Obligations of promoter regarding veracity of the advertisement or prospectus
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 this Act:
Provided that if the person affected by such incorrect, false statement contained in the notice advertisement or prospectus, or the model apartment, plot or building, as the case may be, intends 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 this Act.
The RERA law lays that where any person makes an advance or deposited a sum against the consideration amount on the basis or relying on the assurance or information obtained from the agent of the builder or any person acting on his behalf, had made any assurances or information contained in the prospectus or advertisement or on the basis of any model apartment , plot or building as the case may be, and that the home-buyer sustains any loss or damage by reason of any incorrect or false statement included therein, then such person/home-buyer shall be compensated for the loss so caused by the promoter in the manner as provided under this Act.
Provided further that if such aggrieved person wants/intends to withdraw from the proposed project then he shall be returned his entre investment along with interest at such rate as may be prescribed and the compensation in the manner provided under this Act.
The assurances/promises given by the agent is also considered and presumed assurances given by the Builder and thus the builder is bound by the act of the agent. The agent is liable if he makes a false or misleading representation concerning the services that he intends to offer. The rule of law says that the oral communication is not admissible in law provided the same is proved by circumstantial evidences. Therefore, the home-buyers are required to be cautious while dealing with such oral assurances and that if the agent is making oral promises, then care should be taken that it should be in front of 2-3 different individuals who does not have interest in the transaction or sale. So that in the event of proving the oral promises, these witnesses help in proving the oral promises.
As per section 2(b) of RERA Act, which defines ‘advertisement’, any medium adopted in soliciting for sale would be covered under the said definition, including SMS and emails. Prospectus, which is intended for sale of apartment in real estate project, will also be covered. Thus, all the amenities or facilities that are shown on the brochure / prospectus, emails, SMS, any electronic media used by the builder to promote his sales, such builder is bound to provide all that amenities and if he fails to provide the same the home-buyers can seek reliefs under the RERA Authority. Section 18 plays a complimentary role in the giving such reliefs, where it has categorically stated in the sub section (1) that if promoter fails to complete or is unable to give possession of an apartment, plot or building, in accordance with agreement for sale, he shall be liable on demand to the allottees to return the amount received by him in respect of that apartment, plot as the case may be. This section plays vital role in giving compensation along with interest, thereby safeguarding the hard-earned money of the home-buyers
In one case, the brochure shows the picture of the swimming pool in the middle of the open space facing towers of the flats. No written promise by the builder for construction of swimming pool. On the basis of the photograph in the brochure, the Hon’ble Chattisgarh High Court ordered the builder to construct the swimming on the open space. (M. Ahuja (I)(P) Ltd. Vs. Shaktipunj Engineers Pvt. Ltd. in WPC No. 2374 of 2018.)
In a recent case, a big development has come in interpreting the law for the homebuyers came in M/s Bombay Dyeing and Manufacturing Co Ltd. where the Maharashtra Real Estate Appellate Tribunal directed the promoter to return the amount paid by buyers because of failure to provide facilities as promised in advertisements.
In the said case Bombay Dyeing launched high end 85 storeyed skyscraper project“Island City Centre” in Wadala before the enactment of RERA in 2016.
The promoter in its full fledged advertisement advertised various common facilities and the due date of possession was taken as 2017. That when RERA came into picture the projects were far from completion and therefore, RERA registration was sort wherein the due date was changed to 2019.
Due to the project getting delayed and facilities not developed as promised the buyers invoked section 12 and 18. The MAHRERA Authority ruled in favour of developer and stated that Section-12 which deals with veracity of advertisement cannot apply retrospectively and thus buyers were denied refund.
However, the aggrieved home-buyers took to Maharashtra Real Estate Appellate Tribunal challenging order of MAHARERA. The Tribunal grante relief to the aggrieved home-buyers ruled that the project was registered under Section-3 of the Act and thus was governed by the obligations and duties castes upon a promoter under the RERA Act.
The Tribunal specifically ruled that promoter or developer cheated the buyers by booking the units on a false advertisement. That as per the provision of Section-12 there are two things in case booking is done on false or misleading advertisement: –
- The buyer has to be compensated by the builder
- In case, on such pretext the buyer wishes to exit from the project the builder shall refund the entire amount along with interest and will be compensated as well.
The major point that the Tribunal discussed and ruled was that, how Section-12 has a retrospective effect and even though the project was launched and was under construction before the enactment of RERA.
The promoter was directed to refund the amount taken along with statuary interest as prescribed under MAHARERA Rules.
Disclaimer – The above article is based on interpretation of the related judicial pronouncement and related statutory laws which may differ from case to case. The readers should take expert opinion before placing reliance on any case law. For more information you can reach the author at: