OBJECTS OF RERA ACT 2016:
“An Act 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.”
RERA ACT 2016 : Rera Act 2016 is Special Law and it is well settled that Special law shall prevails and overrides the provisions of General Law { Hon’ble Supreme Court of India , in the matter of General manager , Telecom vs. M . krishanan & Others Civil Appeal no. 7687 of 2004. ( 2009) }
ALLOTTEES ENTITLEMENT FOR REFUND WITH INTEREST
Section 18 (1) and 19(4) of Rera Act 2016 empower and provide refund with interest to the allottees which are reproduced here under .
Section 18
(1) If the promoter fails to complete or is unable to give possession of an apartment, plot or building,--
(a) in accordance with the terms of the agreement for sale or, as the case may be, duly completed by the date specified therein; or
(b) due to discontinuance of his business as a developer on account of suspension or revocation of the registration under this Act or for any other reason, he shall be liable on demand to the allottees, in case the allottee wishes to withdraw from the project, without prejudice to any other remedy available, to return the amount received by him in respect of that apartment, plot, building, as the case may be, with interest at such rate as may be prescribed in this behalf including compensation in the manner as provided under this Act:
Provided that where an allottee does not intend to withdraw from the project, he shall be paid, by the promoter, interest for every month of delay, till the handing over of the possession, at such rate as may be prescribed.
(2) The promoter shall compensate the allottees in case of any loss caused to him due to defective title of the land, on which the project is being developed or has been developed, in the manner as provided under this Act, and the claim for compensation under this subsection shall not be barred by limitation provided under any law for the time being in force. (3) If the promoter fails to discharge any other obligations imposed on him under this Act or the rules or regulations made there under or in accordance with the terms and conditions of the agreement for sale, he shall be liable to pay such compensation to the allottees, in the manner as provided under this Act.
Section 19
(1) The allottee shall be entitled to obtain the information relating to sanctioned plans, layout plans along with the specifications, approved by the competent authority and such other information as provided in this Act or the rules and regulations made thereunder or the agreement for sale signed with the promoter.
(2) The allottee shall be entitled to know stage-wise time schedule of completion of the project, including the provisions for water, sanitation, electricity and other amenities and services as agreed to between the promoter and the allottee in accordance with the terms and conditions of the agreement for sale.
(3) The allottee shall be entitled to claim the possession of apartment, plot or building, as the case may be, and the association of allottees shall be entitled to claim the possession of the common areas, as per the declaration given by the promoter under sub-clause (C) of clause (I) of sub-section (2) of section 4.
(4) The allottee shall be entitled to claim the refund of amount paid along with interest at such rate as may be prescribed and compensation in the manner as provided under this Act, from the promoter, if the promoter fails to comply or is unable to give possession of the apartment, plot or building, as the case may be, in accordance with the terms of agreement for sale or due to discontinuance of his business as a developer on account of suspension or revocation of his registration under the provisions of this Act or the rules or regulations made thereunder.
(5) The allottee shall be entitled to have the necessary documents and plans, including that of common areas, after handing over the physical possession of the apartment or plot or building as the case may be, by the promoter.
(6) Every allottee, who has entered into an agreement for sale to take an apartment, plot or building as the case may be, under section 13, shall be responsible to make necessary payments in the manner and within the time as specified in the said agreement for sale and shall pay at the proper time and place, the share of the registration charges, municipal taxes, water and electricity charges, maintenance charges, ground rent, and other charges, if any.
(7) The allottee shall be liable to pay interest, at such rate as may be prescribed, for any delay in payment towards any amount or charges to be paid under sub-section (6).
(8) The obligations of the allottee under sub-section (6) and the liability towards interest under sub-section (7) may be reduced when mutually agreed to between the promoter and such allottee.
(9) Every allottee of the apartment, plot or building as the case may be, shall participate towards the formation of an association or society or cooperative society of the allottees, or a federation of the same.
(10) Every allottee shall take physical possession of the apartment, plot or building as the case may be, within a period of two months of the occupancy certificate issued for the said apartment, plot or building, as the case may be.
(11) Every allottee shall participate towards registration of the conveyance deed of the apartment, plot or building, as the case may be, as provided under sub-section (1) of section 17 of this Act.
RATE OF INTEREST
Section 18 provides the rate of interest “ at such rate as may be prescribed “
Thus , the law makers have given the powers to prescribe the rate of interest to the Appropriate Government of States under Section 84 (1) (i)(j) (k) of Rera Act 2016 through Notification but under condition that whenever the rate of interest shall be prescribed , it shall be equal in both cases that allottees shall be entitled to get the same rate of interest which the Builder will charge in case of default on the part of allottees. The interest has been defined in Rera Act as under:
Section 2 (za) of RERA ACT 2016
(za) "interest" means the rates of interest payable by the promoter or the allottee, as the case may be.
Explanation.-- For the purpose of this clause—
(i) the rate of interest chargeable from the allottee by the promoter, in case of default, shall be equal to the rate of interest which the promoter shall be liable to pay the allottee, in case of default;
(ii) the interest payable by the promoter to the allottee shall be from the date the promoter received the amount or any part thereof till the date the amount or part thereof and interest thereon is refunded, and the interest payable by the allottee to the promoter shall be from the date the allottee defaults in payment to the promoter till the date it is paid;
POSITION IN UTTAR PRADESH
Section 84 of Rera Act 2016 empowers the Appropriate Government to make Rules by issuing notification on various subjects including interest but the Government of Uttar Pradesh being Appropriate Government under Rera Act 2016 has not made any Rule under Section 84 (1) (i) (j) (k) of Rera Act 2016 prescribing the rate of interest to be payble to allottees under Section 18 and 19 of Rera Act 2016.
The Office Order dated 19th June, 2018, advises for payment of interest at MCLR + 1% where no rate of interest is prescribed in agreement and makes guidelines that earlier order issued by officials should be modified in the light of the Office Order No.1151/ Shakti Pratinidhyan/2018-19 dated 19th June, 2018, issued by The Principal Secretary, AWAS & Shahari Niyojan. Though , this has been an office order ( Not Notification ) but the UP-RERA has followed this Office Order and keep deciding complaints allowing rate of interest SBI MCLR + 1% which is against law.
INTENTION OF GOVERNMENT OF UTTAR PRADESH BEING APPROPRIATE GOVERNMENT IN THE STATE OF UTTAR PRADESH UNDER RERA ACT 2016.
Section 18 mention about the rate of interest “ as may be prescribed”.
It means that Appropriate Government may or may not prescribe the rate of interest . In the state of Uttar Pradesh , the Appropriate government has not prescribed any rate of interest under Section 18 and 19 of Rera Act 2016. Thus , the intension of Appropriate Government is very clear that it has left the rate of interest on Agreements executed between Builder and Buyers relying on definition under Section 2 (za) of Rera Act 2016 which provides that the allottees shall be entitled for the same rate of interest which Builder will charge from the allottees in case of default on the part of allottees.
It means the intention of the appropriate government is very clear and unambiguous that the interest payble to Home Buyers should be the same rate of interest which the Builders have mentioned in the agreement to be charged from the allottees in case of default on the part of allottees . The Government of Uttar Pradesh has not exercised its power to make rules as regard to payment of interest and left it to be decided as per definition of interest of Rera Act 2016. The Principle of Narural Justice ( Section 53 of RERA Act 2016 ) also endorses the concept of equality in connection with payment of interest to the allottees .
FACTS ABOUT MCLR
The Reserve Bank of India the regulatory body of the monetary and credit system of the country issued direction namely “ Master Direction –Reserve Bank of India ( Interest Rate on Advances ) Directions 2016 implementing the concept of MCLR w.e.f. 1st April 2016 in the first time in the country .
The rule under Section 84 (2) (h ) read with Sub-section (2) of Section 13 of the RERA Act 2016 namely ‘ The Uttar Pradesh Real Estate ( Regulation & Development ) ( Agreement for Sale / Lease ) Rules 2018 has been notified on 17.10.2018
The Government of Utter Pradesh being appropriate government in the State of Uttar Pradesh has not made any rule under Clauses (i)) (j) and (k ) of Sub-section (2) of Section 84 till date prescribing the rate of interest while the Government of Utter Pradesh has prescribed the time of refund within 45 days from the date it becomes due .
Various State Governments by exercising their powers under Section 84 (1)(i) have fixed the rate of interest payble to allottees SBI MCLR+1% .
The Office Order dated 19th June, 2018, advises for payment of interest at MCLR + 1% where no rate of interest is prescribed in agreement. and makes guidelines that earlier order issued by officials should be modified in the light of the Office Order No.1151/ Shakti Pratinidhyan/2018-19 dated 19th June, 2018, issued by The Principal Secretary, AWAS & Shahari Niyojan. Though , this has been an office order ( Not Notification ) but the UP-RERA has followed this Office Order and keep deciding complaints allowing rate of interest SBI MCLR + 1%.
ROLE OF DEFINITION OF INTEREST UNDER RERA ACT 2016
The allottees derive the power of refund of money with interest under Section 18 and 19 of Rera Act 2016 , not under definition clause but what should be rate of interest to be payble to allottees when the rate of interest is not prescribed by Appropriate Government , the definition clause plays an important role in deciding the rate of interest payble to allottees when Builders defaulted.
Section 2 (za) of RERA ACT 2016
(za) "interest" means the rates of interest payable by the promoter or the allottee, as the case may be.
Explanation.-- For the purpose of this clause—
(i) the rate of interest chargeable from the allottee by the promoter, in case of default, shall be equal to the rate of interest which the promoter shall be liable to pay the allottee, in case of default;
(ii) the interest payable by the promoter to the allottee shall be from the date the promoter received the amount or any part thereof till the date the amount or part thereof and interest thereon is refunded, and the interest payable by the allottee to the promoter shall be from the date the allottee defaults in payment to the promoter till the date it is paid;
The Objects of Definition Clause in Statute :
The object of a definition is to avoid the necessity of frequent repetitions in describing the subject matter to which the word or expression defined is intended to apply. A definition contained in the definition clause of a particular statute should be used for the purpose of that Act. Definition from any other statute cannot be borrowed and used ignoring the definition contained in the statute itself.
INTERPRETATION OF STATUE
The definition of the particular statute shall be used only for that specific statute in which the definition is incorporated and matter connected with that statute should be decided keeping in view the definition and explanation given in that statute. Explanation appended to a section or a sub-section become an integral part of it.
Interpretation of statute is the process of ascertaining the true meaning of the words used in a statute. When the language of the statute is clear, there is no need for the rules of interpretation. But, in certain cases, more than one meaning may be derived from the same word or sentence. It is therefore necessary to interpret the statute to find out the real intention of the statute. Necessity of interpretation would arise only where the language of a statutory provision is ambiguous, not clear or where two views are possible or where the provision gives a different meaning defeating the object of the statute. If the language is clear and unambiguous, no need of interpretation would arise
Cardinal law of Interpretation states that so far as the cardinal law of interpretation is concerned, it is settled that if the language is simple and unambiguous, it is to be read with the clear intention of the legislation. Otherwise also, any addition or subtractions of the word is not permissible.
In other words, it is not proper to use a sense which is different from what the word used ordinarily conveyed. The duty of the court is not to fill up the gap by stretching a word used. It is also settled that a provision is to be read as whole and while interpreting, the intension and object of the legislation have to be looked upon.
In the matter of Nathi Devi v. Radha Devi Gupta reported in AIR 2005 SC 648, the Apex Court mentioned ,
The interpretative function of the Court is to discover the true legislative intent. It is trite that in interpreting a statute the Court must, if the words are clear, plain, unambiguous and reasonably susceptible to only one meaning, give to the words that meaning, irrespective of the consequences.
It is well settled that literal interpretation should be given to a statute if the same does not lead to an absurdity.
In the matter of Narendra H. Khzurana v. Commissioner of Police reported in 2004 (2) Mh. L.R. 72,Bombay High Court
9. The Apex Court in the case of Union of India v. Devakinandan, reported in AIR 1992 SC 96 has observed that, it is not the duty of the Court either to enlarge the scope of the legislature or the intention of the legislature when the language of the provision is plain and unambiguous. The Court cannot re-write, recast or re-frame the legislation for the very good reason that it has no power to legislate. The power to legislate has not been conferred on the Courts. The Court cannot add words to a statute or read words into it, which are not there. Assuming there is a defect or a omission in the words used by the legislature, the Court cannot go on to correct or make up the deficiencies. The Courts shall decide what the law is and not what it should be. The Courts of course adopts a construction which will carry out the obvious intention of the legislature but cannot legislate itself.
In the matter of Union of India vs Devkinandan,1992 AIR 96, 1991 SCR (3) 873 ( Page No –to----)
PARA 7.1
It is not the duty of the Court either to enlarge the scope of the legislature or the intention of the legislature when the language of the provision is plain and unambiguous. The Court cannot re-write, recast or re-frame the legislation for the very good reason that it has no power to legislate. The power to legislate has not been conferred on the Courts. The Court cannot add words to a statute or read words into it, which are not there. Assuming there is a defect or a omission in the words used by the legislature, the Court cannot go on to correct or make up the deficiencies. The Courts shall decide what the law is and not what it should be. The Courts of course adopts a construction which will carry out the obvious intention of the legislature but cannot legislate itself. But to invoke judicial activism to set as naught legislative judgment is subversive of the constitutional harmony and comity of instrumentalities.
POINTS WHICH SHOULD BE CONSIDERED BY UTTAR PRADESH REAL ESTATE REGULATORY AUTHORITY WHILE DECIDING COMPLAINTS
1.Appropriate Government under RERA Act, 2016 for the said Uttar Pradesh has not prescribed any rate of interest U/s 84(2)(i)(j) and (k) while the same appropriate Government has issued notification U/s 84(2)(h) making the rules The Uttar Pradesh Real Estate (Regulation and Development) Agreement for Sale / Lease Rules, 2018 prescribing the draft of agreement to be executed between builder and allottee and Para 9 prescribe the rate of interest on the basis of SBI - MCLR. Whether the interest rate prescribed by the Appropriate Government in the draft agreement to be executed after the notification of the said rules i.e. 17th October, 2018 can be considered for deciding the rate of interest for prior to 17th October, 2018 i.e. before notification of the said rules?
2.Whether rate of interest as mentioned in specimen of draft agreement notified w.e.f. 17th October, 2018 can be considered for making payment of interest for section 84(2)(i)(j)(k) i.e. relevant section enabling the appropriate Government to prescribe the rate of interest payable by promoter to the allottee.
3.The RBI implemented the concept of Marginal Cost Based Lending Rates (MCLR) first time in the country w.e.f. 1st April, 2016, whether payment of interest on the basis of MCLR can be made before 1st April, 2016 e.g. since 2010 i.e. before its implementation?
4.Why payment of interest before 17.10.2018 should not be considered as per rate mentioned in the agreement already executed between the builder and allottee on the basis of rate of interest chargeable by the builder from the allottee in case of default and similarly payment of interest from builder to allottee in accordance with the provisions of Section 2(za) of RERA Act, 2016 ?
5.Interest is towards utilization of money while compensation is for compensating the allottee or builder for actual or expected loss, whether once the interest is paid, why compensation should not be paid under the provisions of Section 72 of RERA Act, 2016 because Interest , Compensation and Penalty are different in law as decided by various judicial pronouncements from time to time ?
6.Whether Uttar Pradesh Real Estate Regulatory Authority can violates the Rules 16 of the Uttar Pradesh Real Estate (Regulation and Development) Rules, 2016 by allowing refund to allottee beyond 45 days while said rule provides the refund within 45 days from the date on which such refund along with applicable interest becomes due and RERA Act 2016 provides the refund on demand i.e. as when demanded by allottees ?
7.Why the allottees should not be allowed monthly payment of interest from Promoters as per provisions of Section 18 of Rera Act 2016 in case allottees decide to remain in projects ?
WHAT SHOULD BE THE REFUND TIMELINE AND RATE OF INTEREST ?
Uttar Pradesh Real Estate Regulatory Authority can not violates the Rules 16 of the Uttar Pradesh Real Estate (Regulation and Development) Rules, 2016 by allowing refund to allottee beyond 45 days which provides the refund within 45 days from the date on which such refund along with applicable interest becomes due.
Impact if Refund is not allowed in one installment
The basic objects of Rera Act is defeated which provides an Act 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. When refund is not allowed in single installment , the money can be consumed in other purpose other than purchasing real estate products . The such consumption of money for other purpose will hamper the growth of real estate sector affecting the basic objects of Rera Act 2016 as the person may not be able to purchase in other projects resulting negative effect on development of real estate sector .
Rate of Interest
Appropriate Government under RERA Act, 2016 for Uttar Pradesh has not prescribed any rate of interest U/s 84(2)(i) (j) and (k) while the same Appropriate Government has issued notification U/s 84(2)(h) making the rules The Uttar Pradesh Real Estate (Regulation and Development) Agreement for Sale / Lease Rules, 2018 prescribing the draft of agreement to be executed between builder and allottee and Para 9 prescribe the rate of interest on the basis of MCLR. Therefore , in absence of notification under Section 84 (1) (i) (j) (k) the rate of interest will be as per Section 2 (za) of Rera Act 2016 as chargeable by the Builder from the allottee in case of default.
The RBI implemented the concept of Marginal Cost Based Lending Rates (MCLR) first time in the country w.e.f. 1st April, 2016, Therefore , payment of interest on the basis of MCLR can not be made before 1st April, 2016 e.g. since 2010 i.e. before its implementation.
The intention of law maker and the objects of the Rera Act are very clear and it is also clearly defined in Section 2 (za) of Rera Act that the allottee shall be entitled for the same rate of interest as the Builder shall charge in case of default on the part of the allottee. The language of the definition is simple, clear , unambiguous. Simultaneously it also communicates clear intention of legislation , and also established the Principle of Equality and Natural Justice .
DISCLAIMER: The above views and interpretation of statute are personal opinion and interpretation . Others opinion and interpretation may or may not be same. Further, the above is just brief introduction of provisions related to payment of interest in the State of Uttar Pradesh under RERA Act 2016 . For details knowledge, procedures, and information kindly refer complete Act, Rules and Regulations made under the RERA ACT 2016.