UP-REAT (2025.04.02) in Lucknow Development Authority Vs. Vandana Lal and Anr. [Appeal - 322/2024] held that.
In view of Newtech (supra) the proposition of law enunciated therein, the Adjudicating Officer would lack inherent jurisdiction to award interest for the delay till handing over possession of the unit. The jurisdiction would vest exclusively with the Regulatory Authority.
In other words, the legislature has not conferred any discretion, whatsoever, upon the promoter to withhold the interest, rather, by employing the expression ‘shall’ in the proviso to Section 18(1), it becomes mandatory. The allottee is entitled to interest in a delayed project without even raising a deemed, meaning thereby, on the date of offer of possession the appellant/promoter shall have to compute the interest on deposit and pay to the allottee.
In terms of proviso to Section 18(1) of the Act 2016, promoter was liable to pay interest for delay till handing over possession of the unit. Legislature has imposed positive and mandatory obligation upon the promoter to pay the delay interest without the allottee having to raise a demand to that effect.
The expression ‘shall be paid, by the promoter’, makes the proviso to Section 18(1) mandatory. The provision does not mandate that the allottee is required to lodge a protest upon taking possession/execution of the sale deed of the unit, whereas, on the contrary the law explicitly mandates that the interest is required to be computed by the promoter on the date of offer of possession and the amount paid to the allottee, or the amount so computed is to be adjusted against the outstanding dues, if any, of the allottee.
In the circumstances, the allottee cannot be relegated to claim interest till handing over possession of the unit on the plea that the appellant-promoter denies to commit itself to fulfill its obligation to pay interest which is not being disputed.
The failure of the Developer to comply with the contractual obligation to provide the flat within the contractually stipulated period, would amount to a deficiency of service.
Excerpts of the Order;
# 1. Heard Sri Abhishek Khare, learned counsel for the appellant/promoter, and Ms. Priyanka Tripathi, learned counsel for the respondent/allottee.
# 2. By the instant application appellant/promoter seeks condonation of 462 days delay in instituting the appeal.
# 3. Impugned order dated 07.10.2022 passed by learned Adjudicating Officer came to be uploaded on 11.10.2022. It is submitted by the learned counsel for the appellant that appellant was not aware about the impugned order as it was not communicated to the appellant by the office of the Regulatory Authority. It is further submitted that on 16.03.2023 appellant got knowledge of the impugned order, thereafter, applied for the certified copy on 17.03.2023, which was received on 21.03.2023. It is submitted that appellant office had finalized the panel of lawyers on 15.04.2023, and thereafter the process started for instituting the appeal. The appeal came to be instituted on 29.12.2023. That apart, learned counsel for the appellant submits that learned Adjudicating Officer lacks inherent jurisdiction on the subject matter, consequently, the judgment and order if not set-aside would be in-executable as the decree is wholly without jurisdiction.
# 4. Cause shown is good and sufficient.
# 5. Accordingly, the application for condonation of delay in filing the appeal is allowed. The delay is condoned.
# 6. Registry is directed to convert the instant defective appeal into regular appeal.
# 7. On consent of the parties, appeal is being heard on merit.
# 8. The present appeal has been instituted by the promoter raising challenge to order dated 07.10.2022, passed by the learned Adjudicating Officer at Lucknow, arising from Complaint No. ADJ/LKO162/09/81675/2021, whereby, interest by way of compensation till handing over possession of the unit has been awarded.
# 9. Learned counsel at the outset submits that impugned order is wholly without jurisdiction, as the Adjudicating Officer lacked inherent jurisdiction on the subject matter i.e. awarding interest in a delayed project to the respondent/allottee. It is submitted that forum for seeking interest on deposit is with the Regulatory Authority. In support of his reliance has been placed on the decision rendered by the Hon’ble Supreme Court in the case of M/s Newtech Promoters and Developers Pvt. Ltd. Vs. State of U.P. and others, 2021 SCC Online SC, 1044.
# 10. Learned counsel for the respondent/allottee, on being confronted with the decision does not dispute the legal proposition. Learned counsel however submits that since it is admitted that the project was delayed, hence, the respondent/allottee would be entitled to interest in terms of proviso to Section 18(1) of the Act, 2016. The allottee cannot be compelled to adjudicate the matter for the reason that an obligation has been cast upon the promoter to pay interest to the allottee without the allottee having to raise demand. In view thereof, it is submitted that matter in respect of interest to be decided as the period of delay of the project is not in dispute between the parties.
# 11. The question involved in this appeal is whether the impugned order dated 07.10.2022, passed by the learned Adjudicating Officer, Lucknow, is without jurisdiction, and/or, whether in the given facts allottee/respondent is entitled for delay interest under proviso to Section 18(1) of the Act, despite possession/execution of sale deed of the unit.
# 12. In view of Newtech (supra) the proposition of law enunciated therein, the Adjudicating Officer would lack inherent jurisdiction to award interest for the delay till handing over possession of the unit. The jurisdiction would vest exclusively with the Regulatory Authority.
# 13. It is, however, not being disputed by the appellant that the project was inordinately delayed beyond the declared completion date, accordingly, respondent would be entitled to delay interest on the deposit in terms of proviso to Section 18(1) of the Real Estate (Regulation and Development) Act, 2016 (for short ‘Act, 2016’). He, however, submits that since possession of the unit was given, in the circumstances, the appellant has waived his right to interest for the delay. It is further submitted that the possession of the unit was accepted without any protest.
# 14. The facts, inter se, parties are not in dispute. The appellant/promoter launched a residential project in the name and style ‘SARGAM APARTMENT’, situated at Sector-J (Vistar), Janki Puram, Lucknow. The respondent/allottee came to be allotted flat No. SG/D/106 first floor, admeasuring area 102.7 sq. mt. on 29.06.2015. As per terms and conditions of the brochure project was to be completed within 24 months, i.e. on or before, 29.06.2017. It is not in dispute that project got inordinately delayed and finally possession of the unit was handed over to the allottee on 15.06.2019. In this backdrop the respondent/allottee claims interest on his deposit till the date of possession in view of the mandate provided in proviso to Section 18(1) of the Real Estate (Regulation and Development) Act, 2016 (for short, ‘Act 2016).
# 15. The argument that is being pressed and advanced by learned counsel for appellant is misconceived in view of the mandate of Section 18 of the Act, 2016. The proviso clearly provides that the promoter shall pay interest at the prescribed rate in the event the allottee makes a choice to continue in a delayed project. In other words, the legislature has not conferred any discretion, whatsoever, upon the promoter to withhold the interest, rather, by employing the expression ‘shall’ in the proviso to Section 18(1), it becomes mandatory. The allottee is entitled to interest in a delayed project without even raising a deemed, meaning thereby, on the date of offer of possession the appellant/promoter shall have to compute the interest on deposit and pay to the allottee.
# 16. In the given facts, we are required to consider as to whether the appellant/promoter is not liable to pay delay interest in terms of proviso to Section 18(1) of the Act, 2016, on handing over possession of the unit, duly accepted by the allottee without protest.
# 17. Section 18 of the Act, 2016 is extracted :
“(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.”
# 18. The proviso to Section 18(1) is an exception to the main provision. Proviso is a clause in a statute by which a condition is introduced or a stipulation or condition. The function of a proviso is to carve out an exception or exclusion to the main provision which otherwise would have been in the main Section. As such, the function of a proviso is to qualify something or to exclude, something from what is provided in the enactment which, but for the proviso, would be within the purview of the enactment. [Refer : S.Sundaram Pillai Vs. V.R.Pattabiraman (1985) 1 SCC 591].
# 19. In the given admitted facts, the respondent-allottee had not withdrawn from the project and continued with the project, which admittedly, was delayed. In terms of proviso to Section 18(1) of the Act 2016, promoter was liable to pay interest for delay till handing over possession of the unit. Legislature has imposed positive and mandatory obligation upon the promoter to pay the delay interest without the allottee having to raise a demand to that effect. The proviso to Section 18(1), inter alia, confers an absolute right on an allottee to receive delay interest from the promoter. The right cannot be waived/taken away by the promoter, nor, the promoter can insist that the allottee should in the first instance file a complaint for delay interest. The allottee on taking possession of the unit does not waive his statutory right to interest or the obligation of the appellant-promoter to pay interest to the allottee. The argument of the learned counsel for the appellant, if accepted, in that event every promoter, instead of honouring his obligation to pay the interest, would insist on possession/execution of sale deed of the unit to deprive the allottee of his right to interest. The expression ‘shall be paid, by the promoter’, makes the proviso to Section 18(1) mandatory. The provision does not mandate that the allottee is required to lodge a protest upon taking possession/execution of the sale deed of the unit, whereas, on the contrary the law explicitly mandates that the interest is required to be computed by the promoter on the date of offer of possession and the amount paid to the allottee, or the amount so computed is to be adjusted against the outstanding dues, if any, of the allottee. In the circumstances, the allottee cannot be relegated to claim interest till handing over possession of the unit on the plea that the appellant-promoter denies to commit itself to fulfill its obligation to pay interest which is not being disputed.
# 20. Subsequently, in Wg. Cdr. Arifur Rahman Khan & Others Vs. DLF Southern Homes Pvt. Ltd., reported in (2020) SCC Online 667, the Hon’ble Supreme Court held that the terms of the agreement authored by the Developer does not maintain a level platform between the Developer and the flat purchaser. The stringent terms imposed on the flat purchaser are not in consonance with the obligation of the Developer to meet the timelines for construction and handing over possession, and do not reflect an even bargain. The failure of the Developer to comply with the contractual obligation to provide the flat within the contractually stipulated period, would amount to a deficiency of service. Given the one-sided nature of the Apartment Buyer’s Agreement, the Consumer Commission had the jurisdiction to award just and reasonable compensation as an incident of the power to direct removal of deficiency in service.
# 21. Since the period of delay in completing the project and offer of possession of the unit is not under dispute, accordingly, no occasion arises in relegating the parties to the appropriate forum for delay interest for the very same period in view of Sub section (6) of Section 44, read with, Sub section (1) of Section 53 of the Act. The relevant provisions are extracted :
“Section 44. Application for settlement of disputes and appeals to Appellate Tribunal. (6) The Appellate Tribunal may, for the purpose of examining the legality or propriety or correctness of any order or decision of the Authority or the adjudicating officer, on its own motion or otherwise, call for the records relevant to “deposing of such appeal and make such orders as it thinks fit.”
“Section 53 – Powers of Tribunal.—(1) The Appellate Tribunal shall not be bound by the procedure laid by the Code of Civil Procedure, 1908 (5 of 1908) but shall be guided by the principles of natural justice…”
Accordingly, the question is answered.
# 22. The appeal is being disposed of on admitted facts by passing the following orders :
(i) impugned order dated 07.10.2022 passed by learned Adjudicating Officer is set-aside and quashed;
(ii) the respondent/allottee shall be entitled to interest at the rate MCLR+1% w.e.f. 29.06.2017 to 15.06.2019. The interest to be computed and paid within 45 days from the date of uploading this order on the portal, failing which respondent would be entitled to interest at the same rate on the computed amount till the date of payment;
(iii) the amount deposited in compliance of Section 43(5) of the Act, 2016 by the appellant/promoter to be released in favour of the respondent/allottee after obtaining opinion from the Regulatory Authority whether any execution proceeding is pending. In the event, execution is pending, amount so deposited shall be remitted to the learned Regulatory Authority for disbursement in accordance with law;
(iv) no order as to costs.
-------------------------------------------------
No comments:
Post a Comment