In the Uttar Pradesh Real Estate Appellate Tribunal†
(Before D.K. Arora, Chairman and Rajiv Misra, Member (Administrative))
Samar Vijay Singh … Appellant;
Versus
Vice Chairman, Lucknow Development Authority … Respondent.
Appeal No. 143 of 2019
Decided on June 9, 2021
1. This appeal has been preferred by Sri. Samar Vijay Singh (hereinafter referred to as ‘the appellant’) aggrieved against the order of the U.P. Real Estate Regulatory Authority, Lucknow (hereinafter referred to as ‘the Regulatory Authority’) dated 03.06.2019 passed in Complaint No. 6201812681 whereby the Regulatory Authority directed the respondent for payment of interest @ MCLR+1% on the deposited amount w.e.f. 25.09.2016 to 25.08.2018 and LDA was directed to issue revised demand after adjusting 5% discount granted earlier within 15 days and, thereafter, the allottee was required to deposit remaining amount along with stamp fee and other legal expenses within one month and after execution of the registered conveyance deed, the possession of the flat was to be given to the allottee after completing interior work. The Regulatory Authority further directed the allottees to make payment of balance amount, if any, along with delayed payment @ MCLR+1%. The LDA is to receive amount towards the payment of GST on pro-rata basis after providing evidence to the allottees. The parking charges will be included in the entire amount of the flat, since the parking is part of original allotment. The LDA also was directed to take free hold charges from the allottee in accordance with rules.
2. The facts of the case, in brief, are that the appellant booked a flat in Parijat Housing Scheme of the respondent in November, 2011. The respondent allotted Flat No. PJ/404/B-1(293964) in Parijat Housing Scheme, in September, 2014. The cost of the flat was Rs. 44.5 lacs. The appellant deposited Rs. 2,25,000/- on 16.11.2011 as Registration Fee and Rs. 42,25,000/- on 12.11.2012. Thus the appellant deposited total cost of the flat i.e. Rs. 44,50,000/- by November, 2012. The appellant deposited the said amount by obtaining home loan of Rs. 26 lacs from Punjab National Bank, Aliganj Branch, Lucknow. According to para 2.4 of the Booklet, the possession of the flat was to be delivered to the appellant within 24 months, but the respondent failed to deliver possession of the flat to the appellant within the stipulated period. The respondent sent a demand letter dated 21.06.2018 to the appellant to deposit Rs. 8,71,389/- towards registry charges against which the appellant deposited Rs. 3,94,278/- on 16.07.2018. Thereafter the respondent raised another demand of Rs. 3,64,971/- vide letter dated 25.08.2018, after adjusting rebate amount. This amount has not been deposited by the appellant keeping in view the progress of the construction. The respondent demanded a total sum of Rs. 52,09,249/- against Rs. 44,50,000/-, which was the original estimated cost of the flat. The appellant filed complaint against the respondent before the Regulatory Authority claiming interest for the delayed period and exemption from parking charges and GST. The said complaint was disposed of by the Regulatory Authority in the manner mentioned in para 1 above.
3. The appellant has challenged the impugned order dated 03.06.2019 on the following grounds:—
(a) The Regulatory Authority has made an error in tagging all the 6 complaints.
(b) The Regulatory Authority has not taken cognizance of the fact that appellant had deposited total amount of Rs. 44.5 lacs.
(c) The Regulatory Authority relied on the provisions of Booklet of Parijat Apartment which is not acceptable as it is one sided agreement.
(d) The Regulatory Authority allowed Rs. 2.48 lacs as the cost escalation in the Project against the provisions of Section 2(v) of the Act where increase in the estimated cost has not been permitted and it is against the principles of natural justice.
(e) The Regulatory Authority has not considered the fact that the respondent has introduced alteration in the Project without consent of the allottees, hence it is violation of Chapter III, Section 14(2) of the Act, 2016 and the Uttar Pradesh Real Estate (Regulation and Development) Rules, 2016 (hereinafter referred to as “Rules, 2016”).
(f) The respondent has increased the number of apartments from 310 to 406 at the cost of amenities and comfort of the residents. The raising of additional cost of Rs. 2,48,000/- is unjustifiable.
(g) The Regulatory Authority has accepted the delay but not exempted the payment of GST which is being charged because of the delay in handing over the Project in September, 2014, much before implementation of GST in 2017.
(h) The Regulatory Authority has not exempted the parking charges which is against the provision of Section 2(y) and 2(n) of the Act, 2016.
(i) The Regulatory Authority has not exempted the appellant from Free Hold Charges though the land is an acquired property which is against the provision of Section 2(v) of the Act, 2016.
(j) The Regulatory Authority has wrongly assessed the delay of 4.5 years as delay from 25.09.2016 to 25.08.2018, whereas after grant of grace of 6 months, it should have been from 14.03.2015 to the date of possession, in view of the judgment of HON’BLe Supreme Court in Supertech Ltd. v. Rajni Goyal Appeal No. 143 of 2019.
(k) The Regulatory Authority has erred in granting 2 years’ exemption in delay of giving possession treating it as an unavoidable situation.
(l) The Regulatory Authority erred in assessing the compensation amount by wrongly adjusting 5% discount which the appellant is entitled to receive.
(m) The Regulatory Authority assessed the interest against Section 2(za) of the Act, 2016 which says that the rate of interest chargeable from the allottee by the Promoter, in case of default, shall be equal to the rate of interest which the promoter shall be liable to pay the allottee, in case of default. As per clause 2.1 of the Booklet of Parijat Housing Scheme, if the allottee defaults in paying the instalments in time, he is liable to pay interest at the rate of 15% per annum.
(n) The Regulatory Authority has not considered the fact that maintenance of Rs. 58,660/- and Corpus of Rs. 93,968/- is not justifiable as possession has still not been given.
(o) The Regulatory Authority has not considered the fact that the costs of Gas Pipe Line at Rs. 20,000/-, Telephone connection charges Rs. 10,000/- and Electricity charges at Rs. 15,000/- are exorbitant.
(p) The Regulatory Authority has not considered the fact that had the property been transferred by the respondent within the stipulated time, then the registration charges would have been based on the then prevailing circle rate.
4. In the instant appeal the appellant has prayed for (i) possession of the apartment in question as early as possible after obtaining completion and occupation certificates, (ii) reduction in the price of flat, (iii) refund of additional cost of Rs. 2,48,000/-, (iv) refund of GST of Rs. 1,98,062/-, (v) refund of parking charges of Rs. 1,75,000/-, (vi) refund of free hold charges of Rs. 98,549/-, (vii) compensatory interest at the rate of 15% per annum from due date of handing over possession, (viii) no adjustment of 5% discount, (ix) same rate of interest on the total deposited amount as the respondent charges, (x) refund of maintenance charges (Rs. 58660/-) and corpus charges (Rs. 93968/-), (xi) providing Gas Pipe Line, Telephone and Electric Connection on no profit no loss basis, (xii) registration of conveyance deed on the basis of registration charges prevailing on 14.03.2015.
5. The respondent filed its objections denying the allegations made by the appellant in the appeal and further submitted that:—
6. The appeal has been preferred without raising any substantial question of law.
7. No appeal can be maintainable or entertained without mentioning any ground.
8. There is no legislative intent of retrospective application of the Act, 2016; the respondent is a Development Authority and is an instrumentality of the State which works on no profit no loss basis. Further, right to claim interest in terms of the Act and subsequent Rules, 2018 shall only be set to accrue for sale agreement executed after the date of commencement of the Act, 2016 and the Rules of 2018.
9. The schemes which are being developed by respondent are for the purpose of meeting out residential needs of the public at large in city of Lucknow at affordable rates; as per clause 2.4 of the Brochure the possession of the flats was proposed to be provided to the allottees within 24 months.
10. Clause 13.1 of the Brochure specifically provides that after allotment, all other conditions/rules applicable in Lucknow Development Authority and any amendment/change/supersession in such rules shall be binding upon the allottee.
11. The respondent being a Development Authority is governed by the Rules and Regulations formulated by the State Government or the Board of the respondent.
12. Condition no. 38.1 of the 1993 Procedure of the respondent provides that in case for the reasons beyond its control, the construction of the building is delayed then the Lucknow Development Authority shall not be responsible for the delay, however, the allottee may opt for refund of the amount and if the amount remains in the account of the Lucknow Development Authority for a period of one year or more then in that case simple interest at the rate of 6% per annum shall be payable.
13. As per condition 14.2 of the Procedure, 2016 of the respondent, it is provided that in case the Lucknow Development Authority fails to deliver the possession of the property within the time limit prescribed then the allottee may demand refund of deposited amount with interest at the rate of 9% per annum, however, in case the allottee accepts the possession despite of delay then no interest/compensation shall be payable to such allottee.
14. From joint perusal of the provisions of clauses 2.4 and 13.1 of the Brochure and condition 38.1 of 1993 Procedure and condition 14.2 of 2016 Procedure, it transpires that as per the agreed terms and conditions between the appellant and the respondents the flat in question was proposed to be handed over to the appellant within 24 months. In case of delay in handing over the possession by the respondents beyond 21 months the appellant was at liberty to have claimed refund of amount along with interest at the rate of 4% per annum. Further in case of delay in handing over the possession beyond 24 months the appellant was at liberty to have claimed refund of amount along with interest at the rate of 6% per annum prior to 2016 and after 2016 the appellant was at liberty to have claimed refund of amount along with interest at the rate of 9% per annum. In none of the conditions, as per agreed terms, the appellant was entitled for any compensation/interest in case the appellant decides to take possession of the flat despite of delay in handing over of possession.
15. In view of the averments; contents in the application form and the affidavit furnished by the appellant, it is evident that the appellant has already consented to abide by the provisions contained in the rules of the respondent. Thus, in case of delayed possession, the appellant cannot claim interest and possession both.
16. The possession of the flat allotted to the appellant could not be handed over to the appellant within the stipulated period on account of the reasons beyond control of the respondent.
17. The development work of the aforesaid scheme was held up on account of litigation pertaining to shifting of high tension wire line which was running in the middle of the Project.
18. The Project has been completed in accordance with the sanctioned lay out plan and final demand note has been issued to the appellant on 21.05.2018.
19. Since the aforesaid scheme was floated by the respondent prior to coming into force of the Act, 2016, the present case ought to have been governed by the already agreed terms and conditions mentioned in the Brochure of the Scheme read with rules and regulations of the respondent.
20. The Procedure of 1993 as well as amended Procedure of 2016 provide that in case of delay in handing over possession the allottee shall have only the right to take refund of amount deposited along with applicable interest or to get flat.
21. Increase in the cost of the property upto 5% of the estimated cost of the flat is clearly justifiable as the cost indicated at the time of the purchase is merely an indicative cost and the final cost comes at a later stage and the same has already been mentioned in the Booklet of the Scheme and agreed between both the parties.
22. The interest charged by the respondent is due to the fact that the buyer will be paying the complete amount for the flat in 6 EMIs and the interest levied is not a penal interest but an EMI interest.
23. The respondent also offers an additional discount for a buyer who pays the complete sum of the flat within 90 days from the date of allotment.
24. The Regulatory Authority has observed that the allottee/appellant had already agreed to the terms mentioned in the Brochure as well as the provision of Clause 10.1 regarding payment of free hold charges and as such the respondent is entitled to demand the same from the allottee.
25. The Regulatory Authority has rightly observed that the charges of GST will be applicable on pro-rata basis and the same are not disputed at all.
26. The Regulatory Authority has rightly not exempted the appellant from parking charges as the payment of parking charges has already been agreed between the parties and the same is mentioned in clause 3 of the Booklet issued by the respondent.
27. The appellant has not filed any reply to the objections of the respondent to the memo of appeal.
28. We have heard Sri. Samar Vijay Singh, the appellant in person on 07.01.2021. No one appeared on behalf of the respondent though the name of Sri. Harish Pandey, Advocate has been shown in the cause list, as counsel for the respondent. No request for adjournment or pass over has been received from the respondent or its counsel. The matter is pending since July, 2019 and Section 44(5) of the Act, 2016 mandates the Tribunal to make an endeavour to dispose of appeal expeditiously within 60 days from the date of its receipt. As no one appeared on behalf of the respondent we thoroughly examined the record/pleadings of the respondent available on record, before passing this judgment.
29. On examination of the pleadings, submissions and record, the admitted facts are that in the year 2012 a Housing Scheme known as “Parijat Housing” was launched by the respondent (LDA). The appellant applied for allotment of a residential unit having three bed rooms in the said scheme and a unit consisting of two bed rooms having flat no. PJ/404/B-1 (293964) was allotted to him vide allotment letter issued on 14.09.2012. As per the terms and conditions mentioned in the Brochure, the allottee was to be given possession of the flat in question within 24 months. The project got delayed and after completion of the same final demand was issued by the LDA to appellant. The appellant apparently, feeling aggrieved by the demands raised by the LDA under the different heads, approached the Regulatory Authority by means of complaint no. 6201812681 raising his grievance regarding delay, non-issuance of the completion certificate by the competent authority and alteration without consent as well as grievance against the charges for free hold, parking, GST, Gas Pipeline, telephone, corpus fund and sought a relief for refund of Rs. 2,48,400/- paid in excess to LDA, compensation till possession and waiver of GST and stilt parking charges.
30. The Regulatory Authority after exchange of pleadings, clubbed the similar complaints of allottees of the Parijaat Housing Scheme, wherein prayer for interest for the delay and exemption from parking charges and GST was made. The Regulatory Authority framed seven issues, namely:—
I. Whether the price of the unit of the allottee has been increased or not?
II. Whether allottees are required to pay GST or not?
III. Whether allottee is required to pay for parking or not?
IV. Whether the allottee is required to pay free hold charges or not?
V. Whether the project is delayed or not, if yes for what period?
VI. Whether the LDA is entitled for any relief of the said period of delay or not?
VII. Whether the allottees are entitled for interest for the delayed period or not?
31. The Regulatory Authority after examining all the issues independently by means of order dated 03.06.2019 directed for payment of interest @ MCLR+1% on the deposited amount w.e.f. 25.09.2016 to 25.08.2018 and LDA was directed to issue revised demand after adjusting 5% discount granted earlier within 15 days and, thereafter, the allottee was required to deposit remaining amount along with stamp fee and other legal expenses within one month and after execution of the registered conveyance deed, the possession of the flat was to be given to the allottee after completing interior work. The Regulatory Authority further directed the allottees to make payment of balance amount, if any, along with delayed payment @ MCLR+1%. The LDA is to receive amount towards the payment of GST on pro-rata basis after providing evidence to the allottees. The parking charges will be included in the entire amount of the flat, since the parking is part of original allotment. The LDA also was directed to take free hold charges from the allottee in accordance with rules.
32. The complainant being dissatisfied with the order dated 03.06.2019 of the Regulatory Authority challenged the same by means of instant Appeal.
33. We have examined the submissions of appellant in person, as well as the pleading of the respondent, the impugned order dated 03.06.2019, and record.
34. In order to appreciate the issues raised by appellant and respondent in their pleadings, we frame following issues:—
(1) Whether on account of being a prospective Act, the provisions of penalty/compensation introduced for the first time by means of Act of 2016, cannot be implemented in respect of any cause of action, arisen prior to coming into force of Act of 2016, even if the project is not complete and OC/CC has not been issued by the competent authority.
(2) Whether the Regulatory Authority ought to have examined the complaint of appellant only on the basis of agreed terms and conditions mentioned in the Brochure read with Procedure, Rules and Regulations of Lucknow Development Authority?
(3) Whether the payment of GST, implemented in the year 2017, should be exempted to the allottee on account of delay in handing over the project beyond the promised date i.e. September, 2014?
(4) Whether the parking charges should have been exempted?
(5) Whether the cost of Rs. 20,000/- for gas pipeline is an arbitrary amount and should be provided on “no profit no loss” basis?
(6) Whether charges of Rs. 15,000/- for generator, Rs. 15,000/- for electricity and Rs. 10,000/- for telephone are required to be refunded since actual possession has not been given?
(7) Whether the free hold charges should have been exempted?
(8) Whether Regulatory Authority erred in granting 2 years exemption in delay in giving possession treating as an unavoidable situation?
(9) Whether the Regulatory Authority assessed the interest against the provisions of Section 2(za) of the Act, 2016?
(10) Whether the LDA shall bear the increased cost on account of delay in completion of the Project?
35. For examining the issue no. 1, we proceed to examine the scheme and relevant provisions of the Act of 2016.
36. The Real Estate (Regulation & Development) Act, 2016 has been enacted to establish the Real Estate Regulatory Authority for regulation and promotion of the real estate sector and to ensure sale of plot, apartment or building, as the case may be, or sale of real estate project, in an efficient and transparent manner and to protect the interest of consumers in the real estate sector and to establish an adjudicating mechanism for speedy dispute redressal and also to establish the Appellate Tribunal to hear appeals from the decisions, directions or orders of the Real Estate Regulatory Authority and the Adjudicating Officer and for matters connected therewith or incidental thereto. The Real Estate (Regulation & Development) Act, 2016 delineates functions and duties of promoter in chapter 3 and rights and duties of allottees in chapter 4. The Real Estate Regulatory Authority has been assigned functions and have been given powers as detailed out in chapter 5.
37. The Act envisages adjudication by the Regulatory Authority in terms of the powers under Chapter V of the Act and in particular Sections 31, 32, 34, 35 and 40 of the Act, and for adjudging compensation by the Adjudicating Officer in terms of the powers under Chapter VIII of the Act and in particular Sections 71 and 72 thereof.
38. The Act spells out the obligations of the promoter of a real estate project and the consequence of the promoter failing to fulfill those obligations. Some of those obligations are enumerated in Section 11 to 18 of the Act.
39. Section 18 of the Act talks of the consequences of the failure by the promoter to complete or to be unable to give possession of an apartment, plot or building either in terms of the agreement for sale or failure to complete the project by the date specified therein or on account of discontinuance of his business either on account of suspension or revocation of the registration under the Act or for any other reason. In the event of either of the above contingencies under Section 18(1) of the Act, the promoter is made liable on the demand of the allottee:—
(i) In the event that the allottee wishes to withdraw from the project, without prejudice to any other remedy available, to return the amount received by the promoter in respect of that apartment, plot, building, as the case may be, together with “interest at such rate as may be prescribed” “including compensation in the manner as provided under this Act”;
(ii) Where an allottee does not intend to withdraw from the project the promoter shall pay him for every month’s delay in the handing over of the possession, “interest at such rate as may be prescribed”.
40. It is apparent on a reading of Section 18(1) of the Act that upon the contingencies spelt out therein, (i) the allottee can either seek refund of the amount by withdrawing from the project; (ii) such refund could be together with interest as may be prescribed; (iii) the above amounts would be independent of the compensation payable to an allottee under various provisions of the Act; (iv) the allottee who does not intend to withdraw from the project will be required to be paid by the promoter interest for every month’s delay of handing over of possession.
41. When one turns to the powers of the Authority, it is seen that under Section 31, the complaints can be filed either with the Authority or with the Adjudicating Officer (AO) for violation or contravention of the provisions of the Act or the Rules and Regulations. Such complaint can be filed against “any promoter, allottee or real estate agent”, as the case may be, by “any aggrieved person”.
42. Now we proceed to examine the definition of the term “Project”, “Real Estate Project” and provisions of prior registration of a Real Estate Project with Real Estate Regulatory Authority.
The definition of the project provided in section 2(zj) reads as follows:—
“project” means real estate project as defined in clause 2(zn) under this Act.
Accordingly, project means real estate project as defined in clause 2(zn) which reads as follows:—
“(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 apartment, 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;”
43. Chapter 2 of the Act, 2016 relates to registration of real estate projects. Section 3 of the Act, 2016 provides prior registration of a real estate project with the Real Estate Regulatory Authority as follows:—
3. Prior registration of real estate project with Real Estate Regulatory Authority.—
“(1) No promoter shall advertise, market, book, sell or offer for sale, or invite persons to purchase in any manner any plot, apartment or building, as the case may be, in any real estate project or part of it, in any planning area, without registering the real estate project with the Real Estate Regulatory Authority established under this Act …….“
44. Section 3(1) provides for certain restrictions on the promoter without registering a real estate project with the Real Estate Regulatory Authority. The proviso to section 3(1) further provides for registration of an ongoing Project:
“……… Provided that projects that are ongoing on the date of commencement of this Act and for which the completion certificate has not been issued, the promoter shall make an application to the Authority for registration of the said project within a period of three months from the date of commencement of this Act.”
45. This provision requires that the projects which fulfil following two conditions are required to be registered within a period of three months from the date of commencement of this Act. The commencement date of the Real Estate (Regulation and Development) Act, 2016 is 01.05.2017, except Section 2, 20 to 39, 41 to 58, 71 to 78 and 81 to 92, which came into force with effect from 01.05.2016. Accordingly, within 3 months i.e. by 31.07.2017 the following projects covered in proviso 3(1) of the Act have to register with the Regulatory Authority:
(i) The projects that are ongoing on the date of commencement of the Real Estate (Regulation and Development) Act, 2016; and
(ii) The projects for which completion certificate has not been issued.
46. For the issuance of the completion certificate material date is 01.05.2017 i.e. the date of commencement of Section 3 of the Real Estate (Regulation and Development) Act, 2016. Accordingly, all those projects where completion certificate has not been issued on the date of commencement of this Act i.e. by 01.05.2017, are necessarily to be registered with the Regulatory Authority within a period of three months.
47. The proviso to section 3(1) provides that the projects that are ongoing on the date of commencement of this Act and for which completion certificate has not been issued, the promoter shall make an application to the authority for prior registration of the said project within a period of three months from the date of commencement of the Act. This Act came into force on 01.05.2017, barring some Sections which came into force on 01.05.2016. Accordingly, for the on-going projects registration was to be applied by the promoter within three months, i.e., by 31.07.2017.
48. Section 3(2) provides those categories of projects where no registration of real estate projects shall be required. The section 3(2) reads as follows:—
“Notwithstanding anything contained in sub-section (1), no registration of the real estate project shall be required-
a) where the area of land proposed to be developed does not exceed five hundred square meters or the number of apartments proposed to be developed does not exceed eight inclusive of all phases:
Provided that, if the appropriate Government considers it necessary, it may, reduce the threshold below five hundred square meters or eight apartments, as the case may be, inclusive of all phases, for exemption from registration under this Act;
b) where the promoter has received completion certificate for a real estate project prior to commencement of this Act;
c) for the purpose of renovation or repair or re-development which does not involve marketing, advertising selling or new allotment of any apartment, plot or building, as the case may be, under the real estate project
Explanation. -For the purpose of this section, where the real estate project is to be developed in phases, every such phase shall be considered a stand-alone real estate project, and the promoter shall obtain registration under this Act for each phase separately.”
49. In sub-section 3(2)(b) it has been mentioned that those projects where the promoter has received the completion certificate for real estate project prior to commencement of the Act, 2016 have been taken out of the ambit of registration, and by implication not the real estate projects which may have received the completion certificate after the commencement of this Act. Section 3(2) exempts certain categories of real estate projects only from prior registration related provisions but not from the ambit of other provisions of the Act, 2016.
50. From the plain reading of section 3, it is evident that the projects for which the completion certificate has been issued prior to commencement of this Act have only been exempted from prior registration, if the proviso to section 3(1) is read with section 3(2)(b). Section 3(2) provides for categories of projects where no prior registration shall be required. This section 3(2)(b) specifically provides that no prior registration of the real estate project shall be required where the promoter has received completion certificate for a real estate project prior to commencement of this Act, i.e. prior to 01.05.2017.
51. All projects where completion certificate has not been issued are ongoing projects and completion certificate issued by the competent authority on or before 30.04.2017 is the conclusive proof of the fact that the project is complete, and it is not “on-going”.
52. On the basis of aforesaid analysis, it is evident that the Act, 2016 mentions nowhere that it is applicable only for registered projects. The Act, 2016 provides certain categories of projects that are not required to be registered, but these are well within the ambit of the Act. The projects mentioned in Section 3(2) have been taken out of the prior registration requirement, but not out of purview of other provisions of the Act.
53. In view of the aforesaid analysis, we are of the considered view that:—
(a) The Act, 2016 mentions nowhere that it is applicable only for registered projects.
(b) The Projects mentioned in Section 3(2) of the Act, 2016 are exempted from the requirement of prior registration, but are not out of purview of the other provisions of the Act, 2016.
(c) The provisions regarding prior registration and obligation during registration are applicable only for registered projects.
(d) The obligation of the promoter’s–post expiry of validity of registration–provided in the Act, 2016 are applicable to even the real estate projects exempted from registration.
(e) The projects which were completed and handed over during last five years are covered for the purpose of workmanship and structural defect liability. A complaint can be filed by the allottee in such matter in case possession of the real estate was within five years prior to date of commencement of the Act.
(f) All real estate projects are covered for land title defect liability.
54. The domain of the Regulatory Authority extends even to the projects which have not been registered, except those exempted from registration. No promoter shall advertise, market, book, sell or offer for sale, or invite persons to purchase in any manner any plot, apartment or building, as the case may be, in any real estate project or part of it, in any planning area, without registering the real estate project with the real estate regulatory authority established under this Act. In case of violation, the Authority may take action for non-registration under Section 59. Accordingly, the projects which have not been registered, but are registrable, in case of violation of Section 3 come within the domain of the Regulatory Authority and the Regulatory Authority is well within its power to initiate penal proceedings and also to entertain complaints regarding violation of the provisions of the Act. The promoter cannot take a stand that the project is unregistered, accordingly Regulatory Authority has no jurisdiction to entertain the complaint. Where will the complainant go? The complainant may make a complaint to the Regulatory Authority regarding non-registration of the project as well as may request the Regulatory Authority for compliance of obligations by the promoter in case the promoter violates any of the provision of the Act, the rules and the regulations made there under. The Regulatory Authority in such a case cannot take a stand that let the project be got registered and only thereafter it will entertain the complaint. If a complaint in such cases is not entertained by the Regulatory Authority, a scrupulous promoter or builder or developer may not register the project to avoid jurisdiction of the regulatory authority. This will frustrate the very purpose of the Act regarding giving relief to the complainant and ensuring compliance of the obligations by the promoters, real estate agents and allottees.
55. The Act provides for obligations of the promoter, real estate agent and allottees both during the registration phase as well as post-expiry of validity of registration i.e. after the completion of the project. The obligations post-expiry of the validity of registration are to be ensured by the Regulatory Authority both in case of projects which were registered, and validity of registration expired as well as for the projects, where completion certificate was obtained prior to coming into force of this Act and were exempted from prior registration. The obligations of the promoter after completion of the project, such as handing over of possession and executing a registered conveyance deed within specified period, workmanship and structural defects rectification liability upto five years after giving possession, land title defect liability without any limitation period etc. are applicable for all the real estate projects, both registered as well as exempted from registration.
56. Further in case of a project where completion certificate has been obtained for a real estate project but there is unsold inventory left out then it is true that there won’t be any requirement of registration of the project as the project has already been completed prior to coming into force of this Act. The prior registration of projects serves mainly three purposes.
(i) to monitor the progress of the project so that the project is completed timely;
(ii) to ensure that the amount collected from the buyers is not diverted to any other purpose; and also
(iii) to see that layout plan, building plan, specifications etc. as approved by the competent authority are followed by the promoter. The requirement of registration is to monitor the project from commencement to completion. The validity of registration expires on issuing of completion certificate or on expiry of period for completion of project declared by promoter under section 4(2)(l)(c), keeping in view the provisions of section 5(3).
57. There are certain obligations of the promoters which are to be complied by them. Some of these obligations are during registration phase and some of the obligations are post expiry of validity of registration. Accordingly, there are large number of obligations of the promoter which are not linked with the completion of the project, but those provisions relate to regulating relationship between promoter and allottee such as registration of conveyance deed, giving possession, workmanship and structural defect rectification liability, defective land title liability, etc. The projects issued completion certificate prior to commencement of the Act have been taken out of the registration requirement, but not out of the ambit of the Act, 2016. The sold or unsold inventory of such projects, sold before or after commencement of this Act falls within the purview of this Act, as these projects are not required to be registered but have not been kept out of the ambit of the Act, 2016.
58. After the commencement of the Act, 2016 the buyers of the real estate where the promoter has obtained completion certificate of the Project prior to commencement of this Act cannot be left in lurch in case possession is not handed over timely or registered conveyance deed is not made as per the agreement for sale, defective land title, structural defect and workmanship defect etc. Whenever sale of real estate (Project) takes place after commencement of Act, 2016 and real estate project qualifies to be real estate project as per definition given in this Act as well as promoter is covered in the definition of promoter given in the Act, 2016, then complaint in respect of matters, where this Act casts certain obligations on the promoter can be made to the Regulatory Authority. There cannot be two different Regulatory Authorities to be approached for similar types of complaints. The registration certificate of real estate project is valid from the date of registration and it expires as soon as the project is completed, and the completion certificate is issued i.e. the time period declared by the promoter in accordance with section 4(2)(1)(c) for completion of the project. Hence, even after the expiry of validity of registration there are large number of obligations which are to be discharged by the promoter. Hence, in respect of those obligations complaints of project–whether registered or unregistered (except those exempted) irrespective of the fact whether the sale has taken place before the commencement of the Act or after commencement of the Act can be made to the Regulatory Authority and such projects are squarely covered in the ambit of the Real Estate Regulatory Authority. This Act primarily protects the interest of the consumers in case of sale of real estate.
59. Further, there will be three categories of real estate projects which can be sold by a promoter:
(i) Real estate projects where completion certificate of the project has been obtained prior to commencement of the Act, 2016 but there is unsold inventory of real estate project.
(ii) The real estate projects which are ongoing and where the completion certificate has not been issued on the date of commencement of the Act, 2016. So, these are the registered as real estate projects.
(iii) New real estate projects to be taken up after commencement of this Act. Here, there can be two types of real estate projects which can be put to sale by the promoter. (a) where the promoter intends to market/sell real estate project only after obtaining completion certificate; (b) where promoter intends to advertise, market or sell real estate during construction phase i.e. prior to obtaining completion certificate.
60. The HON’BLe Bombay High Court in the case of Neelkamal Realtors Suburban Pvt. Ltd. v. Union of India decided on 06.12.2017 was pleased to observe in para 255 as under:—
“The intention of RERA is to bring the complaints of allottees before one Authority and simplify the process. If the interpretation suggested by the petitioners, namely, that the provision is applicable only after coming into force RERA is accepted, this would result in allottees having to approach different fora for interest prior to RERA and subsequent to RERA. In fact, Section 71 of RERA provides that the cases pending before the Consumer Court can be transferred to Authority. Reference to pending cases is obviously a reference to claims for interest and/or compensation pending when the RERA came into force.”
61. Recently the HON’BLe Supreme Court in Civil Appeal No. 3581-3590 of 2020 Imperia Structures Ltd. v. Anil Patni decided on 02.11.2020, while examining the provisions of Section 18 of the Act, 2016, vide para 23, has been pleased to observe as under:—
“23. In terms of Section 18 of the RERA Act, if a promoter fails to complete or is unable to give possession of an apartment duly completed by the date specified in the agreement, the Promoter would be liable, on demand, to return the amount received by him in respect of that apartment if the allottee wishes to withdraw from the Project. Such right of an allottee is specifically made “without prejudice to any other remedy available to him”. The right so given to the allottee is unqualified and if availed, the money deposited by the allottee has to be refunded with interest at such rate as may be prescribed. The proviso to Section 18(1) contemplates a situation where the allottee does not intend to withdraw from the Project. In that case he is entitled to and must be paid interest for every month of delay till the handing over of the possession. It is upto the allottee to proceed either under Section 18(1) or under proviso to Section 18(1). The case of Himanshu Giri came under the latter category. The RERA Act thus definitely provides a remedy to an allottee who wishes to withdraw from the Project or claim return on his investment.”
62. The HON’BLe Punjab and Haryana High Court in CWP No. 38144 of 2018 Experion Developers Pvt. Ltd. v. State of Haryana and other connected matters vide judgment dated 16th October, 2020 while examining the challenge to Sections 13, 18(1) and 19(4) of the Act, 2016 and Rules 3 to 16 of the Haryana Rules as regards their retroactive application to the ongoing projects, vide paras 73 to 80, pleased to observe as under:—
“73. The last issue concerns the retroactivity of the provisions of the Act particularly with reference to ‘ongoing’ projects. The expression “Real Estate Project” is defined in Section 2(zn) of the Act to mean:
“the development of a building or a building consisting or 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.”
74. The Act is intended to apply even to ‘ongoing’ Real Estate Projects. The expression ‘ongoing project’ has not been defined under the Act but under Rule 2(o) of the Haryana Rules which reads as under:
“ongoing project” means a project for which a license was issued for the development under the Haryana Development and Regulation of Urban Area Act, 1975 on or before the 1st May, 2017 and where development works were yet to be completed on the said date, but does not include:
(i) any project for which after completion of development works, an application under Rule 16 of the Haryana Development and Regulation of Urban Area Rules, 1976 or under sub code 4.10 of the Haryana Building Code 2017, as the case may be, is made to the Competent Authority on or before publication of these rules and
(ii) that part of any project for which part completion/completion, occupation certificate or part thereof has been granted on or before publication of these rules.”
75. The expression ‘Completion Certificate’ has been defined under Section 2(q) of the Act as follows:
“completion certificate” means the completion certificate, or such other certificate, by whatever name called, issued by the competent authority certifying that the real estate project has been developed according to the sanctioned plan, layout plan and specifications, as approved by the competent authority under the local laws.”
76. This has to be read along with the expression ‘occupancy certificate’ which is defined under Section 2(zf) of the Act as under:
“occupancy certificate” means the occupancy certificate, or such other certificate by whatever name called, issued by the competent authority permitting occupation of any building, as provided under local laws, which has provision for civic infrastructure such as water, sanitation and electricity.”
77. Rule 3 of the Haryana Rules talks of application for registration and Rule 4 of ‘additional disclosure by Promoters of ongoing projects.’ Therefore, all ‘ongoing projects’ i.e. those that commenced prior to the Act, and in respect of which no completion certificate is yet issued, are covered under the Act. It is plain that the legislative intent was to make the Act applicable to not only to the projects which were to commence after the Act became operational but also to ongoing projects. The issue that arises is whether this is permissible in law?
78. The decision of the Bombay High Court in Neelkamal Realtors Suburban Pvt. Ltd. (supra) has dealt with this issue quite extensively. The conclusion of the Bombay High Court that this retroactive application of the Act, as distinguished from retrospective effect, in relation to ongoing project is consistent with the legal position in this regard. A very conscious decision was taken that the Act should apply not only to new projects but to existing projects as well.
79. The following observations of the Bombay High Court in Neelkamal Realtors Suburban Pvt. Ltd. (supra) are relevant in this context:
“86. On behalf of the Petitioners it was submitted that registration of ongoing project under RERA would be contrary to the contractual rights established between the promoter and allottee under the agreement for sale executed prior to registration under RERA. In that sense, the provisions have retrospective or retroactive application. After assessing, we find that the projects already completed are not in any way affected and, therefore, no vested or accrued rights are getting affected by RERA. The RERA will apply after getting the project registered. In that sense, the application of RERA is prospective in nature. What the provisions envisage is that a promoter of a project which is not complete/sans completion certificate shall get the project registered under RERA, but, while getting project registered, promoter is entitled to prescribe a fresh time limit for getting the remaining development work completed. From the scheme of RERA and the subject case laws cited above, we do not find that first proviso to Section 3(1) is violative of Article 14 or Article 19(1)(g) of the Constitution of India. The Parliament is competent to enact a law affecting the antecedent events. In the case of State of Bombay v. Vishnu Ramchandra (1961) the Apex Court observed that the fact that part of the requisites for operation of the statute were drawn from a time antecedent to its passing did not make the statute retrospective so long as the action was taken after the Act came into force. The consequences for breach of such obligations under RERA are prospective in operation. In case ongoing projects, of which completion certificates were not obtained, were not to be covered under RERA, then there was likelihood of classifications in respect of undeveloped ongoing project and the new project to be commenced. In view of the material collected by the Standing Committee and the Select Committee and as discussed on the floor of the Parliament, it was thought fit that ongoing project shall also be made to be registered under RERA. The Parliament felt the need because it was noticed that all over the country in large number of projects the allottees did not get possession for years together. Huge sums of money of the allottees is locked in. Sizable section of allottees had invested their hard earned money, life savings, borrowed money, money obtained through loan from various financial institutions with a hope that sooner or later they would get possession of their apartment/flat/unit. There was no law regulating the real estate sector, development work/obligations of promoter and the allottee. Therefore, the Parliament considered it to pass a central law on the subject. During the course of hearing, it was brought to notice that in the State of Maharashtra a law i.e. MOFA on the subject has been in operation. But MOFA provisions are not akin to regulatory provisions of RERA.
87. The important provisions like Sections 3 to 19, 40, 59 to 70 and 79 to 80 were notified for operation from 1/5/2017. RERA law was enacted in the year 2016. The Central Government did not make any haste to implement these provisions at one and the same time, but the provisions were made applicable thoughtfully and phase-wise. Considering the scheme of RERA, object and purpose for which it is enacted in the larger public interest, we do not find that challenge on the ground that it violates rights of the Petitioners under Articles 14 and 19(1)(g) stand to reason. Merely because sale and purchase agreement was entered into by the promoter prior to coming into force of RERA does not make the application of enactment retrospective in nature. The RERA was passed because it was felt that several promoters had defaulted and such defaults had taken place prior to coming into force of RERA. In the affidavit-in reply, the UOI had stated that in the State of Maharashtra 12608 ongoing projects have been registered, while 806 new projects have been registered. This figure itself would justify the registration of ongoing projects for regulating the development work of such projects.
88. On behalf of the Petitioners it was submitted that Parliament lacks power to make retrospective laws. Series of judgments cited above would indicate a settled principle that a legislature could enact law having retrospective/retroactive operation. It cannot be countenance that merely because an enactment is made retrospective in its operation, it would be contrary to Article 14 and Article 19(1)(g). We find substance in the submissions advanced by the learned counsel appearing for the respondents that Parliament not only has power to legislate retrospectively but even modify preexisting contract between private parties in the larger public interest. No enactment can be struck down merely by saying that it is arbitrary and unreasonable unless constitutional infirmity has been established. It is settled position that with the development of law, it is desirable that courts should apply the latest tools of interpretation to arrive at a more meaningful and definite conclusion. A balance has to be struck between the restrictions imposed and the social control envisaged by Article 19(6). The application of the principles will vary from case to case as also with regard to changing conditions, values of human life, social philosophy of the Constitution, prevailing conditions and the surrounding circumstances.
89. Legislative power to make law with retrospective effect is well recognized. In the facts, it would not be permissible for the Petitioners to say that they have vested right in dealing with the completion of the project by leaving the proposed allottees in helpless and miserable condition. In a country like ours, when millions are in search of homes and had to put entire life earnings to purchase a residential house for them, it was compelling obligation on the Government to look into the issues in the larger public interest and if required, make stringent laws regulating such sectors. We cannot foresee a situation where helpless allottees had to approach various forums in search of some reliefs here and there and wait for the outcome of the same for indefinite period. The public interest at large is one of the relevant consideration in determining the constitutional validity of retrospective legislation.”
80. This Court concurs with the above conclusions. No order of the Supreme Court either entertaining a Special Leave Petition against the above decision in Neelkamal Realtors Suburban Pvt. Ltd. (supra) or staying its operation has been shown to this Court. In any event, the Court is of the view that there is nothing unreasonable and arbitrary in making the provisions of the Act applicable to all ongoing projects. There is a clear indication in the Act read with the Haryana Rules of what can be considered to be an ongoing project. If it is the case of the promoter that the completion certificate has been deliberately delayed, that would be examined by the AO, the Authority or the Appellate Tribunal, as the case may be, and the decision on that issue shall be taken into account while deciding the case. The mere fact that there may be an instance where there has been deliberate delay in issuing the completion certificate will not render the retroactivity of the provisions unreasonable or arbitrary. Consequently, this Court rejects the challenge to Sections 13, 18(1) and 19(4) of the Act and Rules 3 to 16 of the Haryana Rules as regards their retroactive applicability to ‘ongoing projects’.”
63. In view of the aforesaid analysis, all those projects coming within the ambit of the Real Estate Regulatory Authority, a complaint pertaining to violation of provisions of the Real Estate (Regulation and Development) Act, 2016, the Uttar Pradesh Real Estate (Regulation and Development) Rules, 2016 (hereinafter referred to as “the Rules, 2016”) and regulations made there under, can be filed by any aggrieved person in respect of real estate belonging to any real estate project, which qualifies to be a real estate project as per the definition given in section 2(zn) of the Real Estate (Regulation and Development) Act, 2016.
64. The judgment relied by the learned counsel for the respondent does not apply to the facts, circumstances and legal position stated hereinabove. The issue no. 1 is answered against the respondent/Lucknow Development Authority.
65. Issues nos. 2: Lucknow Development Authority (LDA) took a plea that present case ought to have been governed with the already agreed terms and conditions i.e. terms and conditions mentioned in the Brochure of the Scheme, read with Rules and Regulations of the LDA, but the Regulatory Authority failed to consider the same and has taken into account certain conditions in isolation and rest of the provisions have been ignored, which is impermissible, further Regulatory Authority failed to consider that in none of the conditions as per agreed terms, the appellant was entitled for any compensation/interest, in case the appellant decides to receive possession of the flat despite delay in handing over of possession.
66. In order to examine the objection raised by LDA and the issue, we deem it proper to examine the details mentioned in the Brochure of Parijat Housing Scheme. For ready reference the relevant provisions of the Brochure are being reproduced as follows:—<image>
67. The Lucknow Development Authority, the respondent placed reliance on clause 2.4 of its Brochure and submitted that the possession of the flat was proposed to be provided to the allottees within 24 months. Learned counsel for the respondent further placed reliance on clause 13.1 and submitted that in the Brochure, it is specifically provided that after allotment order conditions/rules applicable in Lucknow Development Authority or the State Government shall be binding upon the allottee.
68. LDA has further submitted that the procedure for allotment of residential buildings of LDA was formulated by the Board of LDA in the year 1993, and the same are binding upon the allottee as per clause 13.1 of the Brochure, and condition no. 38.1 of the same provides that in case construction of the buildings is delayed for the reasons beyond its control then in that case LDA shall not be responsible for the delay, and in case, the amount deposited by the allottee remained in the account of LDA for a period of one year or more, then in that case simple interest at the @ 6%. p.a. shall be applicable on the deposited amount. The Procedure of 1993 was superseded in the year 2016 by means of Lucknow Development Authority procedure for registration and allotment of residential properties, 2016, and vide condition no. 14.2, it is provided that in case the Lucknow Development Authority (LDA) did not deliver the possession of the property within the time limit prescribed then the allottee may demand the refund of deposited amount with an interest at the rate of 9% p.a., and in case allottee accepts the possession despite of delay, no interest/compensation shall be payable to such an allottee. Thus the allottee in this case is entitled for only refund of amount with interest at the rate of 6% p.a. in view of the terms and conditions applicable on the date of allotment, and after coming into force of 2016 Procedure simple interest at the rate of 9%, if he chooses to withdraw from the project. Further in none of the conditions as per the agreed terms, the appellant was entitled for any compensation/interest in case the appellant decides to receive possession of the flat despite of delay in handing over of possession and therefore, the appellant who has consented on oath to abide by the provisions contained in the rules, while submitting application duly supported with an affidavit for allotment of a residential unit in the scheme in question, cannot claim interest & possession both, contrary to the undertaking given on oath.
69. On examination of the Brochure we found that in clause 13.1 it is mentioned that after allotment other conditions/rules applicable in Lucknow Development Authority (LDA) and any amendment/supersession in such Rules by the LDA or the State Government shall be binding upon the allottee, but specific conditions/rules have not been mentioned. Even it is also not mentioned in the Brochure, from where an applicant/allottee can find those conditions/rules. The Lucknow Development Authority (LDA) cannot take advantage of clause 13.1 of the Brochure, while applying procedure for allotment of residential building of LDA formulated in the year 1993 or subsequent new procedure framed in the year 2016, specially with respect to the rate of interest to be paid by the LDA in case the allottee chooses to seek refund on account of delay in completion of the project or no interest for delay in completion of Project, if allottee chooses to opt or decide to take possession of the unit even in the event of delay in completion of the Project.
70. Another important aspect of the matter is that the grant of interest to the allottee by the Lucknow Development Authority, if the allottee opts to withdraw from the project on account of delay, and providing no interest to the allottee in case he/she takes possession of the apartment in the project, is in violation as well as contrary to the provisions of sub-section (2) of Section 4 of the Uttar Pradesh Apartment (Promotion of Construction, Ownership and Maintenance) Act, 2010 (hereinafter referred to as ‘the U.P. Apartment Act, 2010’). In order to appreciate subsection (2) of Section 4 of the U.P. Apartment Act, 2010, the same is reproduced as follows:—
“CHAPTER II DUTIES AND LIABILITIES OF PROMOTERS.
4. General liabilities of promoter.– ………………
(2) Every promoter shall,
(a) specify in writing the date by which construction of the apartment is to be completed subject to force majeure clause and intimation sent to such purchaser;
(b) declare the penalty for delay in completion of the building and also penalty in the event of non-payment of instalment by the purchaser;
(c) declare the conditions for cancellation or withdrawal of allotment and the extent of compensation either way in the event of violations of any of the conditions;
(d) give on demand by the intending purchaser, on payment of photocopying charges, true copies of the documents referred to in this section.
The provisions of Sub Section (2) (b) of Section 4 of the Apartment Act, 2010 mandates the promoter to declare the penalty for delay in completion of the building and also penalty in the event of nonpayment of instalment by the purchaser, meaning thereby that in the Brochure a promoter is required to mention about the penalty for the delay in completion of the building and also penalty in the event of non-payment of instalment by the purchaser. In the present case the Lucknow Development Authority in clause 2.1 of the Brochure only mentioned the obligation of the allottee to make payment of the instalment in time and in case of failure the allottee has to pay penalty at the rate of 15% per annum and if due instalment and penalty with interest are not paid within 90 days then his/her reservation/allotment was liable to be cancelled, whereas as per provisions of sub-section (2)(b) of Section 4 of the Apartment Act, 2010, the promoter was to declare and specifically mention the penalty to be paid by it, in case of delay in completion of the project. Thus the concerned provisions of the Procedure of 2016, is in violation of the Apartment Act, 2010, and it being a statutory organization, the Lucknow Development Authority is required to follow the concerned laws in its words and spirit.
71. Having examined the terms and conditions of the Registration Booklet/Agreement, we would like to examine the laws on contracts. In this connection, it is useful to note what Chitty has to say about the old ideas of freedom of contract in modern times. The relevant passages are to be found in Chitty on Contracts, Twenty-fifth Edition, Volume I, in paragraph 4, and are as follows:—
“These ideas have to a large extent lost their appeal today. “Freedom of contract”, it has been said, “is a reasonable social ideal only to the extent that equality of bargaining power between contracting parties can be assumed, and no injury is done to the economic interests of the community at large.” Freedom of contract is of little value when one party has no alternative between accepting a set of terms proposed by the other or doing without the goods or services offered. Many contracts entered into by public utility undertakings and others take the form of a set of terms fixed in advance by one party and not open to discussion by the other. These are called “contracts d’adhesion” by French lawyers. Traders frequently contract, not on individually negotiated terms, but on those contained in a standard form of contract settled by a trade association. And the terms of an employee’s contract of employment may be determined by agreement between his trade union and his employer, or by a statutory scheme of employment. Such transactions are nevertheless contracts notwithstanding that freedom of contract is to a great extent lacking.
Where freedom of contract is absent, the disadvantages to consumers or members of the public have to some extent been offset by administrative procedure for consultation, and by legislation. Many statutes introduce terms into contracts which the parties are forbidden to exclude, or declare that certain provisions in a contract shall be void. And the courts have developed a number of devices for refusing to implement exemption clauses imposed by the economically stronger party on the weaker, although they have not recognised in themselves any general power (except by statute) to declare broadly that an exemption clause will not be enforced unless it is reasonable. Again, more recently, certain of the judges appear to have recognised the possibility of relief from contractual obligations on the ground of “inequality of bargaining power”.
72. We note that the Lucknow Development Authority had floated a scheme of multi storeyed residential apartments in 2012 in Vikrant Khand, Gomti Nagar, Faizabad Road, Lucknow in the name Parijat Housing and in pursuance to the advertisement of the Lucknow Development Authority appellant purchased the Brochure and preferred an application for allotment of a unit. The appellant was allotted flat [property No. PJ/404/B-1 (293964)] vide letter no. 103/VAP/Parijat/2012 dated 14.09.2012. The installments have also been deposited by the allottee as per the schedule mentioned in the allotment letter.
73. We are of the view that the Registration Booklet, letter of allotment or agreement for sale, or any written document called by whatever name is kind of an offer of sale and once it is executed or signed or issued or the first payment of booking amount is made by the buyer and accepted by the seller, it becomes a ‘Contract’.
74. The Hon’ble Supreme Court time and again examined the issue of one sided apartment buyers’ agreement and in its recent judgment in Pioneer Urban Land and Infrastructure Ltd. v. Govindan Raghavan report in (2019) , vide para 6.8, pleased to observe as follows:
“A term of a contract will not be final and binding if it is shown that the flat purchasers had no option but to sign on the dotted line, on a contract framed by the builder. The contractual terms of the Agreement dated 08.05.2012 are ex-facie one-sided, unfair, and unreasonable. The incorporation of such one-sided clauses in an agreement constitutes an unfair trade practice as per Section 2 (r) of the Consumer Protection Act, 1986 since it adopts unfair methods or practices for the purpose of selling the flats by the Builder.”
75. Subsequently, in Wg. Cdr. Arifur Rahman Khan v. DLF Southern Homes Pvt. Ltd., reported in (2020) affirming the view taken in the Judgment in Pioneer’s case (Supra) the HON’BLe Supreme Court held that the term of the agreement authored by the Developer does not maintain a level platform between the Developer and the flat purchaser. The stringent terms imposed on the flat purchaser are not in consonance with the obligation of the Developer to meet the time lines for construction and handing over possession, and do not reflect an even bargain. The failure of the Developer to comply with the contractual obligation to provide the flat within the contractually stipulated period, would amount to a deficiency of service. Given the one-sided nature of the Apartment Buyer’s Agreement, the consumer fora had the jurisdiction to award just and reasonable compensation as an incident of the power to direct removal of deficiency in service.”
76. On the basis of the aforesaid analysis, we are of the view that the terms and conditions mentioned in the Brochure are binding on both the parties except clause 2.1 read with concerned provisions i.e. 14.2 of Lucknow Development Authority Procedure for Registration and Allotment of Residential Properties, 2016 which provides that, “in case allottee accepts the possession despite of delay, no interest/compensation shall be payable to such an allottee”, which is unreasonable, unfair, unjust and one sided and contrary to the provision of sub-section (2) (b) of Section 4 of the U.P. Apartment Act, 2010 apart from being unilateral and unfair. The issue no. 2 is answered against the Lucknow Development Authority.
77. Issue No. 3 relates to payment of GST. The submission of appellant is that GST was implemented in the year 2017 and, therefore, he should be exempted from the payment of the same on account of delay in handing over possession beyond the promised date i.e. September, 2014. In clause 2 of the Brochure it has been mentioned that the cost of the flat is tentative and the same can be increased by 5% and any surcharge or extra tax, vat, service tax, if any, was required to be paid by the allottee. The Regulatory Authority while examining this issue took notice of the decision of Hon’ble Supreme Court in the case of Supertech v. Rajni Goyal dated 23.10.2018, wherein HON’BLe Supreme Court upheld the decision of NCDRC regarding charges towards water connection, labour welfare, service tax etc. on proportionate basis subject to furnishing proof of such payments and observed that it is true that in the year 2014 GST was not there but at that time the tax applicable was required to be paid by the allottee and, therefore, there is no justification for directing refund of the amount paid towards GST.
78. On examination of the record/documents annexed with the memo of appeal, we could not find any document/receipt, which shows any amount paid by the appellant towards the service tax, applicable at the relevant time (i.e. between 2012 to 2014) or demanded by the respondent. The GST is demanded by the respondent vide final account report dated 18.08.2018. On due consideration, we do not find any perversity or illegality in the order of the Regulatory Authority while deciding the issue of payment of GST by the allottee.
79. Issue No. 4 is regarding parking charges. In Clause 2 of the Brochure it has been clearly mentioned that for calculating super area the area of parking is not included. Clause 3.3 of the Brochure provides that the cost of covered parking is Rs. 1,75,000/-, cost of extra covered parking is Rs. 2,25,000/- and the cost of open parking is Rs. 50,000/- separately. We find that the cost of parking has neither been included in the price of the flat nor the same has been included in the super area. The condition of parking charges was in the knowledge of the allottee even before making his application for allotment. Therefore the demand of the allottee of free parking space is misconceived. The decision of HON’BLe Supreme Court in the case of Nahal Chand Laloo Chand Pvt. Ltd. v. Panchali Coop. Housing Society dated 31.10.2010, relied by the allottee, does not apply to the present case as the same relates to Maharashtra Apartment Ownership Act and the Regulations made thereunder, whereas in the case of DLF Ltd. v. Man Mohan Lowe, (2014) 12 SCC 231 it has been observed by the HON’BLe Supreme Court that the demand of parking charges in terms of agreement is justified. In view of the above, we are of the considered view that the parking charges are payable by the allottee.
80. Issue Nos. 5 and 6 relate to the charges towards gas pipeline, generator, electricity connection and telephone. As far as these charges are concerned the same have been mentioned in clause 2 of the Brochure and the allottee was fully aware of the charges under these heads and the allottee can always ask the details of the payments made by the Lucknow Development Authority and the calculation of the proportionate charges liable to be paid by the allottee, from the concerned department of the Lucknow Development Authority. The issues are answered against the allottee.
81. Issue No. 7 is regarding exemption from freehold charges. The submission of appellant is that it is against the provisions of Section 2(v) of the Act, 2016. Clause 10 of the Brochure clearly indicates that the allotted flats will be registered as freehold and the allottee is required to pay freehold charges and other expenses prior to execution of the conveyance deed. The allottee was fully aware about freehold charges to be paid before registration of the conveyance deed and, therefore, the issue raised by the allottee for exemption from freehold charges is misconceived and accordingly issue no. 7 is answered against the appellant.
82. Issue No. 8 is regarding grant of two years exemption from the period of delay on account of unavoidable situation by the Regulatory Authority. As per Brochure, the project was required to be completed within 24 months. The allotment letter is dated 24.09.2012 and thus the possession was required to be given by September, 2014. The Regulatory Authority got the inspection done on 20.04.2019 and it was found that the external work was complete whereas internal work was yet to be completed and as per the policy of the Lucknow Development Authority, the same was to be completed within three weeks from the date of registration of the conveyance deed. The Regulatory Authority observed that there is delay of 4.5 years. The Regulatory Authority also examined the circumstances which resulted in the delay of the project and made issue relating to land dispute on account of which the project was delayed for about one year. There was a high tension (H.T.) line also passing through the spot of the project and it took two years to pursue the matter with the Electricity Department and getting the high tension line removed from the site of the project. Taking these unavoidable circumstances which were apparently beyond the control of the authorities of the Lucknow Development Authority the Regulatory Authority granted exemption of two years while calculating the delay in completion of the project.
83. On examination of the cause of delay, we are of the considered view that the relaxation of two years granted by the Regulatory Authority in completion of the project is justified and there is no illegality or perversity in the same. Thus, issue no. 8 is answered against the appellant.
84. Issue no. 9 is regarding rate of interest, and the submission of appellant is that it should be as per the provisions of Section 2(za) of the Act, 2016. We deem it proper to examine the provisions of Section 2, in particular Section 2(za) of the Act of 2016, which reads as follows:—
“2 Definition– In this Act, unless the context otherwise requires,—
……………………………………………………………………..
Section 2(za):— “interest” means the rates of interest payable by the promoter or the allottee, as the case may be.
Explanation.—For the purpose of this clause-
(i) the rate of interest chargeable from the allottee by the promoter, in case of default, shall be equal to the rate of interest which the promoter shall be liable to pay the allottee, in case of default;
(ii) the interest payable by the promoter to the allottee shall be from the date the promoter received the amount or any part thereof till the date the amount or part thereof and interest thereon is refunded, and the interest payable by the allottee to the promoter shall be from the date the allottee defaults in payment to the promoter till the date it is paid;”
85. The definition clause in section 2 begins with the words “unless the context otherwise requires.” The words appearing in the beginning of clauses to Section 2 of the Act are prima facie restrictive and not inclusive. When words have been defined in the interpretation clause, prima facie that definition governs whenever it occurs in different sections of the Act but where the context makes the definition given in the interpretation clauses inapplicable, a defined word when used in the body of the statute may have to be given a meaning different from that contained in the interpretation clause.
86. All definitions given in interpretation clauses are therefore normally subject to the qualification ‘unless there is anything repugnant in the subject or context’, or ‘unless the context otherwise requires’. This is what has been laid down by the Hon’ble Supreme Court, in several decisions, some of which may be referred to as Dhandhania Kedia & Company v. CIT, AIR 1959 SC 219 and Special Officer and Competent Authority Urban Land Ceilings, Hyderabad v. P.S. Rao, (2000) 2 SCC 451 : AIR 2000 SC 843.
87. The function of a definition is not to enact substantive law. It is to provide aid in construing the statute. The HON’BLe Supreme Court in Controller of Estate Duty, Gujarat v. Kantilal Trikamlal, (1976) 4 SCC 643 : AIR 1976 SC 1935 was pleased to observe that a definition is informative and is not a substantive rule of law operative by itself and it must be read along with other relevant provisions.
88. In Ramesh Mehta v. Sanwal Chand Singhvi, (2004) 5 SCC 409, the Hon’ble Supreme Court held that a definition is not to be read in isolation and it must be read in the context of the phrase which would define it and that it should not be vague or ambiguous, that the definition of words must be given a meaningful application; and that where the context makes the definition given in the interpretation clause inapplicable, the same meaning cannot be assigned.
89. We are of the considered view that the rate of interest chargeable from the allottees by the promoter for delay/default in payment cannot be taken as such, while directing the promoter to pay the allottee an interest for delayed possession. The definition of interest as provided in Section 2(za) of the Act needs to be read with the provisions of Section 12, 18 and 19 of the Act, which qualify the word “interest” by suffixing it with the term “at such rate as may be prescribed.”
90. Therefore placing reliance on the definition of interest as provided in Section 2(za) only, without examining the provisions of Section 12, 18 and 19 of the Act of 2016 is misplaced, as the definition is informative and it only provides aid in construing the statute and has to be read along with other relevant provisions of the Act. In the light of the above analysis, the issue no. 9 is answered against the allottee, i.e. the appellant.
91. Issue No. 10 is regarding increased cost of the unit. The submission of the allottee is that on account of delay in the project the increased cost taken by the Lucknow Development Authority be directed to be refunded. The perusal of clause 2 of the Brochure clearly indicates that the declared cost was tentative and the cost could increase by 5% and any surcharge or additional tax, vat, service tax etc., if any, imposed by the Government were to be paid by the allottee separately and in case of increase in the area, the actual payment was to be made on the basis of the increased area. The Regulatory Authority, while examining the calculation sheet of the Lucknow Development Authority dated 05.06.2018 which includes an amount of Rs. 2.48 lacs towards tax and enhancement in the cost of the unit, found that there is increase of about 5.5% of the original amount of Rs. 44.5 lacs of the unit and it was observed by the Regulatory Authority that the increased cost is almost proportionate as per the conditions mentioned in the Brochure of the project.
92. We have examined the submissions of the appellant as well as the pleadings of the Lucknow Development Authority and perused the record thoroughly including the impugned order of the Regulatory Authority dated 03.06.2019. The Regulatory Authority has in detail examined the issues raised by the allottee by framing 7 issues, while passing the order dated 03.06.2019. In our considered view, there is no illegality or perversity in the same except in direction no. 4 of the order, wherein Parking Charges were directed to be charged as part of the cost of building taking into account Parking Charges as a part of original allotment, whereas Regulatory Authority, while deciding issue no. 3, held that as per terms and conditions of Brochure parking/garage charges are payable; and while examining issue of Parking Charges vide issue no. 4 we have also concluded that Parking Charges are payable by the allottee, hence we set aside the direction no. 4 of the Regulatory Authority and affirm the rest of the order. Accordingly Appeal is dismissed.
93. No order as to costs.