Uttar Pradesh State Industrial Development Authority v. Shilpi Singh .

1. All these 5 appeals have been preferred against the common judgment and order of the U.P. Real Estate Regulatory Authority, Lucknow (hereinafter referred to as ‘the Regulatory Authority’), dated 16.03.2020, therefore, they were heard together and are being disposed of by a common judgment. For the sake of convenience we take Appeal No. 339/2020 as leading case.

2. The Regulatory Authority, vide impugned order dated 16.03.2020 while allowing the complaints of the complainants/respondents passed the following directions:—

(i) The appellant was directed to ensure refund of entire amount deposited by the complainant with interest at the rate of State Bank of India's MCLR+1% per annum from the date of deposit of first installment till the date of refund, within 60 days from the date of the order.

(ii) The appellant has not got its ongoing project registered with RERA and has violated the provisions of Sections 3,4 and 15 of the Real Estate (Regulation & Development) Act, 2016 (hereinafter referred to as ‘the Act, 2016’), therefore, a copy of the order be sent to the Secretary, RERA for further action against the appellant.

3. The facts of the case, in brief, are that the appellant is an authority notified under Section 3 of the Uttar Pradesh Industrial Development Act, 1976 by the State Government. The objects and purposes incorporating the aforesaid authority is to acquire and develop land for the purposes of promoting industrialization in the State of Uttar Pradesh.

4. The appellant launched the “Trans Ganga City, Unnao” project which principally focused around “Future Perfect Self Sustained Industrial City”. The major portion of the project was for industrial use only. The allotment of residential plots started from 15.08.2015.

5. Trans Ganga Project is developed as an Industrial Project. The same is duly notified by the State Government by Notification dated 06.01.2018. The residential and commercial plots are allotted to the industrialists and other in furtherance to the achievement of industrial growth and development of the area.

6. The respondent in the leading case, made an application for allotment of residential plot at Trans Ganga City, Unnao on 21.09.2015. As per the terms and conditions of the application form itself, it was crystal clear that the said allotment was on lease basis for 90 years and the allottee shall not have any right to sell, mortgage or assign the property without the permission of the appellant.

7. In furtherance of application of the respondent dated 21.09.2015 a residential plot no. B-89, Sector-7, Industrial Area Trans Ganga City (Housing), district Unnao, was allotted to the respondent. The conditions of the allotment letter clearly stated that the allotment is on lease basis for 90 years and that the allottee shall not transfer the plot/house in any form by direct sale, mortgage, assignment etc. without prior permission of the appellant.

8. The land for the project of Trans Ganga was acquired by notification under Section 4/17 of the Land Acquisition Act, 1894 on 23.07.2002 and the declaration under Section 6/17 was issued on 26.02.2003. The possession was handed over to the appellant (M/S UPSIDA) on 06.04.2005, 09.05.2005 and 29.03.2007. The land cost in the year 2002 was Rs. 1,51,000/- per acre. The land cost was subsequently revised to Rs. 5,51,000/- per bigha. Accordingly all the farmers were paid compensation at the rate of Rs. 5,51,000/- per bigha. In the year 2013-14 the farmers again started agitation for increase of compensation and a meeting was held on 16.01.2014 by the officials of the appellant with the representatives of the farmers wherein it was decided that over and above the said rate, an ex gratia compensation of Rs. 7,00,000/- per bigha shall be paid to the farmers and furthermore Rs. 50,000/- shall be given for rehabilitation of their families. Accordingly the compensation was distributed amongst the farmers.

9. The appellant had paid Rs. 232 crores as compensation to the farmers and then had commenced development in 1100 acres land in 2015. The appellant has also spent Rs. 226 crores in development work of the Trans Ganga Project. Therefore, a total sum of Rs. 458 crores has been spent by the appellant for the said project.

10. Despite payment of aforesaid compensation of Rs. 232 crores, some of the agitationists raised an arbitrary demand for increase of compensation and when the same was refused, then those agitationists started causing hindrance in the development work of the Trans Ganga Project and illegally took over possession of certain plots. The agitationists on 30.05.2018 also forcibly shut the office of the appellant situated at the site. On 16.11.2019 when the appellant took 10 JCBs to the site for its construction activities, then around 200 agitationists gathered and stopped the construction work and threatened the officials of the appellant of dire consequences. The appellant had also taken action against such miscreants by filing FIRs dated 02.10.2017, 30.05.2018 and 16.11.2019.

11. On account of the aforesaid agitation the development work of the project was suspended in October, 2017. Accordingly the appellant was unable to hand over the possession of the land to the allottees, therefore, the respondent in the leading case approached the Regulatory Authority by filing complaint in September, 2019 praying for refund of the total amount paid by the respondent along with compound interest at the rate of 18% per annum, legal expenses of Rs. 75,000/- and compensation for mental harassment to the tune of Rs. 2,00,000/-. A further prayer was made for penalty to be imposed on the appellant for non registration under the Act, 2016.

12. In response to the complaint the respondent filed its objection dated 26.11.2019 before the Regulatory Authority.

13. The delay caused in handing over of possession to the allottees is not on account of any error of the appellant. The appellant had given the entire amount of compensation to the farmers, still the agitation and hindrance was created by few farmers. The appellant also made earnest efforts to free the land from the agitationists and the same is substantiated from the various FIRs lodged by the appellant.

14. As the appellant was not able to hand over possession of the land to the respondent, the appellant sent a proposal dated 121.09.2019 to all the allottees of the project wherein the allottee was given an option as to whether he/she wants possession of the plot with delay and certain concessions or they want to opt for refund of the deposited amount along with interest @ 6%.

15. The appellant being an authority is managing the industrial area projects and is not covered within the ambit of the Act, 2016. Therefore the appellant vide letter dated 18.12.2019 requested the State Government to pass appropriate order under Section 83(1) of the Act, 2016 exempting the appellant from registration with RERA.

16. The complaint under Section 31 of the Act, 2016 is not maintainable against the appellant as the complaint under Section 31 of the Act, 2016 is only maintainable against promoter, allottee or real estate agent.

17. From the definition of the ‘promoter’ it is clear that the basic ingredient for being a promoter is that the apartment, plot, building, project etc. has to be made for the purposes of sale. In the present case the appellant is not involved in selling of the land as the plots are given on lease of 90 years.

18. As per the lease agreement the appellant had the right to even cancel the allotment in case of any default by the allottee. The allottee was also not allowed to transfer the property in the form of direct sale, mortgage, assignments etc. without the permission of the appellant.

19. From the clauses of the lease deed it is clear that the appellant did not transfer the ownership of the land to the respondent instead the allottee was given the property on lease so that he could enjoy the rights of lessee as provided under the lease deed read with the provisions of the Transfer of Property Act, 1882. Therefore, it would not come within the definition of ‘sale’ and the appellant cannot be treated as ‘promoter’ within the definition of Section 2(zk) of the Act, 2016.

20. The appellant does not fall within the definition of ‘Real Estate Agent’ as given in Section 2(zm) of the Act, 2016. Therefore, the complaint initiated against the appellant under Section 31 is not maintainable.

21. The rights of a purchaser under sale deed are entirely different from the leasehold rights. There is no transfer of title in leasehold property to the lessee and restrictions are placed upon the use of the property and lease rent is payable for the restricted use and occupation of tenancy.

22. From a plain reading of objective of the Act, 2016 it is clear that the Regulatory Authority has been established to ensure regulation of sale of plot, apartment, building or real estate in an efficient and transparent manner. The Act does not cover within its ambit the transfer of lease hold rights.

23. As the appellant is not involved in the sale of plots, its projects are also not covered under the definition of ‘Real Estate Projects’ as given in Section 1(zn) of the Act, therefore, the appellant would also not be under the obligation to register its project with Real Estate Regulatory Authority as Sections 3 and 4 only mandate registration of ‘Real Estate Projects’.

24. Section 2(d) of the Act, 2016 clearly states that the ‘allottee’ does not include a person to whom such plot, apartment or building, as the case may be, is given on rent.

25. U.P. RERA Rules do not include the industrial projects. The U.P. RERA Rules are applicable only for projects for houses/apartments for commercial/residential purposes. The said rules do not include the industrial projects.

26. The appellant has challenged the impugned order dated 16.03.2020 passed by the Regulatory Authority, on the following grounds:—

A. The complaint under Section 31 of the Act is not maintainable against the appellant as the complaint under Section 31 is only maintainable against ‘promoter allottee’ or ‘real estate agent’.

B. From Section 2(k) of the Act it is clear that the basic ingredient for being a ‘promoter’ is that the apartment, plot, building, project etc. has to be made for the purposes of sale.

C. From the clauses of lease deed it is clear that the appellant did not transfer the ownership of the land to the respondent instead the allottee was given the property on lease.

D. The appellant does not fall within the definition of ‘real estate agent’ as given in Section 2(zm) of the Act. Therefore, the complaint initiated against the appellant under Section 31 is not maintainable,

E. Rights of a purchaser under sale deed are entirely different from the leasehold rights. There is no transfer of title in leasehold property to the lessee and restrictions are placed upon the end use of the property and lease rent is payable for the restricted and occupation of tenancy.

F. From a plain reading of the objective of the Act, 2016 it is clear that the authority has been established to ensure regulation of sale of plot, apartment, building or real estate in an efficient and transparent manner. The Act does not cover within its ambit the transfer of lease hold rights.

G. The appellant is not involved in sale of plots, therefore, its projects are not covered under the definition of ‘real estate projects’ as given in Section 1(zn) of the Act.

H. The Regulatory Authority while passing the impugned order dated 16.03.2020 erred in coming to the conclusion that the appellant is the same as NOIDA and Greater NOIDA.

I. The appellant is not an ‘industrial township’ like NOIDA and Greater NOIDA but is an ‘authority’ constituted under Section 3 of the U.P. Industrial Area Development Act, 1976.

J. The Regulatory Authority wrongly relied upon Uttar Pradesh Real Estate (Regulation and Development) (Agreement for sale/lease) Rules, 2018 while passing the impugned order.

K. The rules have got no application for the leasehold rights nor do they modify the definitions of ‘promoter’, ‘real estate project’, ‘prospectus’. ‘advertisement’ read with Section 3 of the Act as well as aim and object of the Act.

L. The Rules of 2018 are not in conformity with the aims and objects of the Act, 2016.

M. The Regulatory Authority has passed the impugned order dated 16.03.2020 without having any jurisdiction to pass such orders.

N. The Regulatory Authority has no power to adjudicate the matters pertaining to compensation under Sections 12,14,18 and 19 of the Act, 2016 as the Single Member of the Regulatory Authority is neither a judicial officer nor is or has been a District Judge, as per proviso to Section 71 of the Act.

O. The impugned order dated 16.03.2020 also suffers from the vice of coram non-judice in as much as the same has been passed by the single member of the authority whereas as per the provision of Section 21 of the Act the authority has to be comprised of one Chairperson and at least two members.

P. It is settled principle of law that where a power is given to do certain thing in certain way, things must be done in that way, prescribed or not at all and that other methods of performance are necessarily forbidden.

Q. The Regulatory Authority has awarded interest @ MCLR+1% by placing reliance on the U.P. Real Estate (Regulation and Development) (Agreement for Sale/Lease) Rules, 2018. The proforma agreement has not been executed between the present appellant and respondent and, therefore, the reliance placed on the said clause is wholly misplaced and contrary to Rules.

R. The said question has also been raised before the Hon'ble High Court at Allahabad in the case of Radha Towers Skippers Pvt. Ltd. v. State of U.P., WP No. 42569 of 2019 and the Hon'ble High Court after noting the submissions of the petitioner therein, has been pleased to pass order dated 20.12.2019 staying the recovery in respect of interest accrued subject to deposit of Rs. 3 lacs.

S. The levy of interest is highly excessive and the same is liable to be deleted.

T. The delay caused in handing over of possession to the allottees is not on account of any error of the appellant as the appellant has given the entire amount of compensation to the farmers, still the agitation and hindrance was created by few farmers. The appellant has also made earnest efforts to free the land from such agitationists and the same is substantiated from the various FIRs lodged by the appellant.

27. The appellant has prayed for the following reliefs:—

(A) Issue an order or direction quashing the order dated 16.03.2020 passed in Complaint Case No. LKO/186/09/1251/2019 (Shilpi Singh v. UPSIDC) and further to dismiss the Complaint case no. LKO/186/09/1251/2019 in toto.

(B) Hon'ble Tribunal may graciously be pleased to hold that the Trans Ganga Project is not a ‘real estate project’ in terms of the Act, 2016 as defined under Section 2(zn) of the Act and that the appellant is not a ‘promoter’ as defined in Section 2(zk) of the Act, 2016.

(C) Hon'ble Tribunal may graciously be pleased to pass such other orders as it may deem fit and proper in the facts and circumstances of the case.

(D) Allow the application with cost.

28. The respondent in the leading case has filed her objection to the memo of appeal and submitted that the appellant has admitted that it failed to deliver possession of the plot to the respondent inspite of the fact that the respondent had already paid a sum of Rs. 39,29,314/-. Now the purpose for which the respondent applied for the plot in question is already frustrated and the respondent is not willing to take possession of the plot after the huge delay on the part of appellant.

29. The respondent cannot be made an escape goat for the failures of the appellant and the respondent has statutory right to recover her money along with interest from the appellant.

30. The appellant is required to refund respondent's money along with interest as per provisions of the Act, 2016.

31. The appellant has admitted that it has caused delay in delivering possession to respondent. The Act does not provide any exemption for those promoters where the delay is not caused due to their mistake but the Act specifically provides that the promoter is liable to refund to the allottees money with interest if the allottee seeks refund of his/her money due to delay in delivery of possession.

32. There is no exemption under the Act for State bodies/authorities which fall within the definition of the ‘Promoter’. The appellant is covered within the definition of ‘promoter’ provided under the Act, hence the provision of the Act is applicable on the appellant. The allotment of long term lease is covered under the Act as held by Hon'ble Bombay High Court in the case of Lavasa Corporation Limited v. Jitendra Jagdish Tulsiani, vide order dated 07.08.2018.

33. The U.P. RERA Rules do not exclude industrial project and the industrial projects are covered under the provisions of the Act, 2016, therefore, any defect in the Rules does not grant immunity to the appellant from the provisions of the Act.

34. The Regulatory Authority has not granted any compensation to the respondent vide its order dated 16.03.2020.

35. Section 30 of the Act, 2016 specifically provides that any vacancy or defect in the constitution of the Authority will not render its any act or proceeding invalid.

36. Industrial projects are not excluded by the Act, 2016. Further the order dated 16.03.2020 has been passed regarding a residential scheme and not for an industrial plot.

37. The Regulatory Authority has decided the complaint after considering all written and oral submissions placed by the parties.

38. On the basis of aforesaid facts, reasons and circumstances the appeal of the appellant is liable to be dismissed with heavy cost.

39. The appellant filed its reply/rejoinder to the objection of the respondent and submitted that it is admitted by the respondent that the appellant had spent a colossal amount of 458 crores towards the development of Trans Ganga City Project and that diligent efforts were made by the appellant to complete the project. The appellant is not at fault and, therefore, equities have to be balanced while passing any order against the appellant. The appellant had made all earnest efforts to free the land from the agitationists but as the appellant was not successful for a long period of time, therefore, the appellant, in the interest of allottees and in order to benefit them had given the proposal dated 11.09.2019 wherein the appellant offered to give possession of the plot with delay and with certain concessions or to refund the entire deposited amount along with interest @ 6%. The said offer shows the bonafides of the appellant.

40. Hon'ble Bombay High Court in the case of Neelkamal Realtors Suburban Pvt. Ltd. v. Union of India (Writ Petition No. 2737 of 2017) has been pleased to hold that the Regulatory Authority in order to advance the purpose and object of the Act, 2016 shall, in genuine cases, balance the right of both the parties.

41. The appellant is now complying with the orders passed by the Regulatory Authority and accordingly the appellant has proceeded to get the Trans Ganga City Project registered with the RERA. Therefore, the appellant is not challenging the part of the order whereby a direction has been issued to the appellant to get its project registered.

42. The impugned order dated 16.03.2020 has been passed by a single member of the Authority whereas Section 21 of the Act categorically provides that the authority has to comprise of one chairperson and at least two members. This question is also under consideration of Hon'ble Allahabad High Court in Writ C No. 39080 (Sunshine Trade Tower Pvt. Ltd. v. State of U.P.); Writ C No. 41872 of 2019 (Edge Dwarika Jv 2 v. State of U.P.).

43. Hon'ble Punjab & Haryana High Court in the case of Janta Land Promoters Pvt. Ltd. v. Union of India, CWP No. 8548 of 2020 has been pleased to quash various orders passed by the RERA as they were passed by single member on the ground that a single member cannot validly pass orders on the complaint as it is in violation of Section 21 of the Act. The authority cannot delegate its adjudicatory functions to a single member.

44. Hon'ble Bombay High Court in the case of Neelkamal Realtors Suburban Pvt. Ltd. v. Union of India has been pleased to record that interest is merely compensation for use of money. Therefore, as per Hon'ble Bombay High Court the award of interest is also covered under the definition of ‘compensation’ and, therefore, as per Section 71 of the Act, in order to award compensation the adjudicating officer has to be appointed for holding an enquiry but the same has not been done in the present case. Therefore, the impugned order dated 16.03.2020 passed by the Regulatory Authority is in violation of Sections 21 and 71 of the Act and accordingly deserves to be set aside.

45. The question in regard to award of interest is pending consideration before the Hon'ble Allahabad High Court in Writ Petition No. 42569 of 2019 (Radha Towers Skippers Pvt. Ltd. v. State of U.P.).

46. The impugned order dated 16.03.2020 has been passed in utter violation of Sections 71 and 21 of the Act and accordingly the impugned order deserves to be set aside.

47. Heard Sri Kartikey Dubey, learned counsel for the appellant in all the appeals, Sri Mandeep Singh learned counsel for the respondent (in Appeal Nos. 339/2020 and 341/2020) and Sri Ajay Kumar Gupta, legal representative of respondent (in Appeal Nos. 342/2020, 343/2020 and 344/2020).

48. Learned counsel for the appellant, during the course of hearing submitted that prayer no. (B) of the appeal be permitted to be deleted and he presses the remaining prayers i.e. (A), (C) and (D). Appreciating the request of learned counsel for the appellant the Tribunal on 26.10.2021, permitted him to delete prayer (B) during the course of the day, but the record reveals that the said prayer (B) has not been deleted by the learned counsel for the appellant.

49. Learned counsel for the appellant, during the course of his arguments laid much emphasis and vehemently submitted that the impugned order dated 16.03.2020 suffers from the vice of coram non-judice in as much as the same has been passed by the single member of the authority whereas as per the provision of Section 21 of the Act the authority has to be comprised of one Chairperson and at least two members. In support of his submission the learned counsel placed reliance on certain interim orders passed by Hon'ble Allahabad High Court passed in Writ C No. 41872 of 2019 (Edge Dwarika Jv 2 v. State of U.P.), Writ C No. 39080 of 2019 Sunshine Trade Tower Pvt. Ltd. v. State of U.P.), Writ C No. 41940 of 2019 (M.R.Dd Developers v. State of U.P.) and Writ C No. 3220 of 2020 Psa Impex Pvt. Ltd. v. Malvika Khanna), collectively contained in annexures 8 and 9 to the appeal (page 119 to 128). Learned counsel for the appellant further submitted that the Regulatory Authority wrongly placed reliance on the U.P. Real Estate (Regulation and Development) (Agreement for Sale/Lease) Rules, 2018 while granting interest at the rate of MCLR+1% in absence of any agreement between the appellant and the respondent and this issue is under consideration before the Hon'ble Allahabad High Court in Writ Petition No. 42569 of 2019 (Radha Towers Skippers Pvt. Ltd. v. State of U.P.), wherein vide order dated 20.12.2019 the recovery of interest has been stayed. Learned counsel for the appellant further submitted that even the levy of interest is highly excessive and the same is liable to be deleted. Learned counsel for the appellant also laid emphasis while challenging the order of the Regulatory Authority on the ground that in the complaint the complainant/respondent has mentioned the dates of deposits which range from 2 to 3 years, but the Regulatory Authority in its order while directing for refund, directed for grant of interest at the rate of MCLR+1% per annum from the payment of first installment and in this way the complainants/respondents will get the interest on the amount which they have not paid on the said date.

50. Learned counsel for the respondent submitted that the respondent has no objection if the order of the RERA is modified to the extent that the interest awarded by the RERA is made applicable from the date of different installments till the date of actual payment.

51. Learned counsel for the appellant also submitted that the delay caused in handing over of possession to the allottees is not on account of error by the appellant as the appellant has given the entire amount of compensation to the farmers, still the agitation and hindrance was created by few farmers. The appellant has made earnest efforts to free the land from such agitationists and the same is substantiated from the various FIRs lodged by the appellant.

52. The perusal of the impugned order reveals that on the complaint of the respondent the RERA framed following three questions:—

(1) Whether UPSIDC/UPSIDA who had allotted plots to the complainant on leasehold basis will not come under the definition of “Promoter” and the complainant under the category of “allottee”?

(2) Whether in view of nature of work and objective of UPSIDC the project in question is required to be registered with RERA or not?

(3) Whether it will be appropriate to direct the Promoter to refund the amount along with interest or not?

53. The Regulatory Authority while examining question no. (1), after examining the definition of “allottee” and “Promoter” in Section 2(d) and 2 (zk) of the Act, 2016 held that UPSIDC/UPSIDA is covered under the definition of “Promoter” and the complainant is covered under the definition of “allottee”.

54. The Regulatory Authority while examining question no. (2) found that the proceedings were initiated separately against the appellant and directions have already been issued by the RERA for registration of the project under Section 3 of the Act, 2016, the project in question being a ‘going on project’, failing which action is required to be taken against UPSIDA under Section 59(2) of the Act, 2016.

55. While examining question no. (3) regarding refund of amount along with interest on account of delay, the Regulatory Authority directed the appellant to refund the entire deposited amount within 60 days with simple interest as fixed by the State Bank of India i.e. MCLR+1%;per annum, from the date of deposit of first installment. Since the appellant has not registered its project and violated the provisions of Sections 3, 4 and 15 of the Act, 2016, therefore the Regulatory Authority, after examining the judgment of Neelkamal Realtors Suburban Pvt. Ltd. v. Union of India, 2017 SCC OnLine Bom 9302, and the provisions of Section 18(1) (b) of the Act, 2016, directed the Secretary RERA to take further action for the same.

56. In order to appreciate the controversy on the grounds pressed by the learned counsel for the appellants, pleadings on the record and appreciating the submissions of the learned counsel for the appellants and the respondents of connected appeals, we deem it proper to frame the following issues:—

(1) Whether the provisions of Act, 2016 are applicable to the project of the appellant and Regulatory Authority is vested with the powers and jurisdiction to consider and decide the complaint of the respondent under the scheme of the Act, 2016 on account of violation of the provisions of Sections 12,14,18 and 19 of the Act, 2016, even though these are cases of lease and no transfer of ownership will take place?

(2) Whether under the scheme of Act, 2016 and Rules, 2016 any mechanism has been provided for determination of the interest or compensation for delay in handing over possession of the apartment/plot to the allottee and/or refund with interest, if allottee does not want to continue/wish to withdraw from the project?

(3) Whether the respondent is entitled for interest due to delay in possession of the allotted unit/plot and/or while seeking refund on the deposited amount under the scheme of Act, 2016 and if yes, what rate of interest is required to be paid by the promoter/appellant to the allottee/respondent?

(4) Whether the Regulatory Authority erred in not taking into consideration the difficulties faced by the appellants in completion of the project as per promised time schedule or the order of the Regulatory Authority is in consonance with the provisions of Act, 2016 and Rules, 2016?

(5) Whether the impugned order dated 16.03.2020 suffers from the vice of coram non-judice being passed by the single Member of the Regulatory Authority in violation of the provisions of Section 21 of the Act, 2016?

(6) Whether the Regulatory Authority erred in granting interest on the entire deposited amount of the respondent from the date of payment of first installment, whereas the installment/amount deposited by the respondent against the allotted plot ranges from 2 to 3 years?

57. For examining issue no. (1), we proceed to examine the scheme and relevant provisions of the Act of 2016.

58. The Real Estate (Regulation & Development) Act, 2016 has been enacted to establish the Real Estate Regulatory Authority for regulation and promotion of the real estate sector and to ensure sale of plot, apartment or building, as the case may be, or sale of real estate project, in an efficient and transparent manner and to protect the interest of consumers in the real estate sector and to establish an adjudicating mechanism for speedy dispute redressal and also to establish the Appellate Tribunal to hear appeals from the decisions, directions or orders of the Real Estate Regulatory Authority and the Adjudicating Officer and for matters connected therewith or incidental thereto. The Real Estate (Regulation & Development) Act, 2016 delineates functions and duties of promoter in chapter 3 and rights and duties of allottees in chapter 4. The Real Estate Regulatory Authority has been assigned functions and have been given powers as detailed out in chapter 5.

59. At this stage it is necessary to examine the definition of ‘allottee’ under the provisions of the Act, 2016. Section 2(d) of the Act reads as under:—

2(d) “allottee” in relation to a real estate project, means the person to whom a plot, apartment or building, as the case may be, has been allotted, sold (whether as freehold or leasehold) or otherwise transferred by the promoter, and includes the person who subsequently acquires the said allotment through sale, transfer or otherwise, but does not include a person to whom such plot, apartment or building, as the case may be, is given on rent.”

60. The Hon'ble Bombay High Court in the case of Lavasa Corporation Limited v. Jitendra Jagdish Tulsiani, 2018 SCC OnLine Bom 2074 : (2018) 5 AIR Bom R 553 : (2018) 6 Bom CR 172 examined the status of an “allottee” on the basis of long term leasehold after taking into consideration the judgment of Hon'ble Supreme Court in the case of R.K. Palshikar (HUF) v. CIT, MP Nagpur and Bhandara, (1988) 172 ITR 311, was pleased to observe that the definition of the word “Allottee” as given in Section 2(d) of the RERA, to contend that the allottee does not include a person to whom such plot, apartment or building, as the case may be, is “given on rent”, it must be remembered that, the definition of the term “allottee” in the present context includes even when the plot sold is a “freehold or leasehold”. To that extent, it has to be held that, the definition of ‘allottee’ also includes the ‘Lease Agreement’, though it may not include such agreement when the apartment in its real sense given purely on rent and it is, in reality an ‘Agreement of Rent and Lease’ and not in effect a transaction of sale. The object of RERA is to regulate the real estate industry, to ensure greater accountability towards consumers and significantly to reduce frauds and delays, to bring into it the standardization, professionalism and the transparency, so that interests of the consumers are protected. Hence, they are required to be called as ‘Consumers’ or ‘Allottees’. It is further observed that if they are excluded from the definition of ‘Allottee’ and thereby from the protection given under the Act, by giving restrictive meaning to the term ‘Allottee’, the very object of the Act would stand frustrated.

61. The Act envisages adjudication by the Regulatory Authority in terms of the powers under Chapter V of the Act and in particular Sections 31, 32, 34, 35 and 40 of the Act, and for adjudging compensation by the Adjudicating Officer in terms of the power under Chapter VIII of the Act and in particular Sections 71 and 72 thereof.

62. The Act spells out the obligations of the promoter of a real estate project and the consequence of the promoter failing to fulfill those obligations. Some of those obligations are enumerated in Section 11, 12 to 18 of the Act.

63. Section 18 of the Act talks of the consequence of the failure by the promoter to complete or to be unable to give possession of an apartment, plot or building either in terms of the agreement for sale or failure to complete the project by the date specified therein or on account of discontinuance of his business either on account of suspension or revocation of the registration under the Act or for any other reason. In the event of either of the above contingencies under Section 18(1)(a) of the Act, the promoter is made liable on the demand of the allottee:

(i) In the event that the allottee wishes to withdraw from the project, without prejudice to any other remedy available, to return the amount received by the promoter in respect of that apartment, plot, building, as the case may be, together with “interest at such rate as may be prescribed” “including compensation in the manner as provided under this Act”;

(ii) Where an allottee does not intend to withdraw from the project the promoter shall pay him for every month's delay in the handing over of the possession, “interest at such rate as may be prescribed”.

64. Section 18(2) of the Act mandates that in case loss is caused to allottee due to the defective title of the land, on which the project is being developed or has been developed, the promoter shall compensate the allottee and that such claim for compensation under Section 18(2) shall not be barred by limitation provided under any law for the time being in force.

65. Section 18(3) of the Act states that where the promoter fails to discharge any other obligations under the Act or the Rules or Regulations made there under or in accordance with the terms and conditions of the agreement for sale, the promoter shall be liable to pay “such compensation” to the allottees, in the manner as provided under the Act.

66. It is apparent on a reading of Section 18 of the Act as a whole that upon the contingencies spelt out therein, (i) the allottee can either seek refund of the amount by withdrawing from the project; (ii) such refund could be together with interest as may be prescribed; (iii) the above amounts would be independent of the compensation payable to an allottee either in terms of Sections 18(2) or 18(3) of the Act read with other provisions; (iv) the allottee who does not intend to withdraw from the project will be required to be paid by the promoter interest for every month's delay of handing over possession.

67. When one turns to the powers of the Authority, it is seen that under Section 31, the complaints can be filed either with the Authority or with the Adjudicating Officer (AO) for violation or contravention of the provisions of the Act or the Rules and Regulations. Such complaint can be filed against “any promoter, allottee or real estate agent”, as the case may be. Such complaint can be filed by “any aggrieved person”. The Explanation to Section 31(1) of the Act states that for the purposes of said sub-section “person” shall include an association of allottees or any voluntary consumer association registered under any law for the time being in force. Section 31(2) states that the form, manner and fees for filing a complaint under sub-section (1) shall be such as may be prescribed.

68. Now we proceed to examine the definition of the term “Project”, “Real Estate Project” and provisions of registration of Real Estate Project with Real Estate Regulatory Authority.

69. The definition of the project provided in section 2(zj) reads as under:—

“project” means real estate project as defined in clause 2(zn) under this Act.”

70. Accordingly, project means real estate project as defined in clause 2(zn) which reads as follows:—

“'real estate' means the development of a building or a building consisting of apartments, or converting an existing building or a part thereof, into apartments or the development of land into plots or apartments, as the case may be, for the purpose of selling all or some of the said apartments or plots or building, as the case may be, and includes the common areas, the development works, all improvements and structures thereon, and all easement, rights and appurtenances belonging thereto.”

71. Chapter II relates to registration of real estate projects. Section 3 of the Act, 2016 provides prior registration of real estate project with the Real Estate Regulatory Authority as follows:—

3. Prior registration of real estate project with Real Estate Regulatory Authority.—

“(1) No promoter shall advertise, market, book, sell or offer for sale, or invite persons to purchase in any manner any plot, apartment or building, as the case may be, in any real estate project or part of it, in any planning area, without registering the real estate project with the Real Estate Regulatory Authority established under this Act …….”

Section 3(1) provides for certain restrictions on the promoter without registering a real estate project with the respective Real Estate Regulatory Authority.

The proviso to section 3(1) further provides for registration of ongoing Project:

“……… Provided that projects that are ongoing on the date of commencement of this Act and for which the completion certificate has not been issued, the promoter shall make an application to the Authority for registration of the said project within a period of three months from the date of commencement of this Act.”

72. This provision requires that the projects which fulfil following two conditions are required to be registered within a period of three months from the date of commencement of this Act. The commencement date of the Real Estate (Regulation and Development) Act, 2016 is 01.05.2017, except Sections 2, 20 to 39, 41 to 58, 71 to 78 and 81 to 92, which came into force with effect from 01.05.2016. Accordingly, by 31.07.2017 (that is within 3 months from 1.5.2017) the following projects covered in proviso 3(1) of the Act have to register with the Regulatory Authority:

(i) The projects that are ongoing on the date of commencement of the Real Estate (Regulation and Development) Act, 2016; and

(ii) The projects for which completion certificate has not been issued.

73. For the issuance of the completion certificate material date is 01.05.2017 i.e. the date of commencement of Section 3 of the Real Estate (Regulation and Development) Act, 2016. Accordingly, all those projects where completion certificate has not been issued on the date of commencement of Section 3 of this Act are necessarily to be registered with the Regulatory Authority within a period of three months.

74. The proviso to section 3(1) provides that the projects that are ongoing on the date of commencement of this Act and for which completion certificate has not been issued, the promoter shall make an application to the authority for registration of the said project within a period of three months from the date of commencement of the Act. This Act came into force on 01.05.2017, barring some sections which came into force on 01.05.2016. Accordingly, for the on-going projects registration was to be applied by the promoter within three months, i.e., by 31.07.2017.

75. Section 3(2) provides those categories of projects where no registration of real estate projects shall be required. The section 3(2) reads as follows:—

“Notwithstanding anything contained in sub-section (1), no registration of the real estate project shall be required—

a) where the area of land proposed to be developed does not exceed five hundred square meters or the number of apartments proposed to be developed does not exceed eight inclusive of all phases:

Provided that, if the appropriate Government considers it necessary, it may, reduce the threshold below five hundred square meters or eight apartments, as the case may be, inclusive of all phases, for exemption from registration under this Act;

b) where the promoter has received completion certificate for a real estate project prior to commencement of this Act;

c) for the purpose of renovation or repair or redevelopment which does not involve marketing, advertising selling or new allotment of any apartment, plot or building, as the case may be, under the real estate project

Explanation. -For the purpose of this section, where the real estate project is to be developed in phases, every such phase shall be considered a stand-alone real estate project, and the promoter shall obtain registration under this Act for each phase separately.”

76. In sub-section 3(2)(b) it has been mentioned that those projects where the promoter has received the completion certificate for real estate project prior to commencement of the Act, 2016 have been taken out of the ambit of prior registration and not the real estate projects which may have received the completion certificate after the commencement of this Act. Section 3(2) exempts certain categories of real estate projects only from prior registration related provisions. However, in the light of observations made in para 54 of Hon'ble Supreme Court judgment dated 11.11.2021 passed in the case of Newtech Promoters And Developers Pvt. Ltd. v. State of U.P. in Civil Appeal Nos. 6750-6757 of 2021, the Act of 2016 will apply after getting the on-going projects and future projects registered under Section 3 of the Act, 2016.

77. All projects where completion certificate has not been issued are ongoing projects and completion certificate issued by the competent authority on or before 30.04.2017 is the conclusive proof of the fact that the project is complete, and it is not “on-going”. All “on-going” projects and all future projects are mandatorily required to get themselves registered with RERA under Section 3 of Act, 2016, and unless they are registered with RERA the provisions of the Act of 2016 shall not apply.

78. The provisions of the Act will therefore apply to the project in question as the project was not completed and the Completion Certificate (C.C.) was not issued till date and therefore the project falls under the category of ongoing projects. As regards registration of the Project “Trans Ganga City, Unnao” with UPRERA is concerned, the appellant/promoter has in its rejoinder mentioned that the appellant has proceeded to get the “Trans Ganga City Project” registered with the RERA. We checked the website of RERA and find that the Project “Trans Ganga City” of UPSIDA has been registered on 22.06.2021 and its Registration No. is UPRERAPRJ86654. We are, therefore, of the considered view that the provisions of the Act, 2016 shall apply in this case.

79. Section 31 of the Act, 2016 provides that any aggrieved person may file a complaint before the Regulatory Authority or the Adjudicating Officer against any promoter, allottee or real estate agent for any violation or contravention of the provisions of the Act, or the Rules and Regulations made thereunder.

80. Thus, we are of the considered view that a complaint pertaining to violation of provisions of the Act, 2016, the Uttar Pradesh Real Estate (Regulation and Development) Rules, 2016 (hereinafter referred to as Rules, 2016) and regulations made thereunder may be filed by any aggrieved person in respect of real estate belonging to any real estate project which qualifies to be real estate project as per the definition given in section 2(zn) of the Real Estate (Regulation and Development) Act, 2016. Further, for the project in question Regulatory Authority is vested with the powers & jurisdiction to consider and decide the complaint of respondent under the Scheme of Act, 2016, Rules, 2016 and Regulations framed there under even though it is a case of lease, and no transfer of ownership will take place as argued by the appellant (UPSIDA). The argument put forward by the appellant is misconceived and, therefore, rejected. Issue no. (1) is decided accordingly.

81. Issue No. (2) is regarding, whether under the scheme of the Act, 2016 and Rules, 2016 any mechanism has been provided for determination of the interest or compensation for the delay in handing over possession and/or refund with interest if allottee chooses to withdraw from the Project.

82. The Act envisages adjudication by the Regulatory Authority in terms of the powers under Chapter V of the Act and in particular Sections 31, 32, 34, 35 and 40 of the Act, and for adjudging compensation by the Adjudicating Officer in terms of the power under Chapter VIII of the Act and in particular Sections 71 and 72 thereof.

83. The Act spells out the obligations of the promoter of a real estate project and the consequence of the promoter failing to fulfill those obligations. Some of those obligations are enumerated in Section 11, 12 to 18 of the Act.

84. Section 18 of the Act talks of the consequence of the failure by the promoter to complete or to be unable to give possession of an apartment, plot or building either in terms of the agreement for sale or failure to complete the project by the date specified therein or on account of discontinuance of his business either on account of suspension or revocation of the registration under the Act or for any other reason. In the event of either of the above contingencies under Section 18(1)(a) of the Act, the promoter is made liable on the demand of the allottee:

(i) In the event that the allottee wishes to withdraw from the project, without prejudice to any other remedy available, to return the amount received by the promoter in respect of that apartment, plot, building, as the case may be, together with “interest at such rate as may be prescribed”, “including compensation in the manner as provided under this Act”;

(ii) Where an allottee does not intend to withdraw from the project, the promoter shall pay him for every month's delay in the handing over of the possession “interest at such rate as may be prescribed”. Section 18(2) of the Act mandates that in case loss is caused to allottee due to the defective title of the land, on which the project is being developed or has been developed, the promoter shall compensate the allottee and that such claim for compensation under Section 18(2) shall not be barred by limitation provided under any law for the time being in force.

85. Section 18(3) of the Act states that where the promoter fails to discharge any other obligations under the Act or the Rules or Regulations made there under or in accordance with the terms and conditions of the agreement for sale, the promoter shall be liable to pay “such compensation” to the allottees, in the manner as provided under the Act.

86. It is apparent on a reading of Section 18 of the Act as a whole that upon the contingencies spelt out therein, (i) the allottee can either seek refund of the amount by withdrawing from the project; (ii) such refund could be together with interest as may be prescribed; (iii) the above amounts would be independent of the compensation payable to an allottee either in terms of Sections 18(2) or 18(3) of the Act read with other provisions; (iv) the allottee who does not intend to withdraw from the project will be required to be paid by the promoter interest for every month's delay of handing over possession.

87. When one turns to the powers of the Authority, it is seen that under Section 31, the complaints can be filed either with the Authority or with the Adjudicating Officer (AO) for violation or contravention of the provisions of the Act or the Rules and Regulations. Such complaint can be filed against “any promoter, allottee or real estate agent”, as the case may be. Such complaint can be filed by “any aggrieved person”. The Explanation to Section 31(1) of the Act states that for the purposes of said sub-section “person” shall include an association of allottees or any voluntary consumer association registered under any law for the time being in force. Section 31(2) states that the form, manner and fees for filing a complaint under sub-section (1) shall be such as may be prescribed.

88. Having gone through the relevant Sections of the Act, we find that as per Sections 12, 18 and 19 of the Act, the allottee, in case of default by the promoter, is entitled to refund of his/her entire investment along with “interest at such rate as may be prescribed” and “compensation in the manner provided under the Act”. Whereas in Section 12, the part dealing with interest and the part dealing with compensation are joined with the word “and” while in Section “18” they are joined with the word “including”. Also, “at such rate as may be prescribed” is suffixed to the word “interest” in the context of refund of investment, but the expression “at such rate as may be prescribed” is neither prefixed nor suffixed to the word “compensation” in any of the Sections of the Act. The term compensation is suffixed by the expression “in the manner as provided under this Act” in Sections 12, 14, 18 & 19 of the Act. However, compensation and interest are qualified by the term “as he thinks fit in accordance with the provisions of any of those sections” in Section 71 of the Act. The Act only lays down for “holding an enquiry in the prescribed manner, after giving any person concerned a reasonable opportunity of being heard” under Section 71. The Act very clearly provides that the quantum of compensation or “interest as he thinks fit” under Section 71 will be decided taking into consideration the factors listed under Section 72 of the Act.

89. We further examined Section 31 of the Act and Rule 33 & Rule 34 of the Rules. The relevant portions of Section 31 of the Act and Rule 33 of the Rules are extracted as follows:—

Extract of Section 31 of the Act

“(1) Any aggrieved person may file a complaint with the Authority or the adjudicating officer, as the case may be, for any violation or contravention of the provisions of this Act or the rules and regulations made thereunder against any promoter, allottee or real estate agent, as the case may be.

Explanation

For the purpose of this sub-section “person” shall include the association of allottees or any voluntary consumer association registered under any law for the time being in force.

(2) The form, manner and fees for filing complaint under sub-section (1) shall be such as may be specified by regulations.”

90. As can be seen from above, Section 31(2) of the Act provides for specifying by regulations, the form, manner and fee for filing complaint under Section 31(1) of the Act. As provided under Section 31(2) of the Act, the U.P. Government has framed Rules, 2016. Rule 33(1) provides for manner of filing a complaint with the Regulatory Authority. Rule 33(1) is extracted as follows:—

Extract of Rule 33(1) of Rules-(1) Any aggrieved person may file a complaint with the regulatory authority for any violation under the Act or the rules and regulations, made there under, save as those provided to be adjudicated by the adjudicating officer, in Form M which shall be accompanied by a fee of rupees one thousand in the form of a demand draft drawn on a nationalized bank, in favour of regulatory authority and payable at the main branch of that bank at the station, where the seat of the said regulatory authority is situated.

91. It is evident from Rule 33(1) of the Rules that the complaints filed with the Regulatory Authority should be in Form M, except those complaints which require to be adjudicated by the Adjudicating Officer. On top of Form M, it is clearly written that it is as per provisions of Rule 33(1) and is meant for filing complaint under Section 31 of the Act. Further Column 5 of the Form M specifically requires a complainant to indicate the relief(s) sought.

92. We have further examined Rule 34(1) of the Rules which relate to filing of a complaint with the Adjudicating Officer for compensation. Rule 34(1) reads as follows:—

Extract of Rule 34(1)

(1) Any aggrieved person may file a complaint with the adjudicating officer for compensation under Section 12, 14, 18 and 19 in Form N, which shall be accompanied by a fee of rupees one thousand in the form of a demand draft drawn on a nationalized bank in favour of regulatory authority and payable at the main branch of that bank at the station, where the seat of the said regulatory authority is situated.

93. It is clear from Rule 34(1) of the Rules that a complaint for “compensation” under Sections 12, 14, 18 and 19 of the Act is to be filed before the Adjudicating Officer in Form N. It is mentioned on top of Form N itself that it is an application to Adjudicating Officer for claim of compensation under Rule 34(1) of the Rules and under Section 31 of the Act read with Section 71 of the Act. A complainant is required to indicate in Column 5 of Form N, the compensation sought.

94. Thus, it is our considered view that Form N is to be filed before an “Adjudicating Officer” for only claiming “compensation” under Rule 34(1); whereas Form M is to be filed before the Regulatory Authority under Rule 33(1) of the Rules for all types of reliefs, barring “compensation”, for any violation under the Act, Rules or Regulations.

95. We have also examined the provisions of Sections 71 and 72 of the Act. The opening words of Section 71(1) of the Act make it clear that the scope and functions of the Adjudicating Officer (AO) are only for ‘adjudging compensation under Sections 12, 14, 18 and 19 of the Act’. If the legislative intent was to expand the scope of the powers of the AO, then the wording of Section 71(1) ought to have been different. On the contrary, even the opening words of Section 71(2) of the Act make it clear that an application before the AO is only for ‘adjudging compensation’. Even in Section 71(3) of the Act, it is reiterated that the AO may direct ‘to pay such compensation or interest as the case may be, as he thinks fit’ in accordance with provisions of Sections 12, 14, 18 and 19 of the Act. This has to be seen together with the opening words of Section 72 of the Act, which read “while adjudging the quantum of compensation or interest, as the case may be, under Section 71, the adjudicating officer shall have due regard to the following factors, namely,…………….”

96. On a collective reading of Sections 71 and 72 of the Act, the legislative intent becomes explicit. This is to limit the scope of the adjudicatory powers of the AO for determining “compensation or interest as he thinks fit” in the event of violation of Sections 12, 14, 18 and 19 of the Act.

97. On examination of Section 35 of the Act, we find that the powers of the Regularity Authority under Section 35 of the Act are of a wide nature. While discharging those functions, it will be open to the Authority to even require the AO to conduct the inquiry. Section 35(2) of the Act also makes it plain that the Regulatory Authority will have the same powers as a Civil Court. The legislative intent is, therefore, not to diminish the adjudicatory functions of the Regulatory Authority, but rather to provide it with all the trappings of a quasi-judicial/judicial authority while inquiring into the complaints and issuing directions, by directing the Adjudicating Officer to adjudicate the compensation or interest. The legislation in its own wisdom has used the word “Authority” as well as “Adjudicating Officer” wherever it is required. Furthermore, the legislation has clearly, intentionally and suitably used the word “penalty” or “interest at such rate as may be prescribed” in case of Authority and “compensation” or “interest as he thinks fit” in case of Adjudicating Officer.

98. Further, the Hon'ble Bombay High Court in the case of Neelkamal Realtors Suburban Pvt. Ltd. v. Union of India (supra) observed as follows:—

“Section 18(1)(b) lays down that if the promoter fails to complete or is unable to give possession of an apartment due to discontinuance of his business as a developer on account of suspension or revocation of the registration under the Act or for any other reason, he is liable on demand to the allottees, in case the allottee wishes to withdraw from the project, without prejudice in this behalf including compensation. If the allottee does not intend to withdraw from the project he shall be paid by the promoter interest for every month's delay till handing over of the possession. The requirement to pay interest is not a penalty as the payment of interest is compensatory in nature in the light of the delay suffered by the allottee who has paid for his apartment but has not received possession of it. The obligation imposed on the promoter to pay interest till such time as the apartment is handed over to him is not unreasonable. The interest is merely compensation for use of money”.

99. From the aforementioned discussion, it is clear that the Act of 2016 provides a mechanism for determination of interest and/or compensation for the delay in handing over possession of the unit to the allottee, if the allottee wishes to stay with the project and/or refund with interest if allottee wants to withdraw from the Project. Issue no. (2) is decided accordingly.

100. Issue No. (3) is regarding respondent's entitlement for interest due to delay while seeking refund of the deposited amount under the scheme of the Act, 2016 and if yes, what rate of interest is required to be paid by the promoter to the allottee/respondent.

101. Section 18(1) of the Act clearly provides that if an Allottee wishes to withdraw from the Project on the ground that the Promoter is unable to give possession in accordance with the Agreement for Sale within the date specified therein, then the Promoter shall return the amount received from the Allottee in respect of that property with interest and compensation, on the Allottees' demand. The power of exercising the option of either staying in the Project or for withdrawing from it lies only with the Allottees under the provisions of Section 18(1) of the Act. Further, Section 19(4) of the Act, 2016 gives right to the allottees to claim refund along with interest and/or compensation in case the Promoter fails to give possession of the apartment in accordance with the terms and conditions of Agreement for sale.

102. The Hon'ble Bombay High Court in the case of Neelkamal Realtors Suburban Pvt. Ltd. v. Union of India, (2018) 1 AIR Bom R 558 observed that the requirement to pay interest is not a penalty as the payment of interest is compensatory in nature in the light of the delay suffered by the allottee who has paid for his apartment but has not received possession of it. The obligation imposed on the promoter to pay interest till such time as the apartment is handed over to him is not unreasonable. The interest is merely compensation for use of money.

103. Subsequently, in Wg. Cdr. Arifur Rahman Khan v. DLF Southern Homes Pvt. Ltd., reported in 2020 SCC OnLine SC 667 affirming the view taken in the Judgment in Pioneer's case (Supra) the Hon'ble Supreme Court held that the term of the agreement authored by the Developer does not maintain a level platform between the Developer and the flat purchaser. The stringent terms imposed on the flat purchaser are not in consonance with the obligation of the Developer to meet the time lines for construction and handing over possession, and do not reflect an even bargain. The failure of the Developer to comply with the contractual obligation to provide the flat within the contractually stipulated period, would amount to a deficiency of service. Given the one-sided nature of the Apartment Buyer's Agreement, the consumer fora had the jurisdiction to award just and reasonable compensation as an incident of the power to direct removal of deficiency in service.

104. Recently the Hon'ble Supreme Court, while dealing with the provisions of Section 18 of the Act, 2016, in the case of Imperia Structures Ltd. v. Anil Patni, Civil Appeal Nos. 3581-3590 of 2020, decided on 02.11.2020, vide para 23, was pleased to observe that the right so given to the allottee is unqualified and if availed, the money deposited by the allottee has to be refunded with interest at such rate as may be prescribed and the proviso to Section 18(1) contemplates a situation where the allottee does not intend to withdraw from the Project. In that case he is entitled to and must be paid interest for every month of delay till the handing over of the possession. It is upto the allottee to proceed either under Section 18(1) or under proviso to Section 18(1).

105. U.P. Government framed “Uttar Pradesh Real Estate (Regulation and Development) (Agreement for Sale/Lease) Rules, 2018” (hereinafter referred to as Rules, 2018), wherein under Rule 9.2(ii) and 9.3(i), the rate of interest payable by the promoter or by the allottee respectively are defined in case of default by either of the party. These Rules are extracted as follows:—

Rule 9.2(ii)

The Allottee shall have the option of terminating the Agreement in which case the Promoter shall be liable to refund the entire money paid by the Allottee under any head whatsoever towards the purchase of the apartment, along with interest at the rate equal to MCLR (Marginal Cost of Lending Rate) on home loan of State Bank of India + 1% unless provided otherwise under the Rules, within forty-five days of receiving the termination notice:

Provided that where an Allottee does not intend to withdraw from the Project or terminate the Agreement, he shall be paid, by the Promoter, interest at the rate prescribed in the Rules, for every month of delay till the handing over of the possession of the Apartment/Plot, which shall be paid by the Promoter to the Allottee within forty-five days of it becoming due.

Rule 9.3

The Allottee shall be considered under a condition of Default, on the occurrence of the following events:

Rule 9.3(i)

In case the Allottee fails to make payments for 2(two) consecutive demands made by the Promoter as per the Payment Plan annexed hereto, despite having been issued notice in that regard the Allottee shall be liable to pay interest to the promoter on the unpaid amount at the rate equal to MCLR (Marginal Cost of Lending Rate) on home loan of State Bank of India + 1% unless provided otherwise under the Rules. The Promoter must not be in default to take this benefit.

106. On examination, we find that these Rules-2018 notified by U.P. Government are in consonance with the definition of interest as provided in Section 2(za) of the Act, in as much as that the interest chargeable from the allottee by the promoter, in case of default in payment as per demand, is equal to the rate of interest which the promoter is liable to pay to the allottee, in case of default/delayed possession on the part of promoter.

107. We have come across various orders of the Regulatory Authority wherein it had granted interest at the rate of MCLR+1% per annum in case of delayed projects and had an occasion to examine the issue of rate of interest at MCLR+1% awarded by the Regulatory Authority in Appeal No. 295 of 2019 (U.P. Avas Vikas Parishad v. Devesh Kumar Tiwari) decided on 20.02.2020 and held as follows:—

“We feel that this imbalance is on account of the fact that the buyer/allottee has much less bargaining power as compared to the seller in the real estate market and therefore the buyers/allottees have no choice but to sign on such “dotted line”, “one sided, unfair and unreasonable” terms and conditions/Agreements. We are therefore of the view that the rate of MCLR +1%, as prescribed by the Government and as being ordered by the Regulatory Authority, be payable from the date of deposit of money in case the allottee wishes to withdraw from the project; and from the specified/expected date of possession in case the allottee wishes to stay in the project, would balance the equities and are just and fair and will fall within the term “interest at such rate as may be prescribed” as used in Sections 12, 18 & 19 ………”

108. It is our considered view that drawing light from the Rules of 2018, and the fact that often and allottee/buyer has to supplement his savings by taking loan at the MCLR percent interest (compound), the simple rate of interest at MCLR+1 percent balances the equities and is in line with the word and spirit of the Act and can be taken as “interest at such rate as may be prescribed” as mentioned in Sections 12,18 and 19 of the Act, till the rate of interest for the purpose is notified by the State Government, as there is misprint in Rule 15 of the U.P. Real Estate (Regulation and Development) Rules, 2016.

109. At this stage we have also examined the grievance raised by the respondent that Section 19(4) of the Act, 2016 provides that if the promoter fails to comply or is unable to give possession of the apartment, plot or building in accordance with the terms of agreement for sale, the allottee shall be entitled to claim refund of amount paid along with interest at such rate, as may be prescribed and compensation in the manner as provided under the Act, 2016, but in the instant case the promoter is constantly trying to avoid the obligation imposed.

110. In view of the aforementioned, we are of the view that the respondent is entitled for interest on account of delayed possession and the rate of interest i.e. MCLR+1% granted by the Regulatory Authority is fair, just and reasonable - as it balances the equities between the parties and the Regulatory Authority's action is in accordance with the provisions of the Act, 2016 and Rules, 2016. Issue no. (3) is decided in favour of the respondent.

111. Vide issue No.(4) we are required to examine as to whether the Regulatory Authority passed order without taking into consideration the difficulties faced by the appellants in completion of the project as per promised time schedule as well as the difficulties raised and pointed out by the promoter/appellant can be looked into by the Regulatory Authority and any benefit could have been given to the promoter/appellant for delay in completion of the project.

112. The promoter/appellant in the grounds took basically the plea regarding agitation and hindrance created by previous land owners which resulted in suspension of work since October, 2017. It is admitted position that in pursuance to the advertisement issued by the promoter/appellant for allotment of residential plots in Trans Ganga City the respondent (in leading Appeal No. 339/2020) applied for a plot and was allotted a residential plot bearing no. B-89 Sector-7 in the industrial area, Trans Ganga (Housing), District Unnao through lottery system, on lease basis for a period of 90 years and as per the Brochure of the Scheme the plot was to be delivered by December, 2016. Therefore, the respondent, feeling aggrieved, filed complaint on 11.09.2019 seeking direction for refund of amount of Rs. 39,29,314/- with 18% interest per annum due to not giving possession even after lapse of more than 32 months.

113. Under the scheme of the Act, 2016 there is no provision for extending the period of possession as promised vide allotment letter/Builder Buyer Agreement. Section 5 of the Act provides for grant of registration to the project of a promoter by the RERA and Section 6 of the Act provides for extension of registration granted under Section 5 by the authority on application made by the promoter, due to force majeure. Further the authority may, in reasonable circumstances without fault on the part of the promoter, based on the facts of each case, may extend the registration granted to the project not exceeding a period of one year by recording reasons for the same and under explanation clause of Section 6 force majeure has been defined as a case of war, flood, drought, fire, cyclone, earthquake or any other calamity caused by nature, affecting the regular development of the real estate project. This extension of registration by RERA is only to save the promoter from penal consequences of non compliance of the various provisions of the Act, 2016.

114. The Hon'ble Bombay High Court in the case of Neelkamal Realtors Suburban Pvt. Ltd. v. Union of India (supra) vide paras 256, 257 & 258 was pleased to observe as under:—

“256. Section 4(2)(l)(C) enables the promoter to revise the date of completion of project and hand over possession. The provisions of RERA, however, do not rewrite the clause of completion or handing over possession in agreement for sale. Section 4(2)(l)(C) enables the promoter to give fresh time line independent of the time period stipulated in the agreements for sale entered into between him and the allottees so that he is not visited with penal consequences laid down under RERA. In other words, by giving opportunity to the promoter to prescribe fresh time line under Section 4(2)(l)(C) he is not absolved of the liability under the agreement for sale.

257. Section 18(1)(b) lays down that if the promoter fails to complete or is unable to give possession of an apartment due to discontinuance of his business as a developer on account of suspension or revocation of the registration under the Act or for any other reason, he is liable on demand to the allottees, in case the allottee wishes to withdraw from the project, without prejudice in this behalf including compensation. If the allottee does not intend to withdraw from the project he shall be paid by the promoter interest for every month's delay till handing over of the possession. The requirement to pay interest is not a penalty as the payment of interest is compensatory in nature in the light of the delay suffered by the allottee who has paid for his apartment but has not received possession of it. The obligation imposed on the promoter to pay interest till such time as the apartment is handed over to him is not unreasonable. The interest is merely compensation for use of money.

258. In paragraph-9 of Alok Shanker Pandey v. Union of India, (2007) 3 SCC 545, the Apex Court has held that “There is misconception about interest. Interest is not a penalty or punishment at all, but it is the normal accretion on capital. …………….. The object of Section 18 is to recompense an allottee for depriving him of the use of the funds paid by him. The promoter who has received money from the allottee but has failed to adhere to his contractual or statutory obligations, cannot claim that he is entitled to utilize the monies without paying any interest with respect thereto to the allottee.”

259. A perusal of Section 18 indicates that payment of interest including compensation or interest, as the case may be, is payable on account of default committed by the promoter. Although this Section does not consider a situation where the promoter is unable to complete or handover possession for no fault of his own, it would be open to him to claim frustration in such a case and return the money to the allottee with interest thereby stopping the interest that is to be paid till handing over possession. The provisions of RERA ensure that the allottees’ money is not misused or unreasonably retained by the promoter.

115. The term “Force Majeure” is defined in the Concise Law Dictionary by P. Ramanatha Aiyar as follows:—

Force Majeure - Irresistible force or compulsion; circumstance beyond one's control.

116. The Hon'ble Supreme Court in the case of Dhanrajamal Govindram v. Shamji Kalidas and Co., AIR 1961 SC 1285, 1291 was pleased to observe that the expression ‘force majeure’ is not a mere French version of the Latin expression “vis major”. It is a term of wider import. Strikes, breakdown of machinery, which though normally not included in “vis major” are included in “force majeure”, the intention is to save the performing party from the consequences of anything over which he has no control.

117. The Hon'ble High Court, Orissa examined the issue of force majeure in the case of Mohd. Serajuddin v. State of Orissa, AIR 1969 Ori 152 at 162 and was pleased to observe that, force majeure means act of God, war, insurrection, riot, civil commotion, strike, earthquake, tide, storm, tidal wave, flood, lightning, explosion, fire and any other happening which the lessee would not reasonably prevent or control.

118. Recently, in Civil Appeal No. 940/2017 (Vikram Chatterjee v. Union of India), the Hon'ble Supreme Court has defined Force Majeure as under:—

“Force Majeure shall mean a case of war, flood, drought, fire, cyclone, earthquake or any other calamity caused by nature”.

119. The term ‘force majeure’ has been defined in Black's Law Dictionary, as ‘an event or effect that can be neither anticipated nor controlled. It is a contractual provision allocating the risk of loss if performance becomes impossible or impracticable, especially as a result of an event that the parties could not have anticipated or controlled.”

120. Force majeure clause is generally provided in the Contracts/Agreements and this clause typically spells out specific circumstances or events, which would qualify as force majeure events. The consequences of occurrence of such events, to qualify for the benefit of force majeure, they should be beyond the control of the parties and the parties will be required to demonstrate that they have made attempts to mitigate the impact of such force majeure events. Depending upon the language of the force majeure clause, the parties may be required to issue a notice formally intimating the other party of the occurrence of such events and the invocation of the force majeure clause.

121. Further a developer in the position of appellant would be conscious of the delays/difficulties claimed and cannot set this up as a defence to claim for compensation, where a delay has been occasioned beyond the contractually agreed period for handing over possession.

122. On examination of the pleadings and record we could not find any document in support of the claim of the promoter/appellant except the averments made in the memo of appeal and grounds. Even otherwise the claim of the promoter/appellant regarding non consideration of its difficulties in completion of the project is beyond the scope of the scheme of the Act and if there is any delay either in delivery of possession and an allottee chooses to withdraw from the project due to delay or otherwise then the allottee is entitled for interest/compensation/penalty.

123. As per record, the possession of the developed plot was required to be given by the promoter/appellant by the end of December, 2016, therefore, the Regulatory Authority rightly, after examining the pleadings and appreciating the submissions of the parties, directed for refund of deposited amount with interest at the rate of MCLR+1% per annum. Issue no. (4) is decided accordingly.

124. Issue No. (5): As far as the issue regarding deciding the complaints by single Member of the Regulatory Authority in violation of Section 21 of the Act, 2016 and that the impugned order dated 16.03.2020 being suffered from the vice of coram non-judice is concerned, this issue remains no res-integra as the same has already been settled by the Hon'ble Supreme Court in Civil Appeal No (s). 6745-6749 of 2021 Newtech Promoters and Developers Pvt. Ltd. v. State of U.P., decided on 11.11.2021. The Hon'ble Supreme Court, after examining the scheme of the Act, 2016 answered the said issue vide paragraph nos. 119 and 120 as under:—

“119. That scheme of the Act, 2016 provides an inbuilt mechanism and any order passed on a complaint by the authority under Section 31 is appealable before the tribunal under Section 43(5) and further in appeal to the High Court under Section 58 of the Act on one or more ground specified under Section 100 of the Civil Procedure Code, 1908, if any manifest error is left by the authority either in computation or in the amount refundable to the allottee/home buyer, is open to be considered at the appellate stage on the complaint made by the person aggrieved.

120. In view of the remedial mechanism provided under the scheme of the Act, 2016, in our considered view, the power of delegation under Section 81 of the Act by the authority to one of its member for deciding applications/complaints under Section 31 of the Act is not only well defined but expressly permissible and that cannot be said to be dehors the mandate of law.”

125. In view of the aforesaid judgment of Hon'ble Supreme Court, we hold that single Member of the Regulatory Authority has rightly decided the complaints of the respondents preferred under Section 31 of the Act, 2016 and there is no illegality or perversity therein. Issue no. (5) is decided accordingly.

126. Vide issue no. (6) we are required to examine the direction of the Regulatory Authority regarding payment of interest on the deposited amount of the respondent from the date of first installment.

127. The submission of learned counsel for the appellant is that the respondent and other respective allottees were required to pay the amount in installments and in order to substantiate his submission the learned counsel for the appellant drew our attention towards Brochure of the Project contained in annexure-1 to the memo of appeal. In the Brochure under the heading of the Scheme Details (at page 62 in Memo of Appeal) of Payment Plan has been mentioned providing therein that (1) 10% of total premium of the plot will have to be paid along with application as earnest money and 15% of the total premium is payable on allotment of the plot as reservation money; (2) Balance 75% of the premium is payable in 18 half yearly equal installments along with interest @ 14% p.a. on the total balance premium from time to time from the date of allotment. Rebate in interest @ 2% shall be admissible in case the payments are made by due dates (1 January/1 July) and if there are no arrears of dues.

128. Learned counsel for the appellant also drew our attention to the allotment letter dated 07.05.2016 (annexure-3 to the memo of appeal) wherein at page 76 a chart has been given regarding remaining 75% premium to be paid by the allottee/respondent in 16 half yearly installments along with interest on 1 January/1 July each year.

129. Learned counsel for the appellant submitted that as the allottee/respondent was required to pay the amount in installments, therefore, the Regulatory Authority erred in granting interest on the entire deposited amount to the allottee/respondent from the payment of 1 installment and this will result in getting interest by the respondent on the amounts which have not been paid by the allottee/respondent on the said date.

130. Learned counsel for the respondent, during the course of submission, fairly submitted that he has no objection if the order of RERA is modified to the extent that the interest awarded by RERA is made applicable from the date of different installments till the date of actual payment, and the same has been recorded by us while reserving the judgment on 26.10.2021.

131. On examination of the record, we could not find any details of installments paid by the respondent. The respondent in its objection only mentioned regarding making payment of Rs. 39,29,314/-. Since as per details in the Brochure regarding payment plan and the allotment letter dated 07.05.2016 the allottee/respondent was required to initially pay 10% of the premium along with application as earnest money and 15% of the total premium as reservation money at the time of allotment, the respondent was to make payment of balance 75% of the premium in 16 half yearly equal installments and the details of the installments have been provided in the allotment letter dated 07.05.21016, therefore, in absence of any record regarding payment of installments we presume that the respondent must have paid the amount required to be refunded to her as per payment schedule given in the allotment letter dated 07.05.2016 and thus we find force in the submission of learned counsel for the appellant that the allottee/respondent cannot get interest on the entire amount from the date of payment of first installment and interest is required to be calculated from the date of payment of the respective installments. Issue no. (6) is decided accordingly.

132. A peculiar fact of the matter is that the appellant vide para no. 5.15 of memo of appeal as well as para 3 of the Rejoinder Affidavit stated that the appellant on 12.09.2019 sent a letter to the respondent offering refund of entire deposits along with interest @ 6% from the date of deposit, subject to the acceptance of the respective allottees. A copy of the said offer/letter dated 12.09.2019 has also been enclosed as Annexure-6 at page 112 of the appeal.

133. From the aforesaid averments of the appellant one thing is clear that appellant wants to give possession of the allotted plots to the respective allottees and is also agreeable to give 6% interest to refund seekers, even then the appellant has challenged the directions of the Regulatory Authority regarding refund of deposited amount to the respondents within 60 days with interest @ MCLR+1% for delay. If we examine both the rates of interest, we will find very minor difference in liability on the part of the appellant, and thus the appellants wasted time and money of UPSIDC/UPSIDA as well as incurred further liability of interest on account of delay in refund of the amount of respondents. Moreover, we have already held in the case of Devesh Kumar Tiwari v. U.P. Avas Evam Vikas Parishad (Appeal No. 295/2019) that the rate of interest at MCLR+1 per cent per annum can be taken as the rate of interest as prescribed, and this rate is also just and equitable. Moreover, drawing light from the Rules, 2018, the Regulatory Authority and Adjudicating Officer have been awarding MCLR+1% interest per annum and the same has also been upheld in several judgments of the Tribunal.

134. On the basis of aforesaid analysis while partly allowing the appeals we modify direction no. 1 of the impugned order dated 16.03.2020 to the extent that the complainants/respondents will be entitled to simple interest fixed by State Bank of India i.e. MCLR+1% per annum on the amount deposited by the complainants/respondents from the dates of deposit of installments till the date of actual payment. The appellant will get calculated the interest part of each complainant/respondent through a chartered accountant and provide the calculation to the complainants/respondents.

135. Accordingly direction no. 1 of the impugned order dated 16.03.2020 shall be read as under:—

“The appellant (M/S UPSIDA) is directed to refund the entire deposited amount to the complainants/respondents within 60 days along with SBI's MCLR+1% interest to be calculated from the respective dates of payments of the installments till he date of actual payment. The appellant will get calculated the interest part of each complainant/respondent through a chartered accountant and provide the calculation to the complainants/respondents.”

136. The respondents will be at liberty to approach UPRERA for execution of this order, if the same is not complied within 60 days.

137. With the aforesaid modification the Appeal Nos. 339/2020, 341/2020, 342/2020, 343/2020 and 344/2020 are partly allowed.

138. Now the issue to be decided is as to what should be done of the pre-deposit made by the appellant/promoter in compliance of the provisions of Section 43(5) of the Act in case of these appeals.

139. The aims and objects of the Act provide for regulation and promotion of the real estate sector in an efficient and transparent manner and to protect the interests of the consumers in real estate sector. Proviso to Section 43(5) of the Act specifically provides that where a promoter files an appeal with the Appellate Tribunal, it shall not be entertained without the promoter first having deposited with the Appellate Tribunal at least 30% of the penalty, or such higher percentage as determined by the Appellate Tribunal, or the total amount to be paid to the allottee including interest and compensation imposed on him before the said appeal is heard. The intent of the legislature is quite clear from the wording of proviso to Section 43(5) of the Act that the interest of the consumers i.e. allottees/buyers be protected.

140. The intent of the legislature in laying down the provision of pre-deposit of the amount of penalty or any other amount payable to the allottee by the promoter before the appeal can be heard in the Appellate Tribunal, has been elucidated by the Hon'ble Apex Court in paragraph 127 of its judgment in the Civil Appeal Numbers 6745-6749 of 2021 Newtech Promoters and Developers Pvt. Ltd. v. State of UP and others, the same reads as under:—

“127. It may further be noticed that under the present real estate sector which is now being regulated under the provisions of the Act, 2016, the complaint for refund of the amount of payment which the allottee/consumer has deposited with the promoter and at a later stage, when the promoter is unable to hand over possession in breach of the conditions of the agreement between the parties, are being instituted at the instance of the consumer/allottee demanding for refund of the amount deposited by them and after the scrutiny of facts being made based on the contemporaneous documentary evidence on record made available by the respective parties, the legislature in its wisdom has intended to ensure that the money which has been computed by the authority at least must be safeguarded if the promoter intends to prefer an appeal before the tribunal and in case, the appeal fails at a later stage, it becomes difficult for the consumer/allottee to get the amount recovered which has been determined by the authority and to avoid the consumer/allottee to go from pillar to post for recovery of the amount that has been determined by the authority in fact, belongs to the allottee at a later stage could be saved from all the miseries which come forward against him.”

141. The Hon'ble Apex Court has clearly held that the legislature in its wisdom intended to ensure that the money which has been computed by the Authority at least must be safeguarded if the promoter intends to prefer an appeal before the Tribunal and in case, the appeal fails at a later stage, it should not be difficult for the consumer/allottee to get the amount recovered which has been determined by the Authority. It is in order to avoid the consumer/allottee to go from pillar to post for recovery of the amount that has been determined by the Authority, that the legislature has in its wisdom laid the condition of pre-deposit by the promoter under Section 43(5) of the Act.

142. Section 40(1) of the Act of 2016 provides for a mechanism for recovery of interest or penalty or compensation and enforcement of orders etc. of the A.O. or the Regulatory Authority, or the Appellate Tribunal and the same shall be recoverable in such manner as may be prescribed as an arrears of land revenue. The Hon'ble Apex Court vide paragraph 140 in Newtech Promoters and Developers Pvt. Ltd. v. State of UP (supra) was pleased to observe that:—

“140. It is settled principle of law that if the plain interpretation does not fulfill the mandate and object of the Act, this Court has to interpret the law in consonance with the spirit and purpose of the statute. There is indeed a visible inconsistency in the powers of the authority regarding refund of the amount received by the promoter and the provision of law in Section 18 and the text of the provision by which such refund can be referred under Section 40(1). While harmonizing the construction of the scheme of the Act with the right of recovery as mandated in Section 40(1) of the Act keeping in mind the intention of the legislature to provide for a speedy recovery of the amount invested by the allottee along with the interest incurred thereon is self explanatory. However, if Section 40(1) is strictly construed and it is understood to mean that only penalty and interest on the principal amount are recoverable as arrears of land revenue, it would defeat the basic purpose of the Act.”

143. As can be seen from the above observations, Hon'ble Supreme Court has held that even the principal amount invested by the allottee can be recovered as arrears of land revenue under Section 40(1) of the Act. It is further clarified by Hon'ble Supreme Court that the intention of the legislature is to provide a mechanism for early recovery of the amount invested by the allottee alongwith the interest incurred thereon.

144. Rule 23 of the U.P. Real Estate (Regulation and Development) Rules, 2016 provides that subject to the provisions of Section 40(1), the recovery of the amounts due as arrears of land revenue shall be carried out in the manner provided in the local laws. As Rule 23 has been framed under the provisions of Section 40(1) of the Act, the observations of Hon'ble Supreme Court on Section 40(1) shall equally apply to Rule 23 of the Rules, 2016.

145. Although Section 40(1) of the Act of 2016 gives powers to the Appellate Tribunal to enforce its decisions, but the Tribunal does not have adequate infrastructure and the required sufficient human resource to determine and certify the amount due from the appellant/promoter to be paid to the respondent/allottee.

146. It is our considered view that as per provisions of the Act and as per the observations made by the Hon'ble Apex Court, it is the duty of the Tribunal to arrange to transfer the pre-deposited money to the concerned allottee/consumer in case the promoter's appeal is dismissed. However, since the promoter might not have paid the full payable amount or there being a prospect of some amount having already been recovered from the promoter under execution proceedings at the level of the Authority or AO, it is just and lawful that the Tribunal transfers the amount to the Authority for transferring the same to the allottee/consumer after due diligence at its end and to recover any additional amount which could be due to be paid by the promoter; or return to the promoter any amount that could be in excess of the entitlement of the allottee/consumer.

147. The calculation of the exact amount due to be paid to the respondent/allottee normally is to be determined up to the date of actual payment. As the facts and figures are available with the Regulatory Authority, which is executing its order, therefore, due diligence is required while calculating the amount payable, interest thereon, as well as verification of the payments made by the allottee from time to time, etc.

148. In the instant cases, this Tribunal has directed the appellant/promoter to refund the entire deposited amount to each of the complainants/respondents along with interest at the rate of MCLR+1 percent calculated from the respective dates of installments till the date of actual payment, accordingly we direct the Registry to transfer the entire amount deposited by the appellant/promoter under the provisions of Section 43(5) of the Act, separately in each case, to the concerned account of the U.P. Real Estate Regulatory Authority (UP RERA). Further, we direct the Regulatory Authority to dispose of this amount, separately in each case, during the execution proceedings in accordance with its order dated 16.03.2020, read with this judgment.

149. No order as to costs.