In a landmark ruling, the Kerala Real Estate Appellate Tribunal (REAT) issued a significant judgment, ordering Shobha Ltd, the respondent in the case, to pay a 12% interest rate. This payment results from Shobha Ltd receiving and utilizing the allottee's funds for 18 months, all without executing a legally compliant agreement under the Real Estate Regulatory Authority (RERA).
Advocates Sri Shameem Ahmed and Sri Akhil Philip Manithottiyil represented the appellant in the case, while advocates Sri Abraham Mathew Vettoor and Sri Anil Abey Jose appeared on behalf of the respondent.
The appellants, Mr. Sanjay Gangadharan Nambiar and Mrs. Usha VR have filed an appeal under Section 44 of the Real Estate (Regulation & Development) Act, 2016. The complainant has lodged an appeal against the order dated August 8, 2022, issued by the Kerala Real Estate Regulatory Authority (K-RERA) in Complaint No. 245/2021. However, a formal defect was identified in the appeal memorandum.
The complainants, Mr. Sanjay Gangadharan Nambiar and Mrs. Usha VR, who are husband and wife, were allotted a residential apartment along with two car parking spaces in a project called 'Marina One' situated in Kochi. The project was developed by the respondents and is duly registered with the Kerala Real Estate Regulatory Authority (K-RERA) under Section 3 of the Real Estate (Regulation & Development) Act, 2016. The complainants made a booking for the aforementioned property, agreeing to a total payment of R 3,29,05,554/-.
As part of the total amount payable, the appellants/complainants initially paid an advance sum of Rs. 63,50,245/- as per the respondents' request. On 13/3/2018, the respondents provided a draft agreement for sale to be signed and returned by the appellants/complainants. However, the deal did not comply with the provisions outlined in the Real Estate (Regulation & Development) Act, of 2016. The appellants notified the respondents that the draft agreement was unacceptable due to the inclusion of clauses that were not agreeable to them. They requested modifications to be made.
Despite the appellants' concerns and request for modifications, the respondents proceeded to demand an additional sum of Rs. 25,43,299/- in clear violation of Section 13 of the Real Estate (Regulation & Development) Act, 2016. The appellants, recognizing that the agreement for sale had not been amended to comply with the provisions of the Act, refused to make the payment. As a result, they made the decision to cancel their booking of the apartment and withdraw from the project. A notice of cancellation was issued by the appellants.
On March 13, 2018, the respondents provided the appellants/complainants with a draft agreement for sale to be signed and returned. However, the agreement did not comply with the provisions of the Act. The appellants notified the respondents that the draft agreement was unacceptable due to the inclusion of clauses that were not agreeable to them and requested modifications. Despite this communication, the respondents, in their letter dated November 5, 2018, ignored the issue and unlawfully demanded an additional amount of Rs. 25,43,299/-, thereby violating Section 13 of the Act. The appellants refused to pay this amount as the agreement for sale had not been modified in accordance with the provisions of the Act.
The respondents returned the advance amount paid by the appellants on various dates ranging from June 13, 2019, to June 21, 2019. However, they refused to pay any interest on the refunded amount. The findings of the K-RERA (Karnataka Real Estate Regulatory Authority) dismissing the complaint are legally unsound and not in accordance with the law.
During that time, it is important to note that the state of Kerala had not implemented K-RERA. Additionally, it was stated that the withdrawal of the allottee during the pre-agreement stage would not entitle them to any interest. This specific situation was not addressed or covered by the provisions outlined in the RERA Act. It is advisable to seek legal advice and clarification from a legal professional familiar with the laws and regulations of Kerala during that period to determine the applicable rights and obligations in this scenario.
According to Justice Sri. P. Ubaid, Chairperson, and Sri V.K. Babu Prakash, Judicial Member, it was observed that Section 12 of the RE(R&D) Act stipulates that if an individual incurs a loss or damage after making an advance or deposit based on information provided in a notice, advertisement, prospectus, notice of development, or model apartment, plot, or building, the promoter is obligated to compensate them in accordance with the provisions outlined in the Act.
In the appeal decision, the Tribunal ruled that the appellants are entitled to receive interest on the advance amount they paid. The interest should be calculated from the respective dates of payment mentioned below until the amount is realized. Consequently, the appeal was allowed, and the appellants have the right to receive interest at 12% per annum on the advance amount paid. To view the judgment, you can subscribe to Taxscan Premium.
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