RERA| Promoter Who Has Not Received Any Consideration From An Allottee Can Also Be Liable To Refund With Interest: Bombay HC
The Bombay High Court observed that a promoter who has not received any consideration from an allottee can also be liable to give refund with interest under Section 18 of the Real Estate (Regulation and Development) Act, 2016 (RERA).
Therefore, while refusing to accept the contention about absence of privity of contract and highlitging the definition of a ‘promoter’ under Section 2(zk) of the RERA, a Bench of Justice Sandeep V. Marne observed, “…it is not necessary that there has to be an agreement between every Promoter and the flat purchaser. As observed above, it is a matter of indoor management between the Promoters and the flat purchaser who is not supposed to know the intricacies of the arrangements made between several promoters amongst themselves. When a claim is raised in respect of a real estate project by a flat purchaser, all promoters become jointly liable qua that flat purchasers, irrespective of whether there is privity of contract with each of the promoter or not. This is the scheme of RERA and mere absence of privity of contract with a particular promoter does not relieve such promoter in respect of the liabilities under RERA”.
Advocate Naushad Engineer appeared for the Appellant, and Senior Advocate Ashish Kamat appeared for the respondent.
In the present matter, the respondent no.2- SSS Escatics Pvt. Ltd, launched a project named "The Nest" under a Joint Development Agreement with the appellant. The respondent No.1 booked a flat in the project and paid a substantial amount towards consideration. However, the said project remained incomplete upon the enactment of the Real Estate (Regulation and Development) Act, 2016 (RERA), and was registered under RERA with the appellant declared as a Promoter.
Thereafter, respondent no.1 sought a refund due to discrepancies in the area of the flat and other issues. Pursuant to which, MahaRERA directed both the complainant and the promoters to execute a registered agreement for sale within 30 days. If failed, the entire amount was to be refunded to the complainant within the next six months. The appellant challenged the order, denying any liability towards the complainant and arguing that only respondent No.2 should be liable for the refund.
However, it was held that both the complainant and the promoters were responsible for the violation and rejected the complainant's refund request but directed the execution of a registered agreement for sale.
Therefore, now the Bench had to adjudicate upon two broad issues:
(i) Whether a Promoter who has not received any consideration from an allottee can be made liable for giving refund with interest under Section 18 of the Real Estate (Regulation and Development) Act, 2016?
(ii) Whether on account of non-decision of point about the liability of the Appellant to refund the amount by the MahaRERA Appellate Tribunal, an order of remand is warranted?
While answering in affirmative, the Bench observed, “…mere falling of flat in the share of the second Respondent under the Joint Development Agreement, would not excuse the Appellant from the responsibilities and liabilities under the RERA, Rules and Regulations made thereunder qua that flat. RERA does not demarcate or restrict liabilities of different promoters in different areas. The liability is joint for all purposes under the Act, Rules and Regulations”.
On the second question, the bench was of the opinion that the same was rendered academic. “True it is that the Appellate Tribunal ought to have recorded some findings on the points sought to be raised by the Appellant about the plea raised by Appellant. However, the issue is being decided in the present Appeal, it is not necessary to remand the Appeal due to technical reason of Appellate Tribunal’s failure to record findings on the issue sought to be raised by the Appellant in the written submissions filed before it”.
Appearances:
Appellant: Advocates Naushad Engineer with Chirag Kamdar, Abir Patel and Lavina Bhargava i/by. M/s. Wadia Ghandy & Co.
Respondent: Senior Advocate Ashish Kamat, with Vikram Garewal, Sagar Deb, Amani i/by. Anmol Bastariva
Cause Title: Wadhwa Group Housing Private Ltd. v. Vijay Choksi [Neutral Citation: 2024:BHC-AS:9311]
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