Real Estate Firm utilised Allottee’s Money for 18 Months: REAT directs to Pay 12% Interest [Read Order]

In a significant judgment, the Kerala Real Estate Appellate Tribunal (REAT) has directed respondent Shobha Ltd to pay 12% interest for receiving and utilising the allottee's money for 18 months without executing a RERA-compliant agreement. Advs. Sri. Shameem Ahmed & Sri. Akhil Philip Manithottiyil appeared on behalf of the appellant and Advs. Sri Abraham Mathew Vettoor & Sri Anil Abey Jose appeared on behalf of the respondent. Mr Sanjay Gangadharan Nambiar & Mrs Usha VR, the appellants filed an appeal under Section 44 of the Real Estate (Regulation & Development) Act, 2016 by the complainant, against the order dated 8/8/2022 passed by the Kerala Real Estate Regulatory Authority (the K-RERA) in Complaint No. 245/2021 There was a formal defect in the appeal memorandum. The complainants are husband and wife,who were the allottees of a project named 'Marina One" located in Kochi, developed by the respondents. The project is registered with the K-RERA under Section 3 of the Act. The complainants booked a residential apartment together with two car parking spaces for a total consideration of R 3,29,05,554/-. Out of the total consideration payable, the appellants/complainants initially paid an advance amount of Rs. 63,50,245/- as demanded by the respondents. On 13/3/2018 the respondents forwarded a draft agreement for sale to be signed and forwarded by the appellants/complainants. The agreement was not in compliance with the provisions of the Act. The appellants informed the respondents that the draft agreement was not acceptable as it contains clauses which are not acceptable to the appellants, and requested modifications. Without addressing the issue, the respondents further demanded an additional amount of Rs. 25,43,299/- in violation of Section 13 of the Act. The appellants were not willing to pay the amount as the agreement for Wales was not modified by the provisions of the Act. Thus the appellants decided to cancel the booking of the apartment and to withdraw from the project. Notice was On 13/3/2018 the respondents forwarded a draft agreement for sale to be signed and forwarded by the appellants/complainants. The agreement was not in compliance with the provisions of the Act. The appellants informed the respondents that the draft agreement was not acceptable as it contains clauses which are not acceptable to the appellants, and requested modifications Without addressing the issue, the respondents vide letter dated 5/11/2018 further demanded an additional amount of Rs. 25,43,299/- in violation of Section 13 of the Act. The appellants were not willing to pay the amount as the agreement for Wales was not modified by the provisions of the Act. The respondents refunded the advance amount paid by the appellants on different dates from 13/6/2019 to 21/6/2019 but refused to pay interest on them. The findings of the K-RERA dismissing the complaint are not legally sustainable in the eye of the law. It was stated that K RERA was not implemented in the state of Kerala during that time and further that, withdrawal of the allottee during the pre-agreement stage will not entitle him to any interest. This was not covered in any of the situations mentioned in the RERA Act. Justice Sri. P. Ubaid, Chairperson and Sri V.K. Babu Prakash, Judicial Member observed that “Section 12 of the RE(R&D) Act says that where any person makes an advance or a deposit based on the information contained in the notice advertisement or prospectus, or based on the information contained in the notice of development or prospectus, or based on any model apartment, plot or building, as the case may be, and sustains any loss or damage, he shall be compensated by the promoter in the manner as provided under this Act.” While allowing appeal, the Tribunal held that “the appellants are entitled to get interest on the advance amount paid by them from the respective date of payment stated hereunder till realisation. Thus the appeal is allowed and the appellants are entitled to get interest at the rate of 12% per annum on the advance amount paid.” Support our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates

Real Estate Firm utilised Allottee’s Money for 18 Months: REAT directs to Pay 12% Interest [Read Order]

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