Wednesday, 24 May 2017

Where to complain? Real Estate Regulatory Authority OR Adjudicating Authority? Part 2 of Citizens' Guide to MahaRERA

25th May, 2017, Mumbai: Aggrieved investors and flat-buyers generally want compensation, repayment with interest, and penalites imposed on builder. Under the RERA Act, they can file a complaint ("Form A") against the builder before Real Estate Regulatory Authority OR a claim for compensation ("Form B") before the Adjudicating Officer.

What kind of offences of the builder will attract only penalty, and for which offences can you seek compensation? Below, we will colour-code the sections for your guidance. Blue highlight is for matters related to only penalty, and yellow highlight is for matters where you can seek compensation. If you have suffered a loss due to the faults of the builder, for which you want him to compensate you and/or pay you interest, then the matter will go before the Adjudicating Authority who will decide the amount of compensation and interest. 

Form A ("Complaint") is as per Section 31 of the Real Estate Regulation Act. "31 (1) Any aggrieved person may file a complaint with the Authority or the adjudicating officer... for any violation... of the provisions of this Act or the rules and regulations... against any promoter... Explanation.— For the purpose of this sub-section "person" shall include the association of allottees or any voluntary consumer association registered under any law... (2) The form, manner and fees for filing complaint... shall be such as may be specified by regulations."

Form B ("Claim for Compensation") is as per Section 31 read with Section 71. According to Section 71, Section 12, 14, 18 and 19 fall within the domain of the Adjudicating Authority. "71. (1) For the purpose of adjudging compensation under sections 12, 14, 18 and section 19, the Authority shall appoint... one or more judicial officer... who is or has been a District Judge to be an adjudicating officer for holding an inquiry... after giving any person concerned a reasonable opportunity of being heard... (2) The application for adjudging compensation under sub-section (1), shall be dealt with by the adjudicating officer as expeditiously as possible... within a period of sixty days..."

The amount of compensation will be determined as per Section 72. "72. While adjudging the quantum of compensation or interest..., the adjudicating officer shall have due regard to... :— (a) the amount of disproportionate gain or unfair advantage, wherever quantifiable, made as a result of the default; (b) the amount of loss caused as a result of the default; (c) the repetitive nature of the default; (d) such other factors which the adjudicating officer considers necessary..."


1. Registered Agreement not made even after substantial payment. 
In case of failure of the builder to register a flat even though you (the allottee or flat-buyer) have paid more than 10% of the total consideration of the flat, you may file a acomplaint in Form A to Regulatory Authority. For this offence, the builder will be given appropriate directions to make a registered agreement and he will also attract penalty of 5% of the total project cost as per section 13 read with section 61, but you will not get compensation. "Section 61. If any promoter contravenes any other provisions of this Act, other than that provided under section 3 or section 4... he shall be liable to a penalty which may extend up to five per cent of the estimated cost of the real estate project..." Section 13. (1) A promoter shall not accept a sum more than ten per cent of the cost of the apartment, plot, or building... without first entering into a written agreement for sale... and register the said agreement..."  In this case, you should file a complaint in Form A.

2. Breach of promise, defective workmanship, etc. 
In case of failure of the builder to deliver to you (the allottee) the exact thing that he has promised in his communications, for which you have paid the booking amount, section 12 and section 14 are applicable, and you are eligible to get compensation. If your actual flat and building, fixtures and common amenities are not as per agreement and/or as per advertisement claims, prospectus, brochure and other pictorial and verbal representations, then you can make a complaint in Form B under section 12 and/or section 14. Section 12: Where any person makes an advance or a deposit on the basis of the information contained in the notice advertisement or prospectus, or on the basis of any model apartment, plot or building... and sustains any loss or damage by reason of any incorrect, false statement included therein, he shall be compensated by the promoter...: Provided that if the person affected... intends to withdraw from the proposed project, he shall be returned his entire investment along with interest... and the compensation..." Section 14. (1) The proposed project shall be developed and completed by the promoter in accordance with the sanctioned plans, layout plans and specifications as approved by the competent authorities. (2) ... after the sanctioned plans, layout plans and specifications... are disclosed or furnished to the person who agree to take one or more of the said apartment, plot or building ... the promoter shall not make — (i) any additions and alterations in the sanctioned plans, layout plans and specifications and the nature of fixtures, fittings and amenities described therein... without the previous consent of that person... (3) In case any structural defect or any other defect in workmanship, quality or provision of services or any other obligations of the promoter... is brought to the notice of the promoter within a period of five years... from the date of handing over possession, it shall be the duty of the promoter to rectify such defects without further charge, within thirty days, and in the event of promoter's failure..., the aggrieved allottees shall be entitled to receive appropriate compensation... File a claim for compensation in Form B.

3. Not giving Conveyance, not handing over Common Amenities like clubhouse, garden etc., and not handing over documents and plans of the building. 
Even after giving posession of the flat, many builders don't give timely delivery of promised common amenities such as clubhouse and garden, with the result that the allottee and his family members are deprived of the promised facilities that are part and parcel of the project. Also, builder actively avoid giving conveyance of the building and the land plot to the cooperative housing society and/or federation of societies for decades. Quite often, builder also don't hand over the necessary documents of the building to the cooperative society. All this attracts provisions of section 17, which means that the builder will be penalized and will be also given strict directions by the authority to do the needful, but you and your society will not get compensationSection 17. (1) The promoter shall execute a registered conveyance deed in favour of the allottee along with the undivided proportionate title in the common areas to the association of the allottees or the competent authority, as the case may be, and hand over the physical possession of the plot, apartment or building... and the other title documents pertaining thereto... within three months from date of issue of occupancy certificate.
(2) After obtaining the occupancy certificate and handing over physical possession to the allottees... it shall be the responsibility of the promoter to handover the necessary documents and plans, including common areas... within thirty days after obtaining the occupancy certificate. File a complaint in Form A.

4. Delay in possession OR Giving possession of incomplete project.
In case of failure of the builder to complete the project and give possession of the flat on the agreed date with all the common amenities such as clubhouse, etc. (or failure to give possession within a reasonable period after booking the flat -- say 36 months), you will get compensation, because section 18 is applicable. If the builder has given possession of the flat without getting Occupation Certificate, it amounts to the building project being incomplete, and possession is NOT as per the terms of the agreement. Section 18: (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... 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... in case the allottee wishes to withdraw from the project... to return the amount received by him... with interest... including compensation: 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... File a claim for compensation in Form B.

Friends, there are many other powerful provisions in RERA, which can become headaches for crooked builders and a source of empowerment for flat owners and investors seeking justice. We will discuss more details in Part 3 of this series.

Krishnaraj Rao

Also read: How to Use Maharashtra RERA for Remedy Against Builders: Detailed Guide - Part 1

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