Delay in Flat Possession by Builder? Here’s how to claim Compensation under RERA

Introduction:

Delay in flat possession can be a distressing experience for a homebuyer. Not only does he endanger his life savings, but also loses his chance to get his dream home in an era where property prices are skyrocketing. In the wake of suffering experienced by homebuyers who had invested in Jaypee and Unitech projects, the Government passed the Real Estate Regulation Act of 2016 to address the problem. Section 18 of the Act is of particular significance, as it directs defaulting builders to pay compensation for delay in handing over possession of flats.

Under Section 18, if a builder fails to hand over possession of the flat as per the date mentioned in the Agreement of Sale, the homebuyer has two options – either to terminate the agreement and seek refund or to continue with the project and claim compensation. If he decides to exit the project, the builder will be liable to return the entire amount paid for the flat with interest. On the other hand, if the homebuyer opts to continue with the project, he can claim interest for every month of delay till the time the apartment is handed over.

What is the rate of interest payable for delayed projects?

The rate of interest is prescribed under the Real Estate Regulation Rules, which vary from state to state. For example, Rule 18 of the Maharashtra Real Estate Rules prescribes a rate of interest equal to SBI MCLR (Marginal Cost of Lending Rate) plus two percent (2%). Since the current MCLR rate is 8.6% (varies from time to time), the penal interest rate would be 10.6%.

Procedure for filing complaint under Section 31 against the builder:

Section 31 of the RERA Act states that, any ‘aggrieved person’ may file a complaint with the Real Estate Regulatory Authority for any violations of the said Act. Thus, if a builder delays in completing the flat, a complaint can be filed against him under Section 31. Such a complaint can be filed either by the flat-buyer himself, or the Association of Allottes in the project (such as a homebuyer association).

Format for preparing the complaint:

The prescribed format for preparing the complaint is mentioned in the real estate regulation rules, which vary from state to state. However, there is a common structure to be followed which can be described as under:

  • Give the RERA registration number and basic details of the project;
  • State the brief facts of the Matter and how the complainant is affected;
  • Describe how the RERA Act is violated by the Developer;
  • If compensation is claimed, justify the same through calculations;
  • State the relief sought.

After the complaint is ready, all the relevant documents such as Agreement for Sale, payment proofs etc. can be attached as exhibits and bound into a paper book. While a scanned copy can be uploaded online, the RERA require that hard copies be submitted at the authority’s office. In addition, the opposite party (such as the builder) must also be provided with an advance copy. Once the builder has been served with a copy and his acknowledgement taken, the Real Estate Regulatory Authority will accept the complaint and give a date for the hearing.

RERA to conduct time-bound hearing:

Once the claim for compensation is filed under Section 31, it will be posted for hearing before the Adjudicating Officer of RERA under Section 71 of the Real Estate Regulation Act. The Adjudicating Officer has the rank of a District Judge and is empowered to hear and decide claims for compensation. A sixty (60) day time-limit is prescribed under Section 71 for the Adjudicating Officer to hear and decide the case.

During the hearing, the Adjudicating Officer of RERA will have to follow the Rules of Natural Justice. This means that he will have to hear both sides and give them to chance to rebut each other. The Opposite Party (such as a the Developer) will be given a chance to file his reply to the complaint. After reply is filed, the Complainant can file a short counter to the reply, known as a rejoinder. Once these documents are filed, the pleadings are considered complete and matter is kept for final hearing. The Adjudicating Officer of RERA will give both sides ample time to present their arguments. The parties must follow proper discipline and not try to unnecessarily interrupt one another. If the judge has any questions, he will raise them and parties must answer to the best of their abilities. Once this stage of arguments and questions is complete, the matter will be kept for passing orders.

Adjournments an Exception, Not a Rule:

Civil courts in India have been plagued with the ‘tareekh pe tareekh‘ syndrome, resulting in massive pendency and denial of justice. This is not the case with RERA. Since Section 71 prescribes a time limit of sixty days, the lawyers appearing for the parties must not seek unnecessary adjournments. If a party seeks to adjourn the proceedings, it must provide valid reasons for doing so, failing which the request will be rejected. Therefore, RERA actively discourages the ‘adjournment culture’ that has been the bane of Indian courts and instead proceeds in a timely manner to avoid delays.

Judgment and Appeal:

Once the Adjudicating Officer of RERA has completed the hearing, he will proceed to pass judgment. RERA judgments are usually short, just 4 to 5 pages where the judge records the facts of the case and arguments presented by both sides. He then examines the arguments advanced in accordance with law in order to determine whether any violation of the RERA Act is made out or not. Having given his reasons and finding on fact, the judge will conclude by deciding whose case has merit and pass order accordingly.

Once the final order has been passed in favour of one party, the other party against whom the decision is passed can file an appeal. Such an appeal must be filed before the Real Estate Appellate Tribunal (REAT) within a period of sixty days of the Adjudicating officer passing the order. This sixty day limitation period will start running from the date on which the Appellant (person filing appeal) receives the certified copy of the order from the RERA office registry.

Conclusion:

While the Real Estate Regulation Act of 2016 may have faced criticism for one reason or another, it is nevertheless a major step forward in protecting consumers in the housing and construction sector. Before the advent of RERA, builder-buyer litigation went on for years in consumer courts, plagued by delays and pendency. Now in the post-RERA era, homebuyers have a dedicated and specialised forum where they can agitate their disputes. Therefore, any person who is facing delay in possession of his flat can easily move the Real Estate Regulatory Authority with his complaint. While the final verdict will depend on the individual merits of the case, the benefits of quick and timely disposal are for all to see.

About the Author: A

Aditya Pratap is a lawyer practising at the Bombay High Court. Questions can be addressed to him by email at aditya@adityapratap.com. For further information one may visit his website adityapratap.in. and his YouTube Channel.

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Advocate Aditya Pratap
About Advocate Aditya Pratap 64 Articles
Aditya Pratap is a lawyer practising in Mumbai. He argues cases in the Bombay High Court, Sessions and Magistrate Courts, along with appearances before RERA, NCLT and the Family Court. For further information one may visit his website adityapratap.in or view his YouTube Channel to see his interviews. Questions can be emailed to him at aditya@adityapratap.com.