REFUND OF ADVANCE AMOUNT AND INTEREST – KERALA HIGH COURT
“Whether the RERA Authority or the Adjudicating Officer have the jurisdiction under to refund of advance amount, with interest, when the Allottee Real Estate Project cancel his booking?”
Learned Single Judge of the Kerala High Court Justice M.R. Anitha, examined this question in Unnikrishnan Chandran Pillai vs. TATA Reality Infrastructure Limited[1], observed that the Authorities under the Real Estate Regulation and Development Act 2016, have the jurisdiction to entertain the claim.
The Factual Background:
“Appellant booked an apartment in July, 2019 in the multi-storied residential apartment project named ‘Tritvam’ at Marine Drive in Kochi launched by the TATA Reality Infrastructure Limited, the promoter/respondent. He paid total amount of Rs.16 lakhs towards advance amount. Advance payment was received by the respondent before executing the agreement as provided under Section 13 of the Act. However, in October 2019, the promoter requested the appellant to make payment of the amount required for registration of the sale agreement. For that appellant requested by letter to cancel the booking of the apartment on the ground of inability to raise the money and also requested the promoter to return the advance amount of Rs.16 lakhs paid by him, to which, the promoter sent a reply letter intimating that out of Rs.16 lakhs received, an amount of Rs.15,16,667/- is liable to be forfeited in view of the default on the part of the appellant and expressed willingness to return Rs.83,333/-. Aggrieved by that reply, the appellant approached K-RERA with a complaint, claiming advance payment with interest along with Rs.5 lakhs and to impose penalty for the violation of Section 13 of the Act.”
Finding of the Kerala RERA Authority
Kerala RERA found that since compensation was also claimed the Adjudicating Officer, is the Competent Forum to entertain the complaint. Hence the complaint was dismissed reserving the right of the appellant to approach the Adjudicating Officer.
Findings of the Adjudicating Officer
The Adjudicating Officer dismissed the complaint finding that the power to order return of amount with interest is upon the Kerala RERA. It also found the complaint is not maintainable, since the claim is based on the ground of his own default and not on account of any default of the promoter.
Finding of the RERA Appellate Authority
In the challenge against the orders of the Kerala RERA and the Adjudicating Officer the RERA Appellate Authority, the following orders were passed amongst others:
- Dismissal of the complaint by the Adjudicating Officer was affirmed, without prejudice to the right of the complainant to approach the appropriate forms for reliefs;
- The findings of the Kerala RERA that it does not have the jurisdiction to decide the claim for compensation clubbed with advance amount and interest was confirmed;
- The complaint is remitted to Kerala RERA for the purpose of initiating appropriate proceedings and passing orders appropriately in the matter of registration of the project, and also for initiating necessary action for imposition of penalty and otherwise, for having collected more than 10% of the value of the apartment as advance, before execution and registration of the agreement for sale, if proved so.
Summary of the findings of the Kerala High Court:
- Proviso to Section 11(5)[1] enables the Appellant Allottee to approach the Kerala RERA for redressal of grievances when the promoter cancels the agreement
- The Promoter has received advance of more than 10% of the total value of the Apartment and hence violated the Section 13(1)[2].
- After receipt of amount in excess prescribed limit as advance the promoter cannot find fault with the appellant contending that he himself withdrawn from the project or that no agreement was executed so as to attract the proviso to Section 11(5)[3].
- When the appellant himself has withdrawn from the project there is no scope for adjudging the relief of compensation and interest as per Section 12, 14, 18 and 19[4], by the Adjudicating Officer.
Directions of the High Court:
- The matter is remitted by to the Real Estate Regulatory Authority, Thiruvananthapuram to reconsider the complaint filed by the appellant for return of advance amount with interest and pass fresh orders in accordance with law within two months from the date of receipt of certified copy of this judgment in the light of the principles of law discussed above.
- The remand made by the RERA Appellate Authority, remain unaltered.
Conclusions:
The Judgment of the Kerala High Court assumes importance, for the position adopted by the Authorities under RERA would have ousted a large majority of allotees, from the preview of this beneficial legislation. The Court appears to have balanced the interests between the Promoter and the Allottee by holding that when an allottee withdrawn from the booking, he cannot claim compensation. The High Court, has thus upheld the spirit of the Real Estate (Regulation and Development) Act 1996.
[1] Judgement dated 14.07.2022 in MSA No. 4 of 2021 and MSA No. 5 of 2021. Advocates, Mr Johnson Gomez, Mr. Sanjay Johnson, Mr. John Gomez, Ms. S Sreedevi and Mr. Dinoop P,D, M/s. Gomez and Gomez Associates, appeared in these appeals.
[1] Real Estate (Regulation and Development) Act 2016
[2] Supra
[3] Supra
[4] Supra
