Page 47 - RERA Performance Report 2020

47 U.P. RERA PERFORMANCE REPORT 2020

In a recent judgment by full bench of Supreme Court in Chief Administrator HUDA Vs
Skakuntala Devi (Appeal No. 7335/2008 decided on 08.12.2016), Hon’ble Supreme Court has
clarified the view that award of interest would have been sufficient to compensate the
respondent (buyer) for the loss suffered by him due to the delay in handing over the
The Adjudication Process
possession of the plot. The fact of the case was that Skakuntala devi (respondent) was

allotted a plot on 30.04.1987 and since the physical possession of the plot was not given to
By Piyush Chandra Srivastava,
her, she filed a complaint before the state commission. The state commission held that the
Lucknow Adjudicating Officer, U.P. RERA
respondent has established deficiency of service and the complainant was awarded interest
Chaitanya Kumar Kulshrestha,
at the rate of 18 % on the amount deposited, also held that the respondent was entitled for
a sum of Rs. 18,67,000/- as compensation. The National Commission confirmed the order
NCR Adjudicating Officer, U.P. RERA
passed by the state commission holding that the compensation awarded was just and
reasonable but modified the rate of interest to 15 percent. On appeal the full bench of
Hon’ble Supreme Court held as:

‘We are of the view that the respondent is not entitled to such compensation awarded by
the state commission and confirmed by the National Commission. The respondent suffered
an injury due to the delay in handing over the possession as there was definitely escalation
in the cost of construction at the same time the respondent has surely benefited by
increase in the cost of plot between 1989 to 2000. In the facts and circumstances of this case,
we are of the opinion that award of interest would have been sufficient to compensate the
respondent for the loss suffered by him due to the delay in handing over the possession of
the plot.’

While deciding the constitutional validity of the provisions of The Real Estate (Regulation
and Development) Act 2016 Hon’ble Bombay High Court in Neelkamal Realtors SubUrban
Pvt. Ltd. Vs Union of India (Writ No. 2737/2017 decided on 06.12.2017) held that award of
interest is sufficient to compensate the buyer for delayed possession. In the case of RV
Prasanna Kumar Vs Mantri Castles Pvt. Ltd (Civil appeal No. 1232/2019 decided on 11.02.2019
Hon’ble Supreme Court held as:

‘The liability of the developer to pay interest at the rate of six percent per annum shall
continue to operate until the date on which each of the respective flat purchasers is offered
possession.’

In the case of Kolkata West International City Pvt. Ltd. Vs Devasis Rudra (Civil Appeal
3182/2019 decided on 25.03.2019) Hon’ble Supreme Court held as:
‘This was nearly seven years after the extended date for the handing over of possession
prescribed by the agreement. A buyer can be expected to wait for possession for a
reasonable period. A period of seven years is beyond what is reasonable. In the
circumstances we are of the view that the orders passed by the SCDRC and the NCDRC for
refund of money were justified.’

In Pioneer Urban Land and Infrastructure Ltd. Vs Govindan Raghavan (2019 S.C.C page 725)
Hon’ble Supreme Court held that award of interest for delayed period is a form of
compensation.

Under the Real Estate (Regulation and Development) Act 2016, compensation may be
awarded under Section 12 for false information by promoter, under Section 14 for structural
defect, under Section 18 for discontinuance of business and delayed period, under Section
19 for failure of promoters for compliance of agreement and under section 72 for loss caused
as a result of the default of promoters. The general rule is that compensation is not a profit
of business.