“RERA (The Real Estate Regulatory Authority)”- A big relief for Builders from defaulting Buyers/Customers.

While this is true that since a massive downfall in real estate sector in India, the news of buyers getting harassed by builders on account of no construction, delayed possession and to the extent of its company getting liquidated has become common now a day.

But at the same time, there are also numbers of buyers who being a defaulter in them files false cases against the builders and harasses them for their no fault and ultimately destroy their name in the market. 

Yes, it is true that while mostly it is only builders who harass buyers by their unfair trade practices but at the same time, the Builders also go through a lot from their buyers which fact always goes unnoticed. However, with a recent enactment of The Real Estate Regulatory Authority Act’ 2016 (“the Rera Act”) not only the disposal of real estate matters has been expedited whether filed from the side of buyers or builders but also it is a balanced law protecting the rights of buyers and builders at the same time. 

Under the Rera Act, the rights and duties of both Allottees (the buyers) and Promoter (the Builder) have been clearly explained and the actions, which either party can take on their non-compliance or failures. In Chapter III, Section 11 to 18 of the Rera Act explains the Functions and Duties of Promoter and in Section IV Section 19 explains the Rights and Duties of the Allottees.

Amongst above right and duties of Allottees in Section 19, the sub Clause (6) & (7) explains the duty of Allottee as under:

“(6) Every allottee, who has entered into an agreement for sale to take an apartment, plot or building as the case may be, under section 13, shall be responsible to make necessary payments in the manner and within the time as specified in the said agreement for sale and shall pay at the proper time and place, the share of the registration charges, municipal taxes, water and electricity charges, maintenance charges, ground rent, and other charges, if any.

(7) The allottee shall be liable to pay interest, at such rate as may be prescribed, for any delay in payment towards any amount or charges to be paid under sub-section (6). ”

In view of above provisions, noticing an evasive complaint filed by the buyer, the Madhya Pradesh Real Estate Regulatory Authority bench comprising of its Chairman Mr Anthony De Sa and members Mr Aniruddh D. Kapaley and Mr Dinesh Naik passed a judgment against him (the Allottee/Buyer).

“Where, it was the case of the complainant that he has entered into an agreement with Builder in the year 2016 for the purchase of a residential apartment at an agreed Sale Consideration of Rs. 20.00 Lakhs, out of which he paid an amount of Rs. 2.75 Lakhs apart from an undated cheque of Rs. 1.25 Lakh, which was to be presented in the bank by the builder with his prior approval i.e. when he would be satisfied with the construction of the project. It was further alleged by him that since till end of the year 2017 the construction was not even started by the builder, as such, advance amount be returned along with the interest apart from compensation for harassment and mental agony. 

The Authority on appearance of the Builder and consequent to filing of its reply before it with the real fact that the firstly agreement allows delivery of apartment in a period of 3 years from the date of agreement with a further extension of 6 months, if needed and secondly that the agreement is governed by a strict construction linked payment schedule, as per which, the advance which was to be paid by the allottee was not 2.75 Lakh but 3.75 Lakhs, which was also not paid by the allottee. Also, by the end of the year 2017, the builder had completed more than 70 % construction by which time an amount of Rs. 8.75 Lakh also became due to be paid to the builder by the allottee and in order to escape from such liability, he has filed this complaint.

The Authority on the basis of proof being filed along with the Reply passed an order in favour of the Promoter (Builder) i.e. to cancel the allotment of the Allottee by deducting an amount of Rs. 50,000 towards cancellation apart from taxes.” 

Therefore, it is very important for Promoters (Builders) to have a proper agreement as approved by the Rera having a clear strict time and payment schedule plan along with a clear cancellation and termination clause on account of any failure of Allottee (buyer) in fulfilling its duties as per the agreement. 

Needless to mention, the termination or cancellation Clause should be specific about it subject and contingency arising therefrom.   

Priyank Upadhyay


Contact:- priyankupadhyay@lnu.co.in