Punjab RERA Orders Compensation For Homebuyers After Project Site Was Declared As Protected Monument

Background Fact

Builder launched a commercial scheme known as the Public Health Fountain Chowk Site scheme (PWD). To sell the sites under the PWD Scheme, the builder organized an open auction in which homebuyers participated, and they were allotted the site named SCO NO. 05, for which they deposited Rs.56,54,000. However, the PWD scheme failed to materialize as the site was declared a protected monument by the Government of Punjab.

After two years, the Builder refunded the amount of Rs. 56,54,000, which the Homebuyers had deposited as consideration following the auction. However, despite various notices served by the homebuyer, the Builder failed to refund the amount with interest. Aggrieved by the non-payment of interest, the Homebuyers filed a complaint before Punjab RERA seeking payment of interest from the builder.

Contention of the Builder

The Builder contended that the Complaint is not maintainable as RERA is applicable prospectively and not retrospectively. Furthermore, the project had not been registered with the RERA Authority. The Builder further contended that they have already refunded the amount of Rs. 56,54,000, which the homebuyers accepted without any objection. The legal notices issued by the homebuyers were meaningless as there was no agreement, letter of intent, or allotment letter in this case. There was only an offer of allotment, which could not materialize, and hence there is no question of violating the terms and conditions of any agreement.

RERA Order

The Authority held that the Builder cannot be held accountable for the project's non-completion, as it was a subsequent development wherein the competent authority of the State Government declared the project site a heritage monument and protected site.

The Authority observed that homebuyers deposited amounts on 30.11.2016, which remained with the builder for two years before being refunded on 22.11.2018. This indicates that the builder would have earned profit on the deposits until repayment.

Furthermore, the Authority held that there is no evidence of default on the part of the Builder. However, compensation can be granted in this case, as homebuyers experienced difficulty and mental anguish during these two years.

Further, the Authority held that the provisions of RERA will be applicable in this case, for that Authority relied on the judgment of the Bombay High Court in the case of Neel Karnali Realtors Suburban Pvt. Ltd. and another vs. Union of India and others, wherein, it was held that unilateral contracts from the prior period, not in accordance with the provisions of the Act, are not enforceable to that extent, and the provisions of the Act would be applicable to cover ongoing projects.

Therefore, the Authority directed the builder to pay compensation of Rs. 70,000 to the homebuyers.

Case: Jaswinder Singh & another VS Estate Officer, Patiala Urban Planning and Development Authority, Urban Estate-II, Patiala, District Patiala

Citation: Complaint No. ADC 0050 of 2023 UR

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