Karnataka RERA Orders Refund To Homebuyer After Builder's Failure To Hand Over Possession Even After Lapse Of Six Years

Background Facts

The Builder, in order to attract homebuyers, offered a pre-EMI scheme, i.e., pre-sanctioned loans, to purchase apartment units in their project. The Homebuyer booked an apartment unit and entered into an agreement of sale on 06.08.14. As per the agreement, the Builder promised to deliver possession by 31.08.16.

Prior to the loan sanction, the Homebuyer, along with Punjab National Bank Housing Finance (financial institute), had a tripartite arrangement with the builder regarding loan repayment liability. The Homebuyer paid a sum towards the sale consideration and also several pre-EMI amounts to the loan account held by the financial institute as the builder failed to pay them. The Homebuyer furnished calculations indicating the amount due.

The apartment unit was booked under an assured returns and pre-EMI/buy-back scheme, wherein the builder was supposed to reimburse pre-EMI amounts till project completion. Despite the terms of the construction agreement, the builder failed to hand over possession of the apartment unit or pay the agreed pre-EMI amounts.

The Homebuyer notified the builder of their intention to withdraw from the project as per the scheme terms. The builder acknowledged the withdrawal but failed to refund the amount paid. Aggrieved by the delay, the Homebuyers have filed a complaint before Karnataka RERA seeking a refund of the amount paid towards the apartment unit and pre-EMIs along with interest.

Observation and Direction by Authority

Authority observed that in spite of entering into an agreement of sale and construction agreement and after receiving substantial consideration from Homebuyer the Builder has neither completed the project, handed over the possession of the apartment within promised timeframe nor refunded the amount with interest as agreed. The Builder has also failed to pay Pre-EMIs to the PNBHFL bank as agreed. There seems to be no possibility of completing the project or handing over the possession of the apartment in the near future.

The Authority has relied on the Supreme Court decision in M/s Newtech Promoters and Builders Pvt. Ltd vs. State of Uttar Pradesh & Ors, wherein it was held that if the Promoter fails to give possession of the apartment, plot, or building within the time stipulated under the terms of the agreement, then the Allottees right under the Act to seek refund or claim interest for delay is unconditional and absolute, regardless of unforeseen events or stay orders of the Court/Tribunal.

Furthermore, Authority observed that As per Section 18 of the RERA, in case the Homebuyer wishes to withdraw from the project, the promoter is liable, 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 provided under the act. Therefore, as per Section 18(1) of the Act, the builder is liable to return the amount received along with interest and compensation only if the builder fails to complete or provide possession of an apartment/plot in accordance with the sale agreement.

Therefore, the Authority directed the Builder to pay a sum of Rs. 1,00,16,869/- as a refund with interest to the Homebuyers within 60 days.

Case – Rahamatulla Dhalayat Versus Mantri Builders Private Limited

Citation - COMPLAINT No: CMP/221107/0010220