The Real Estate (Regulation And Development) ACT, 2016

Section 18: ?Return of amount and compensation.

(1) If the promoter fails to complete or is unable to give possession of an apartment, plot or building,—

(a) in accordance with the terms of the agreement for sale or, as the case may be, duly completed by the date specified therein; or

(b) due to discontinuance of his business as a developer on account of suspension or revocation of the registration under this Act or for any other reason,

he shall be liable on demand to the allottees, in case the allottee wishes to withdraw from the project, without prejudice to any other remedy available, to return the amount received by him in respect of that apartment, plot, building, as the case may be, with interest at such rate as may be prescribed in this behalf including compensation in the manner as provided under this Act:

Provided that where an allottee does not intend to withdraw from the project, he shall be paid, by the promoter, interest for every month of delay, till the handing over of the possession, at such rate as may be prescribed.

(2) The promoter shall compensate the allottees in case of any loss caused to him due to defective title of the land, on which the project is being developed or has been developed, in the manner as provided under this Act, and the claim for compensation under this subsection shall not be barred by limitation provided under any law for the time being in force.

(3) If the promoter fails to discharge any other obligations imposed on him under this Act or the rules or regulations made thereunder or following the terms and conditions of the agreement for sale, he shall be liable to pay such compensation to the allottees, in the manner as provided under this Act.

Analysis:

Section 18 of the Real Estate (Regulation and Development) Act (RERA) outlines the obligations and liabilities of promoters (developers) towards allottees (buyers) in cases where the promoter fails to deliver possession of the property as per the agreed terms. This section provides a robust mechanism to protect the interests of allottees and ensure accountability in the real estate sector.

Failure to Deliver Possession

???Allottee Rights:

-Withdrawal from Project: Allottees can choose to withdraw from the project and demand a refund of the amount paid, along with interest and compensation as prescribed.

-Non-Withdrawal: Allottees opting to stay with the project are entitled to receive interest for every month of delay until possession is handed over.

?Compensation for Defective Title:

?-Promoters must compensate allottees for any losses caused due to defective title of the land on which the project is being developed.

?-This compensation claim is not restricted by any limitation period under existing laws.

Other Obligations:

-If the promoter fails to meet any other obligations under the Act, rules, regulations, or terms of the sale agreement, they must compensate the allottees as prescribed by the Act.

Purpose:

-Consumer Protection: Section 18 ensures that allottees have a clear recourse in case of delays or other issues, thus protecting their investments.

-Promoter Accountability: It holds promoters accountable for timely project completion and adherence to contractual terms.

-Financial Liability: The section imposes financial liabilities on promoters for delays and other breaches, incentivizing timely completion and adherence to legal requirements.

-Legal Clarity: Provides clear legal guidelines and remedies for allottees, contributing to greater transparency and trust in the real estate market.

? Implications:

?-Interest and Compensation: The rates of interest and compensation mechanisms are designed to be fair ???and provide adequate compensation to allottees.

-Market Dynamics: This provision helps in maintaining a balance in the real estate market by ensuring that developers adhere to their commitments, thus boosting investor confidence.

Right to Get Refund Under Section 18 RERA: Landmark Case Laws

The right to request a refund with interest under Section 18 of RERA is an absolute and unrestricted entitlement. The Hon’ble Supreme Court, in the case of Imperia Structures Ltd. vs. Anil Patni and Another, affirmed that Section 18 grants an unequivocal right to a homebuyer to receive a refund of the amount deposited with the developer along with interest at the prescribed rate if the developer fails to complete the apartment or provide possession by the specified date in the homebuyer’s agreement.

In the past, authorities would often link refund decisions to the construction stage and might not issue a refund order if the developer had obtained an occupancy certificate or if the construction was at an advanced stage. However, it is now firmly established in law that the right of the allottee to seek a refund is absolute and not subject to any contingencies or stipulations.

This principle was reaffirmed by the Hon’ble Supreme Court in the case of Newtech Promoters and Developers Pvt. Ltd. vs. State of U.P, where the Court emphasized that Section 18(1) confers an indefeasible right upon the allottee to demand a return of the amount if the developer fails to hand over possession as per the agreement or complete the project by the specified date. Any justifications the developer offers as a defense are insignificant, and the regulatory authority can determine the refund and prescribed interest.

Interest for Delay in Possession: Landmark Case Laws

Regarding interest for delay in possession, Section 18(1) also states that if the allottee chooses not to withdraw from the project, they are entitled to receive interest for every month of delay until possession is handed over by the developer.

This entitlement cannot be denied based on the absence of a registered agreement to sell. In a recent order, the Maharashtra Real Estate Appellate Tribunal held that the lack of a registered agreement does not prevent a homebuyer from receiving interest relief for delayed possession. Any other document, such as an allotment letter, brochure, template, or email communication mentioning the possession date, can be used to calculate the delay in possession.

Right to get Compensation under Section 18 RERA: Landmark Case Laws

In addition to the refund, buyers can also seek compensation under Section 18(2) and 18(3) of RERA if:

-They suffer a loss due to the defective title of the land.

-The developer fails to fulfill any obligations under the RERA Act or its associated Rules and Regulations.

-The developer breaches the terms and conditions of the Agreement to Sell.

The authority to determine compensation lies with the adjudicating officer, appointed by the Real Estate Regulatory Authority in consultation with the government. Buyers must file a separate application before the adjudicating officer for compensation, and the authority cannot make decisions on compensation matters.

The Hon’ble Supreme Court clarified the powers of the Authority and Adjudicating Officer in granting refunds and compensation in the case of Newtech Promoters and Developers Pvt. Ltd. Vs. State of Uttar Pradesh.