the compensation in the manner provided under
the Act. So, what Section 12 indicates is about the return of the
entire investment along with interest to the allottee if the
advance was on an incorrect or false statement contained in the
notice, advertisement, prospectus etc of the promoter. It is true
that it does not provide for return of the advance with interest if
the allottee himself withdraws from the project for his own
reasons.
28. In paragraph No.80 of New Tech Promotors, there is
a discussion with regard to refund claim of the allottee when he
himself defaulted the terms of agreement and an argument was
advanced that if the allottee himself defaulted the terms, it has
to be determined by the A.O. But the Apex Court categorically
found that if the allottee has made a default either in making
instalments or made any breach of the agreement the promoter
has a right to cancel the allotment in terms of Section 11(5) of
the Act and proviso to Sub Section 5 of Section 11 enables
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allottee to approach the Regulatory Authority to question the
termination or cancellation of agreement by the promotors and
thus the interest of the promotor is equally safeguarded. So, sub
Section (5) of Section 11 enables the promotor to cancel the
allotment in terms of the agreement for sale but proviso to sub
Section 5 as held by the Apex Court enables the allottee to
approach the K-RERA for relief if he is aggrieved by the
cancellation and if the cancellation is not in agreement with the
agreement for sale unilaterally and without saying any sufficient
cause.
29. Rule 10 of the Rules provides that the agreement for
sale for the purpose of Sub Section (2) of Section 13 shall be in
the form in Annexure-A. Sub Rule (2) further provides that any
application like allotment letter, agreement or any other
document signed by the allottee in respect of the apartment
called building prior to the registration of agreement of sale shall
not be construed to limit the rights and interest of the allottee
under the agreement for sale and under the Act or the Rules or
the regulations made thereunder. I have also stated earlier that
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the learned counsel for the appellant relies on condition No.21
attached to Annexure A agreement provided under Rule 10 of the
Rules which expressly provides that if the allottee does not rectify
the defect within thirty days of the notice issued by the promoter,
the application of the allottee shall be treated as cancelled and all
sums deposited by the allottee in connection therewith including
the booking amount shall be returned to the allottee without any
interest or compensation whatsoever. It is true that a condition
stipulated in the agreement attached to the Rules cannot have
any binding effect or has any enforceable effect as provisions
under the Act. But it would make the intention of the Rule
making authority explicit that even if the allottee failed to rectify
the default, the option available to the promoter is to cancel the
allotment and in such contingency, the promoter is liable to
return the booking amount without any interest or compensation.
30. Section 13 expressly prohibits the promoter to accept
any sum more than 10% without first entering into a written
agreement for sale and register the agreement for sale with the
allottee. If at all the promoter in the case on hand had complied
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with the direction provided under Section 13, he could not have
received Rs.16,00,000/-, which is more than 10% of the cost of
unit booked without entering into an agreement for sale as
contemplated under Section 13. If at all such an agreement had
been executed in between the promoter and the appellant when
there was default on the part of the allottee in paying the balance
consideration the option available to the promoter is cancellation
of allotment as contemplated under sub Section 5 of Section 11.
Then, the appellant could have availed the benefit under the
proviso to Section 11(5) of the Act by approaching the K-RERA
for such cancellation. Here merely due to the lapses of the
promoter in receiving Rs.16,00,000/- which is an amount in
excess which he could have received as per Section 13 without
entering into an agreement for sale as provided therein, the
appellant cannot be left without any remedy provided under
Section 11(5) of the Act. Allottee cannot be penalised for the
lapses of the promotor in receiving excess amount without
executing sale agreement as provided under Section 13(1) of the
Act.
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31. Clause 21 attached to Annexure-A of Rule 20 of the
Rules decipher the intention of the rule making authority to
return the entire booking amount on cancellation of the
agreement due to the default of allottee in rectifying the defect
with respect to registration of agreement. As discussed earlier,
only because of the fact that an agreement for sale as
contemplated under Section 13 read with Rule 10 was not
executed by the appellant before the advance of more than 10%
of the total sale value of the unit, disabled him in taking the
recourse to proviso to Section 11(5) of the Act. It is also found
earlier that the act of the promoter in receiving advance
exceeding 10% of the total sale value of the unit is in violation of
Section 13(1) of the Act.
32. It is relevant in this context to quote the maxim
"nullus commodum capere potest de injuria sua propria meaning
no man can take advantage of his own wrong." Union Of India
& Ors vs Major General Madan Lal Yadav : 1996 (1) KLT
Online 901 (SC) was a case in which an action was taken
against the respondent under Section 122 of the Army Act, 1950
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on account of dereliction of duty and action. Relevant paragraph
reads as follows:
"................. On consideration of the charge, the
proceedings were adjourned from day to day till the
respondent appeared on March 2, 1987. It is obvious
that the respondent had avoided trial to see that the
trial would not get commenced. Under the scheme of
the Act and the Rules, presence of the accused is a
pre-condition for commencement of trial. In his
absence and until his presence was secured, it
became difficult, may impossible, to proceed with the
trial of the respondent- accused. In this behalf, the
maxim nullus commodum capere potest de injuria
sua propria- meaning no man can take advantage of
his own wrong - squarely stands in the way of
avoidance by the respondent and he is estopped to
plead bar of limitation contained in Section 123. In
Broom's Legal Maximum [10th Edn.] at page 191 it is
stated "it is a maxim of law, recognized and
established, that no man shall take advantage of his
own wrong; and this maxim, which is based on
elementary principles, is fully recognized in Courts of
law and of equity, and, indeed, admits of illustration
from every branch of legal procedure. The
reasonableness of the rule being manifest, we
proceed at once to show its application by reference
to decided cases. It was noted therein that a man
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shall not take advantage of his own wrong to gain
the favourable interpretation of the law. In support
thereof, the author has placed reliance on another
maxim frustra legis auxilium quoerit qui in legem
committit. He relies on Perry v. Fitzhowe [8 Q.B.
757]. At page 192, it is stated that if a man be
bound to appear on a certain day, and before that
day the obligee put him in prison, the bond is void.
At page 193, it is stated that "it is moreover a sound
principle that he who prevents a thing from being
done shall not avail himself of the non-performance
he has occasioned". At page 195, it is further stated
that "a wrong doer ought not to be permitted to
make a profit out of his own wrong". At page 199 it
is observed that "the rule applies to the extent of
undoing the advantage gained where that can be
done and not to the extent of taking away a right
previously possessed".
33. In Devendra Kumar vs State Of Uttaranchal & Ors
: 2013 (3) KLT (Suppl) 62 (SC) : (2013) 9 SCC 363 : AIR 2013
SC 3325 the applicability of the maxim has again come up. In
paragraph 23 of the said judgment it has been held that a person
having done wrong cannot take advantage of his own wrong and
plead bar of any law to frustrate the lawful trial by a competent
court. In such a case, the legal maxim 'Nullus Commodum
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Capere Potest De Injuria Sua Propria' applies. The persons
violating the law cannot be permitted to urge that their offence
cannot be subjected to inquiry, trial or investigation. Paragraph
23 of the said judgment is relevant in this context which is
extracted below:
" .................... A person having done wrong
cannot take advantage of his own wrong and plead
bar of any law to frustrate the lawful trial by a
competent Court. In such a case the legal maxim
Nullus Commodum Capere Potest De Injuria Sua
Propria applies. The persons violating the law cannot
be permitted to urge that their offence cannot be
subjected to inquiry, trial or investigation. (Vide:
Union of India v. Maj. Gen. Madan Lal Yadav, AIR
1996 SC 1340; and Lily Thomas v. Union of India &
Ors., AIR 2000 SC 1650 nor can a person claim any
right arising out of his own writing.
34. In the present case, the promoter after having violated
the law in receiving more than 10% of the sale value of the unit
without executing a sale agreement as provided under Section
13(1) has contended that the appellant is not entitled for the
benefit under Section 11(5) proviso. The appellant is forbidden
from claiming the benefit solely for the reason that a written
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agreement was not executed as provided under Section 13(1)
when the law prohibits the promoter itself to receive in advance
in excess of 10% of the total sale value and thereafter refuse to
repay the amount contending that there is no agreement for sale
or that the appellant himself withdrawn from the project etc.
cannot be sustained in law. Proviso to Section 11(5) enables the
appellant allottee to approach the K-RERA for redressal of
grievances when the promoter cancels the agreement as per
Section 11(5). So, the receipt of amount in excess prescribed
limit as contemplated under Section 13(1) is itself a violation of
the provisions of law by the promoter and thereafter the
promoter cannot find fault with the appellant contending that he
himself withdrawn from the project or that no agreement was
executed so as to attract the proviso to Section 11(5) of the Act.
35. At the same time, since the appellant himself
withdrawn from the project, I do not think that he would be
entitled to get any amount towards compensation. It has already
been found that the issue regarding claim of refund of amount
and interest is to be dealt with by the Regulatory Authority which
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has the power to examine and determine the outcome of the
complaint. Since the appellant himself withdrawn from the
project there is no scope for adjudging the relief of compensation
and interest as per Section 12, 14, 18 and 19 of the Act.
36. Section 31 of the Act enables any person aggrieved to
file complaint to the K-RERA or the A.O for any violation or
contravention of the provision of the Act or Rules and Regulations
against any promotor, allottee or real estate agent as
the case may be. Section 34 of the Act states about the functions
of the authority and Section 34 clause (f) provides that the
authority has to ensure compliance of obligations cast upon the
promoters, the allottees and the real estate agents under the Act
and the Rules and Regulations made thereunder.
37. Section 35 of the Act deals with the powers of
K-RERA which is relevant to be extracted which reads
thus:
Section 35: "Powers of Authority to call for
information conduct investigations" - The Real Estate
(Regulation and Development Act, 2016)
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(1) Where the Authority considers it expedient to do
so, on a complaint or suo motu, relating to this Act
or the rules of regulations made thereunder, it may,
by order in writing and recording reasons therefor
call upon any promoter or allottee or real estate
agent, as the case may be, at any time to furnish in
writing such information or explanation relating to its
affairs as the Authority may require and appoint one
or more persons to make an inquiry in relation to the
affairs of any promoter or allottee or the real estate
agent, as the case may be.
(2) Notwithstanding anything contained in any other
law for the time being in force, while exercising the
powers under sub-section (1), the Authority shall
have the same powers as are vested in a civil court
under the Code of Civil Procedure, 1908 while trying
a suit, in respect of the following matters, namely:-
(i) the discovery and production of books of account
and other documents, at such place and at such time
as may be specified by the Authority;
(ii) summoning and enforcing the attendance of
persons and examining them on oath;
(iii) issuing commissions for the examination of
witnesses or documents;
(iv) any other matter which may be prescribed"
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38. So, the above factors would reveal that the K-RERA
have the same powers as are vested in a civil court under the
Code of Civil Procedure, 1908 while trying a suit with respect to
discovery and production of books of accounts and other
documents at such place and at such time and summoning and
enforcing the attendance of persons and examining witnesses
etc.
39. Section 37 further provides that K-RERA for the
purpose of discharging its functions under the provisions of Act or
Rules or Regulations can issue directions from time to time to
promoters allottees or real estate agents as the case may be and
such direction shall be binding on all concerned. Section 38
further provides about the powers of K-RERA to impose penalty
or interest in regard to any contravention of obligation cast upon
the promoters, allottees and real estate agents under the Act or
Rules and Regulations. So, the above provisions under the Act
also would speak in volumes about the power and authority of
the K-RERA to resolve the issue when a complaint is preferred or
suo motu in relation to the Act and Rules. So, when it has come
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out that there is express violation of the provisions of the Act
from the part of the promoter in receiving more than 10% of the sale
value as advance without executing agreement by the promoter the
Authority is well within its powers to resolve the issue when a
complaint is filed by an aggrieved allottee, to regulate and
promote the real estate sector without again driving the allottee
to civil court for redressal of the grievance to get the advance
amount unauthorisedly received by the promoter. The statement
of objects and reasons of the Act also points that the Act has
been established for regulation and promotion of the real estate
sector and to ensure sale of plot, apartment, building etc in an
efficient and transparent manner and to protect the interest of
the consumers in real estate sector. It is to ensure greater
accountability towards the customers, consumers and to reduce
frauds and delays, the Act has been promulgated. It seeks to
establish symmetry of information between the promoter and
purchaser, transparency of contractual conditions, set minimum
standards of accountability and a fast-track dispute resolution
machanism. Real Estate (Regulation and Development) Act, 2016
& 05/2021
is a beneficial legislation intending to safeguard the interest of
the consumers as well as promoters by imposing certain
responsibilities on both. So, bearing in mind the great objectives
with which the Act has been promulgated if at all it could not
redress the grievance of consumers like the appellant the very
purpose of the Act would become otiose.
40. In the result, order in M.S.A.No.04/2021 and
M.S.A.No.05/2021 stands modified and Kerala Real Estate
Regulatory Authority, Thiruvananthapuram is also directed to
reconsider the complaint No.185/2020 filed by the appellant for
return of advance amount with interest and pass fresh orders in
accordance with law within two months from the date of receipt
of certified copy of this judgment in the light of the principles of
law discussed above. Parties shall bear their respective cost.
(sd/-) M.R.ANITHA, JUDGE
shg/jsr/13/07/2022
True Copy
P.S to Judge
