To promote standardisation and openness in the real estate industry, the Real estate (Regulation and Development) Act, 2016 (RERA) was passed. Even though the law is new and evolving, there are still gaps and unaddressed problems that exist in the current system. In its decision Newtech Promoters and Developers Pvt. Ltd. v. State of UP and Others, dated November 11, 2021, the Supreme Court clarified important aspects of the legislation, ranging from its application to important RERA provisions like Section 40 of the Act.
In the instant case titled Newtech Promoters & Developers (P.) Ltd. vs. State of U.P., the issue raised for clarification before the Supreme Court was:
If the adjudicating officer retains exclusive jurisdiction under Section 71 of the RERA, or if the regulatory authority has the authority to direct return or refund of the amount to the allottee under Sections 12, 14, 18 and 19 of the same law?
With regard to this issue, the allottee is entitled to "compensation" and a "refund of the price" if the promoter has not transferred possession. The judgement said that pursuant to Sections 18(1) and 19(4) of the Act, the regulatory authority has jurisdiction over the claim for refund of sum on demand. The adjudicating officer has the power to decide on compensation under Sections 12, 14, 18, and 19 following an investigation under Section 71(3).
The regulatory authority is required to assess the outcome of a complaint regarding a refund amount and interest thereon, or payment of interest for delayed handover of possession, fines, etc. The regulatory authority's decision was based on a combined reading of Sections 18 and 19, which the court used as the basis for its ruling. In addition, based on a combined reading of Sections 71 and 72 of the Act, the adjudicating officer has sole discretion to grant requests for adjudicating compensation and interest under Sections 12, 14, 18 and 19.
The Court categorically stated that,
"The unqualified right of the allottee to seek refund referred under Section 18(1)(a) and Section 19(4) of the Act is not dependent on any contingencies or stipulations thereof. It appears that the legislature has consciously provided this right of refund on demand as an unconditional absolute right to the allottee, if the promoter fails to give possession of the apartment, plot or building within the time stipulated under the terms of the agreement regardless of unforeseen events or stay orders of the Court/Tribunal, which is in either way not attributable to the allottee/home buyer, the promoter is under an obligation to refund the amount on demand with interest at the rate prescribed by the State Government including compensation in the manner provided under the Act with the proviso that if the allottee does not wish to withdraw from the project, he shall be entitled for interest for the period of delay till handing over possession at the rate prescribed".