Discussion on Subsection (1)&(2) of Section 14 RERA - Advocate Satish Dedhia
Discussion on Subsection (1)&(2) of Section 14 RERA - Advocate Satish Dedhia
Introduction: MahaRERA Orders and Appellate
Judgments reveal that there are very few complaints related to Subsections
14(1) & 14(2). May be because, the allottees are not able to understand
this provision. Issues covered by these subsections are one of the major
reasons for the delay in a project. Section-18 deals with immediate issues
being faced by the allottees whereas issues covered by these Subsections have
long-lasting impact.
I along with Advocate Shri Chetan
Hadolikar already made a video on this topic in question answer format to
easily understand this important topic. https://www.youtube.com/watch?v=XbKUbDvmrm4
1. How scheme under RERA departs
from MOFA?
A= The scheme under RERA departs
from MOFA by imposing an obligation to make requisite disclosures for
public view in advance at the time of registration
of the project with Authority.
2. How the disclosure related to FSI
and development potential are entered on the project webpage on the MahaRERA
website?
A= [Show project webpage] You can
see in this project webpage how disclosures are made
Area of the plot, Total Building
count, Aggregate area of recreational open space or RG, FSI details, parking
details, uploaded documents viz. title report, layout approval, building plan
approval, a declaration in form B and a draft of the flat sale agreement.
3. As per Neelkamal Judgment, for
true and harmonious interpretation of any provision, it has to be read with
other relevant provisions. So for harmonious provision of Section 14, which are
other provisions of RERA shall be read together?
A= For harmonious interpretation
and to know the scheme, the Section can be read mainly with the Preamble,
provisions related to the obligation of making true and full disclosure of FSI
and development potential Section 4 subsection (2) (c) (d) and (h), Section 11
subsection (3), the provision related to the formation of society &
conveyance under Section 11 subsection (4)(a),(e) and (f), Section 17 & and
applicable MahaRERA Rules 2(k), 2(m), 2(p), 3(f), (g), 4, 9, 10, etc. as well
as the provision related to unfair trade practice under Section 7(c).
4. What is the effect of Section 11
subsection (4)(e), 17 and MahaRERA Rule?
A= These provisions impose
time-bound obligation on the promoter to form a society of allottees and
transfer his title to land and building by executing conveyance in favor of such
society.
5. So what does this scheme exactly
suggest?
A= Sequence of these provisions will
reveal the scheme and its four stages– (1) true and full disclosures (2)
development as per such disclosures (3) formation of society (4) transfer of
title as per the disclosures. The scheme suggests that the concept of
developability has to be harmoniously read with concept of registration of the society
and transfer of the title as per such disclosures.
6. What is purpose of these
provisions?
A=Allottees must be sure of what
the ultimate structure of the proposed building and the common areas, amenities
and facilities in the layout would be. Development of the apartment, building
and layout must be carried out in accordance with the plans sanctioned and
specifications as per the prevailing policy along with the agreed amenities,
facilities etc. Once the entire project is placed before the allottee at the
time of sale of the apartments, then the promoter is not required to obtain
further consent of the allottees as long as the promoter puts up construction
in accordance with the sanctioned building plan, layout plan and the amenities
etc. that were disclosed to the allottees.
Once the allottee has agreed to
purchase the apartment on basis of such disclosures, the law prohibits the
promoter from making any changes to such sanctioned plans as well as the
amenities, facilities etc, without previous consent of the allottees.
7. What can be the reasons for
provision in Section 14 subsection (2) that promoter cannot make any additions
and alterations in the sanctioned plans, sanctioned plans, layout plans and
specifications and the nature of fixtures, fittings, common amenities, etc.
without previous consent?
A= Contract Act will give
explanations. Allottee has agreed to purchase the apartment by relying on the
sanctioned plans, specifications and the nature of fixtures, fittings, and
amenities in respect of the apartment disclosed or furnished to him by the
promoter at the time of sale of that apartment. The promoter also has
obligation to transfer his title to the society of allottees exactly as per
such disclosure. This disclosure is a very basic foundation of the concluded contract. It
is the promise of the promoter and consideration for the allottee.
Therefore, if the promoter makes
any major changes without previous consent of the allottee it would amount to
breach of the concluded contract.
Under RERA, such promises and
obligations became statutory duties of the promoter and the RERA prohibits the
promoter from contravening the law.
8. Suppose the agreement is not
registered in favor of the allottee, still the promoter requires to obtain
previous consent of the allottee?
A= If the allottee has paid due
amounts to the promoter then execution and registration of the agreement is statutory
obligation of the promoter. Therefore, the absence of the registered agreement
for sale cannot come in the way of the allottee in invoking the provisions of
the Section 14(1) and (2) and the promoter is not absolved from obtaining the
previous consent of such allottee.
Provisions of MOFA under Section
7 & 7A are not diluted under RERA.
9. What type of consent will be
valid?
A= Such consent aims to confirm
the modification of the existing concluded contract and therefore consent of
the allottee will be valid if it is previous or prior, specific, written, and
affirmative consent. Such consent must be a free consent and informed consent.
Previous means it should be taken
before making the proposed change.
Specific means the promoter
should have made clear disclosure of proposed changes along with the comparison
showing existing plan and proposed change or as the case may be.
Affirmative Consent means the
allottee should have given clear positive consent for the proposed changes.
Indirect, implied or unclear
consents are not valid.
10. So whether promoter can insert a
clause in agreement and take prior consent of allottee for making additions or
alterations, use of FSI, etc.?
A= No. The consents in the
agreement will be vague and uncertain and hence will not be binding. Such
consents in the agreement will be considered as “blanket” consents. The opening
words of Section 14(2) “Notwithstanding anything contained” confirm that the consent
in the agreement will not be helpful to the promoter for making subsequent
additions and alterations.
11. What does the language of Section
14(1) reflects?
A= The Plain language of Section
14(1) and the word “shall” make it clear that the promoter can carry out the development
and construction in the project only in accordance with the sanctioned plans
and specifications disclosed and furnished to the allottee at the time of sale
of apartment.
12. So whether unauthorized
construction beyond approved plans or permissions will be a contravention of Subsection
14(1)?
A= Yes.
13. What are highlights of Subsection
14(2) of RERA?
A= Section 14(2) has a
non-obstante clause having an overriding effect over any similar provision in
any law, contract or agreement. It clarifies without any doubt that Section 14(1)
is a mandatory duty of the promoters to adhere to the sanctioned plans and
project specifications.
Section 14(2) does not
differentiate whether additional constructions is in the form of additional
floors or an additional structure.
Section 14(2) provides two types
of consents. 14(2)(i) requires previous consent of individual allottee for the additions
or alterations in the apartment and common areas whereas Section 14(2)(ii) requires
previous consent of 2/3rd allottees for any other additions or
alterations that are not covered by Section 14(2)(i).
It excludes the promoter from
giving such consent.
It defines minor and major
changes with the help of proviso.
Explanation restricts the right
of a bulk purchaser and his group entities by treating them as one allottee
only.
14. Construction is a highly
technical and complex subject and everything cannot be planned. The promoter
may require making some changes due to technical reasons. Taking consents for
minor changes will delay the project. So don’t you think restrictions in
Section 14(2) is a rigid provision and against the promoter’s right to exploit
full development potential of the project land?
A= No. Promoter is merely
required to satisfy that promoter has made true and full disclosure of the
proposed development to the allottee at the time of sale of the apartment and that
thereafter the promoter has carried out development according to such
disclosure. Section 14(2) is actually flexible that even after such disclosure;
the promoter can make changes subject to previous consent of the allottees. The
proviso thereto makes it further flexible by excluding changes required to be
done due to practical issues like minor changes or alterations as may be
necessary due to architectural and structural reasons duly recommended and
verified by an authorized Architect or Engineer.
15. So promoter can directly carry
out minor changes or alterations in the apartment as recommended by the
architect?
A= No. the promoter can make such
minor changes only after proper declaration and intimation to the
allottee. Such changes shall not be excluded by the Explanation given to Section
14(2)(i).
16. Whether the changes in floor of
the apartment, or its entrance, location, direction, height, or removal of
mezzanine floor will amount to minor changes or substantial major changes?
A= Such changes will be considered
as major changes as per the Explanation given to Section 14 (2)(i).
17. Suppose, I have purchased
apartment on the understanding that my apartment is on the top floor and
promoter wants to add one floor OR if I have purchased apartment on the
understanding that my apartment is NOT on the top floor and the promoter wants
to reduce one floor and my floor becomes the top floor. So whether promoter
needs to obtain my consent?
A= Yes, such changes will be considered
as major changes as they are not included in any of the exceptions provided in the
Section.
18. What changes related to carpet
area of an apartment require consent?
A=Changes related to carpet area can
be of two types (1) changes in sanctioned plan itself (2) variation occurred due
to construction.
(1) Suppose carpet area of the
apartment sold by the promoter at the time of booking is 50 sq. metres but
subsequently promoter reduces or increases the carpet area of the apartment. If
it is increased promoter will immediately ask the allottee to pay for it. But
if it is reduced, promoter hardly informs or reduces price of the apartment proportionately.
So, allottee has to remain alert.
(2) Sometimes, though carpet area
of the apartment gets reduced due to use of non-standardized bricks or cement
blocks of different sizes or if unskilled labors are employed who failed to
maintain thickness of the plaster or gypsum or POP etc. OR the promoter might
have reduced the thickness of RCC walls etc.
19. Explain the point regarding
reduction in thickness of walls and its impact?
A=Suppose a promoter has
completed foundation and completed few RCC slabs and thereafter FSI or other
benefits are increased and the Promoter decided to put up additional
construction by increasing floors. In such circumstances, it is not possible to
increase strength of foundation of the building to take care of such additional
construction. So, promoter may change design and reduces thickness of RCC Walls
and using light weight materials. This will naturally resulted in useable
carpet area of the apartment. Such changes will affect lifespan of the building
in the long run. This will contravene Section 14.
20. So in such circumstances, can the
promoter demand additional price due to increase in useable carpet area of the
apartment?
A= No. In this case, the actual
carpet area of the apartment is not increased. The Explanation given to Section
14 (2)(i) clearly provides that cutting into of any wall will not be considered
as a minor change.
21. If the promoter intends to put up
additional building but it can do so only after relocating the additional RG
i.e. recreation ground or mandatory open space, whether promoter is required to
obtain previous consent of the allottee?
A= Yes for two reasons (1) if the
proposed building is not part of the sanctioned plan disclosed to the allottees
at the time of sale of the apartments (2) the new building is proposed on the
area which is disclosed as RG in that sanctioned plan. So irrespective whether
such RG was compulsory or additional, the promoter will be required to obtain
consent of the allottees in such cases.
22. Suppose in above case the
allottee was aware that promoter is developing the layout in phase manner and
there was possibility of further construction and there was disclosure to that
effect that there was possibility of further construction. Allottee has not
objected to it and thus there was implied consent. So why promoter shall again
obtain consent of the allottees?
A= Test is that consent is not
required if the entire project is placed before the allottee at the time of
sale of the apartment. The moot question is whether there was a disclosure in
the sanctioned plan furnished to the allottee at the time of sale of apartment
and whether there is an informed, specific consent of the allottees or not. If
the answer is no, then the promoter is required to obtain previous specific
consent of the allottees. Implied consent will not be valid.
23. Suppose a project is delayed and
meantime permissible FSI is increased due to change in policy. There are
clauses in flat sale agreement giving permission or authority to the promoter
to utilize such FSI. Society is not formed and conveyance is not executed so
till then the promoter is absolute owner of the property. In such
circumstances, why promoter shall be required to take consent of the allottees?
A= Yes promoter is still required
to obtain prior specific written affirmative consent of the allottees in such
case. The concept of developability and transfer of title are inseparable and
go together. After specific disclosure of development potential and proposed
development, the promoter will be having limited rights to carry out that much
development only and then transfer his title to the society within stipulated
period. Promoters cannot be allowed to get the benefit of the wrong of delay in
the completion of the project or not forming society or not executing
conveyance. Clauses in the agreement retaining such rights will be considered
as blanket consents and hence not valid and binding on allottees.
24. Many promoters delay the
formation of a society to delay the execution of the conveyance. So whether in
such circumstances, the promoter can still claim rights in respect of balance
FSI or subsequently increased FSI?
A= If the promoter had complied
with the legal obligations of the formation of society and execution of
conveyance within the time stipulated in the applicable rules, the promoter
could not have claimed the right to use any residual FSI or any additional FSI
which could be brought on the project land. A promoter cannot argue that be
heard to say that promoter did not comply with these provisions of law and even
though promoter might have contravened the law by delaying the formation of
society and execution of conveyance, still, the promoter has the right or power
to use the residual FSI or additional FSI which could be brought on the land.
To accept such type of argument would amount to rewarding the violation of the
provisions of law. Therefore, such an argument will be rejected by the
authority.
25. If any additional FSI is made available due to
amalgamation of the plot with adjoining plot after the sale of the apartment,
can the promoter take benefit of such additional FSI without consent of the
allottees?
A= Yes, still the promoter will
require to obtain consent from the allottees because it will be a major change
to the sanctioned plan disclosed to the allottees.
26. Suppose building is part of a
layout of four proposed buildings. Total FSI disclosed was 10000 square meters.
Promoter has registered each building has a separate project in July 2017.
Subsequently due to DCPR-2034 permissible FSI was increased to 14000 square
meters and the promoter intends to construct one more building. So in such a
case, the promoter is required to obtain the consent of allottees of four
buildings in the layout?
A= Yes. Because the promoter is
not the true owner of the subsequent increase in the FSI as it belongs to the proposed
societies of the allottees of four buildings in the layout.
27. Suppose in case of a layout of
four buildings having total permissible FSI of 10000 Square meters, OC for two
buildings is obtained in December 2017 and FSI of 5000 Square meters is
consumed. Due to DCPR-2034 permissible FSI of the layout is increased to 14000
square meters and the promoter can construct one more building or put up
additional floors above the remaining two incomplete buildings.
So in such a case, whether still,
promoter requires obtaining consent?
A=Yes as per the provisions of
Section 14(1)&(2), it will affect the limited common areas and amenities
and hence the promoter will be required to obtain consents of allottees of every
building in the layout.
28. Normally in such cases, how much
additional FSI can be utilized in the remaining two incomplete buildings?
A= Since OC of two completed
buildings is already obtained in this case, the promoter can utilize the additional
FSI to the extent of share of the two incomplete buildings as per their
original FSI consumption ratio.
29. Suppose old promoter is changed so
can new promoter is entitled to make changes without prior consent required u/s
14?
A= Merely because a promoter is
changed, a new promoter is not entitled to make any changes without previous consent
of the allottees as per the provisions of Section 14(2).
30. In an ongoing Slum rehabilitation
project, due to amendment in law rehab tenement area was increase from 269 to
300 and in return the promoter would get proportionate increase in the sale
component area. So, whether developer will be required to pay compensation to
the allottees?
A=In such case, the promoter may
not be required to compensate for use of such additional FSI. However, the
promoter may require to reasonably compensate the allottees for major reduction
in common areas and amenities. Adjudicating Authority will take decision on
case to case basis. It may inquire whether the promoter has purposely delayed
the project in anticipation of such increase in the FSI.
31. In ongoing incomplete project as
per rental housing schemes, due to several changes promoter became entitled to
additional FSI and number of floors and flats are increased whereas the open
space area or amenities areas are allowed to be reduced. So whether the
promoter needs to obtain consent of the allottees?
A= Yes, such changes will be considered
as major changes as the same may result into permanent losses to the allottees plus
additional FSI and benefits will belong to proposed society of the allottees and
hence the promoter shall obtain previous consent of the allottees.
32. Whether allottees can ask for
compensation for such additional construction for any other reason?
A= Yes. If a proportionate
increase in common areas, amenities and facilities is not made, the same will
result in permanent losses to the existing allottees because such allottees
have to share such common areas, amenities and facilities permanently with new
allottees of additional construction. Therefore, the existing allottees can claim
compensation for such permanent losses.
33. Besides FSI and common amenities,
what can be other possible changes?
A= MahaRERA is not insisting
promoters to disclose on MahaRERA website the concessions approved by
sanctioning authority. It is difficult for allottees being layman to find out
as well as understand vast impact of such concessions. Concessions may be
related to compulsory open spaces, paved RG, cantilever projections, canopy,
society office, gymnasium, swimming pool, conversion of parking spaces,
reduction of number of parking spaces, higher density of tenements per hectare,
etc. Promoters must take previous consent of allottees for the subsequent
concessions which are substantial changes.
34. Can individual allottee ask for
compensation for unauthorized changes by the promoter in area, design,
location, direction, specifications, floor, and building of his
apartment?
A=Yes.
35. Whether allottee can claim
compensation for reduction or change or relocation of any common areas like
garden, open areas, parking spaces, clubhouse, swimming pool, etc. ?
A=Allottees can ask for the
compensation for any change that is major or substantial and if Section 14 is
contravened due to such changes.
36. Promoter wants to convert parking
spaces as per the original sanctioned plan into stack or puzzle parking space
to satisfy the condition of applicable rules for the proposed number of
apartments. Whether allottee can claim compensation even if the change will
increase the number of parking spaces?
A= Yes. DC Rules provide number
of parking spaces to be provided depending upon the size of the apartments.
Promoter has not made adequate space available for parking space and hence
promoter is required to convert existing surface parking spaces into stack or
puzzle parking spaces. In such a scenario, though the number of parking spaces
is increased, the allottee will have to share the space above its parking with
another allottee who will be allotted stack parking above surface parking. Now,
it would also not be possible for Society to increase parking spaces in the
future. So for an allottee, these are permanent losses and hardships.
Therefore, allottee can claim compensation for such changes and promoter must
take previous consent before making such changes.
37. Can allottee can claim for
compensation for any other unauthorized changes done by the promoter result in
overall operational and maintenance costs for the allottees?
A=Yes, provided the same are not
excluded under Section 14(2).
38. Whether allottees can ask for
compensation for consenting to the promoter for additional construction put up
by the use of subsequently available FSI?
A= Yes. Because after the
disclosures the promoter is duty bound to transfer and convey to the proposed
society the entire development potential of the plot which was permissible as
per the sanctioned plans at the time of sale of the apartments. Thus the
proposed society will become deemed owner of such FSI. Promoter can utilize
that development potential but the Promoter shall hold such plot as trustee of
the society. FSI is attached to the plot. Therefore, all subsequent increase in
the FSI or other benefits that can be generated and uploaded on that plot will
belong to the proposed society of the allottee.
Such compensation will be payable
to such allottees in proportion to the carpet area of their respective
apartments.
39. What if on completion of
construction, any residual FSI remains unutilized?
A= It will also belong to the
society of the allottees.
40. Some allottees challenged changes
to sanctioned plans and utilization of subsequently increased FSI in January
2019 without the consent of allottees. The building was completed in 2020.
Authority directed promoter to pay compensation. So whether all allottees will
be entitled to claim such compensation?
A=No. In this case, only those
allottees who have purchased the apartments before the increase in FSI will be
entitled to seek the compensation. Other allottees who have purchased the apartments
after amendment of sanctioned plans, will not be entitled to claim compensation
from the promoter.
41. New DCPR-2034 brings new changes.
For example promoter is required to hand over amenity open space or AOS as per
DCPR No 14(A)(ii) in plots with area exceeding 10000 mtrs. OR Incentive Housing
or IH in plot area of 4000 mtrs. or more and in lieu thereof MCGM provides
additional FSI as incentive. Also promoter is entitled to benefits like
exemption from deducting 15% RG or additional 100% FSI for setback or DP Road.
So promoter needs to obtain consent for such changes and pay compensation to
the allottees?
A= Yes. DCPR-9(6)(a) provides two
options. In the ongoing partially
completed project, the promoter can complete the development as per permissions
under Old DCR or can completely convert the project as per new DCPR-2034. So
only if the promoter opts for second option of conversion then only conditions
of DCPR-2034 will apply. Such changes being substantial changes will definitely
require previous consent of allottee as the same may result into permanent
losses to the allottees. Additional FSI and benefits will belong to proposed
society of allottees. Therefore, in such circumstances also allottee can claim
compensation.
42. Law regarding additional
construction is clear even before RERA and still, there are several cases where
sanctioning authorities are still permitting promoter to make substantial
changes, put up additional construction, or permitting the use of subsequently
increase in FSI. Still, allottees have to fight for their rights?
A= Yes, unfortunately, officials
of sanctioning authorities are still ignoring the effect of MOFA and RERA. Some
promoters or project architects misled officials. [Show MCGM Website]. See this
is the MCGM website for online approvals. It contains a specific field in their
system where promoter or project architect has to upload NOC of allottees or
resolution of societies for amendments to sanctioned plans. However, in this
case, instead of such NOC or resolution, PR Card is uploaded and MCGM has not
objected. For such reasons, allottees suffer and they require to fight to protect
their rights.
So, if the sanctioning authority
and project architect insist full compliance of RERA before amendments
contravening Section 14(1) &(2), such issues can be curtailed and promoter
then will have no option but to obtain consent from allottees.
43. In case the promoter has
registered multiple phases of a layout as separate projects and now the
promoter wants to change common areas of the layout which are situated in one
of the phases. So whether promoter is required to obtain consent of allottees
of all phases?
A= Yes provided the allottees of
other phases have undivided share in such common areas, amenities or facilities
as per the approved layout.
44. In redevelopment case, suppose the
new allottees of apartments forming sale component have not become members of
the owner society. Whether promoter is require to obtain previous consent of
such new allottees for making any major changes?
A=Yes.
45. Under which Sections allottee can
claim compensation and what he needs to prove?
A= Allottee can claim
compensation u/s 12 & 18(3) by filing a complaint before the Adjudicating
Authority. Allottee has to establish two things (1st) contravention of Section
14(1)&14 (2) and (2nd) that allottee has suffered loss due to such
contravention.
46. Which factors will be considered
by adjudicating authority for determining compensation payable by the promoter
to allottee?
A= Adjudicating Authority
shall have due regard to the factors mentioned in Section 72 and mainly the two
factors (1) gains to the promoter due to contravention (2) and losses suffered
by the allottees due to such contravention.
47. If the proposed has submitted a
proposal for additional construction and other changes without the consent of
allottees. What interim reliefs can be sought by the allottees?
A=Depending on the circumstances
of each case, interim reliefs till final decision can be (1) stay on putting up
any additional construction (2) stay on obtaining the approval for the
additional construction (3) prior verification of structural design from the
professional institute like IIT at cost of the promoter (4) stay on sale of
additional construction (5) to deposit 100% of the price of such apartments
into RERA Account till the final decision on the compensation.
48. What additional reliefs can be
sought by the allottee under such a complaint?
A= Allottee can ask directions
for the formation of society, execution of conveyance, etc.
49. Can authority levy penalty on the
promoter for contravention of Section 14?
A= Yes. The Registration Authority
can levy penalties on promoter u/s 61 for contravention of Section 14 and
violation of Section 7(c).
50. Resolution of such issues will
lead to litigations which may took a long period to decide. So what other
precautions allottees should take?
A=
(1) Verification of all relevant
documents and facts, alertness, unity and patience will be the keys for
success.
(2) Such matters will involve technical
as well as legal interpretation and application of the law. Therefore, the
allottees shall appoint a proper advocate who shall be aware of all provisions
of applicable law and judgments.
(3) In such complaints, the promoter
will make attempts to misled the authority on all possible grounds like such
complaint will delay the project, etc. so allottees shall not lose their patience.
(4) The promoter may attempt to obtain
backdated consents from other allottees by using pressure tactics to adversely
affect the complaint.
(5) In case 50% of total proposed
flats are not booked the allottees must form their association or else society.
(6) Allottees shall not sign any
consent without obtaining proper legal advice from the advocate.