How to draft a complaint to get relief as per RERA Act 2016 - Advocate Satish Dedhia

Drafting of Complaint under RERA Act, 2016 - by Advocate Satish Dedhia

The revival of sale of under construction projects is must for the revival of the promoters. Under construction projects can be sold only by restoring faith and trust of the allottees.  

This discussion does not aim to give any advice but our purpose. Viewers are advised to approach the professionals before filing complaints.

1.      Who can file the Complaint?

As per Section-31, any aggrieved person can file a complaint against any promoter OR allottee OR real estate agent. Complaint has to be filed in the RERA specified format. Explanation to Section-31 provides that the term "person" shall include the association of allottees or any voluntary consumer association registered under any law.

2.      What are the basic requirements of a valid or maintainable Complaint?

Many complaints are rejected because they were found as not maintainable. To become a valid and maintainable Complaint, it must satisfy at least these conditions:

(1) Complainant himself must be a directly aggrieved person.

(2) Complaint should have been filed ONLY against any promoter OR allottee OR real estate agent

(3) Complaint should have been filed ONLY for any violation or for any contravention of the provisions of the Act or rules and regulations made thereunder.

(4) Complaint must be project-specific and not on general in nature.

(5) Stage of the project is important in certain complaints i.e. whether the project is an ongoing incomplete project or completed project.

(6) in certain complaints status of possession is important means whether possession is taken or not.

(7) Whether there exists any specific waiver or extension given by the allottee for the alleged grievance.

(8) In Maharashtra, complaints are entertained only against the registered projects. So one needs to first file a complaint for direction to get the project registered with MahaRERA.

3.      Whether there is any specific format of the complaint?

Yes.

For example, in Maharashtra, two Formats of the Complaint Form A & B, are provided as per Rule-6&7 MahaRERA Rules.

Format in Form-A is for any violation and it is addressed to Registration Authority i.e. Non-Judicial Members of RERA Authority who will levy a penalty for violations.

Format in Form-B is for any contravention and it is addressed to Adjudicating Authority i.e. Judicial Members of RERA Authority who will direct the respondent to pay interest and/or compensation to the aggrieved allottee.

4.      Whether landowner, major investor, a bank that provided can be treated as co-promoter?

Yes if the conditions as per applicable provisions are satisfied.

5.      On what ground a promoter can file a complaint against the allottee under RERA?

(1)  A promoter can file a complaint against the allottee mainly u/s 11(5), 13 & 19. U/s 11(5) Promoter can seek direction for cancellation of the agreement as per the terms of that agreement.

(2)  U/s 13 Promoter can seek directions against the allottee for completing execution and registration of the agreement.

(3)  U/s 19, a promoter can seek directions against the allottee to make outstanding payment with interest if any or to take possession of the flat and for the discharge of other obligations of the allottee.

(4)  As per the interpretation of Section-18(1)&(2), a promoter can also claim frustration and offer a refund to the allottee.

(5) In certain typical or unavoidable circumstances, a promoter can also seek direction against the allottee for providing consent etc. in the interest of the project.

(6) In certain typical or unavoidable circumstances, a promoter can also seek direction against another co-promoter provided the same is related to any violation or contravention.

(7)  Once the prices go upward, there is a possibility that certain provisions of RERA can be misused against the allottee and then the trend may be reversed where the number of complaints against allottees will increase.

6.     On what ground a promoter or allottee can file a complaint against the real estate agent under RERA?

 Complaint against the real estate agent can be filed for violation and contravention of Section 9 & 10.

Most of the complaints are filed by the allottees. So, we will discuss from allottees point of view.

7.      What is the importance of drafting a complaint under RERA?

1. Drafting complaint is a highly technical and legal subject. If the complaint is not drafted properly, it may get rejected on several technical grounds.

2. There are examples of the bigger layouts, promoters engaged senior counsels from High Court (charging fee of Rs.3 to 5 Lakh per hearing) who misled and confuse the Authority on legal and technical points. So, most of such complaints get dismissed or the complainants did not get adequate interest or compensation. It is the tendency of few non-judicial officers of the Authority to copy-paste such orders in subsequent complaints. Since the complaints were not properly drafted, such allottees do not get proper justice at appeal level also.

3.  Authority will not be able to frame relevant issues if the complaint is not properly drafted and grievances will not be properly decided by the Authority.

4.  Complaint must establish violation or contravention of the particular provision of the law and losses or damages caused to the aggrieved person due to such contravention.

5.  The aggrieved person will get only one chance to file a complaint on the particular grievance. He cannot file a second complaint on the same issue.

6.    Complainant cannot argue beyond what is written in his complaint.

7.    Complainant cannot subsequently change the stand taken in his complaint.

8.   Amendments are allowed to some extent only. Changes that substantially change the original complaint are not permitted.

9.  If the Authority’s order is challenged in the appeal, then the complaint will be minutely scrutinized and tested on technical grounds.

10. Real estate is a complex subject.

So for all these reasons, drafting of the Complaint is very crucial.

8.        What steps shall be taken before drafting a complaint?

      (1)  At the first instance, Complainant should make a list of his grievances, find out how these grievances can be termed as violation or contravention and what he wants to achieve from the Complaint. He shall then frame possible reliefs than he can seek in the complaint.

(2)  All concerned issues shall be covered related to the same cause of action.

(3)  Complainant shall gather all documents and information that are relevant to the issue or dispute and supporting the Complainant. The same can be individual documents or project-specific documents or information related to the opposite party.

(4) Verify that Basic agreed terms concluded between the parties and details of the breach, delay in compliance etc. are reflected in the documents.

(5) Ascertain the Losses and damage caused or that may be caused in future to the aggrieved person.

(6)  Details of the Opposite party i.e. exact name and the proper address (7) Name and address of the project (8) Project Registration Number (9) Any other relevant point.

(10)    Sorting out relevant and irrelevant material

(11)   To ascertain that any relevant material is not escaped or else the opposite side will be making an allegation of suppression.

9.      What can be individual documents for the allottee?

Individual documents can be (1) Application form, Allotment Letter, Agreement, subvention agreement or any other document executed between the parties. (2) Any other document containing any representation, assurance or promise about the transaction or possession date, quality, or amenities, specifications etc. or any claim related to the promoter or its director (3) Payment schedule, Demand letters, stage-wise work completion certificates, receipts, (4) Correspondence exchanged by the parties related to the subject matter.

10.    What can be project-specific documents for the allottee?

Project-specific documents can be (1) general details of the project, (2) Prospectus, brochure, advertisements, or any other sale promotion material relied for sale or purchase of the flat (3) the plans, designs, specifications, approvals, sanctions related to subject project at a different stage of the project(4) title certificate, litigation details, court orders if any (5) encumbrance or mortgage details (6) work progress and present status of the project (7) Notices if any issued by any authority (8) Orders passed by the Authority or Tribunal in the particular project. (9) Any other relevant materials. (10) Allottee shall find out whether promoter has disclosed all documents and information on RERA Website or not.

11.     What details or information regarding the promoter can be required?

(1) Number of promoters (2) Exact name of the Promoter’s company (3) Directors or partners of the Company if any (4) Past and present projects (5) To find out whether the promoter has disclosed all relevant details of the promoters as per applicable rules.

12.    What factors shall an allottee in keep in mind before drafting of the complaint?

Allottee needs to verify the available options. For example, in the case of Section 12 & 18(1) – allottee gets two options (1) withdraw from the project, or (2) continue with the project.

(1)  Allottee needs to verify which option is best suitable to him in the present circumstances as well as circumstances that may prevail in future at the time of actual redressal of the grievance or compliance of the order.

(2)  Allottee shall estimate what tangible benefits will be ultimately received.

(3)  Allottee needs to test his proposed complaint on basis of the possible defence available with the promoter, applicable law and precedents of the judgments on similar type of grievances.

(4)  Time and cost factor.

(5)  Possible effects of the complaint on the project in general.

(6)  Possible effects of the complaint on his housing loan and other commitments.

(7)  Complaint shall be drafted by keeping in mind the subsequent appeals that may be filed by either party.

(8) Allottee shall anticipate all further possibilities and accordingly the select the facts, documents, reliefs and take his stand that will remain relevant at all times.

13.  From where the allottee will be able to get details and documents other than individual documents?

(1) Promoter’s website (2) Project Webpage on the RERA website, (3) documents and plans etc. available on sanctioning website like MCGM, SRA, Cidco, environment department, etc. (4) Online marketing promotional portals like magicbricks, 99 acres, etc. (5) General information or news or articles or advertisements available on google and social media platforms like youtube, Instagram etc. (6) news articles giving any specific information that can be supported with other material (7) On complaints specific websites like mouthsut.com etc. (8) websites of different courts (9) Website of IGRMaharashtra (10) Other allottees of the same project.

However, all such information shall be relevant to the violations or contraventions.

14.     What are the main parts or paragraphs of the complaint to be filed under RERA?

Paragraphs shall be as per the specific formats of complaints provided in RERA. 1&2 Para contain the particulars of the parties, project details and project number. 3^rd Para contain declaration related to jurisdiction. Facts of the case are to be briefly stated in the Fourth Para along with certain submissions if any. Claim of the Complainant shall be mentioned in the Fifth para. Prayers or reliefs shall be mentioned in the Sixth Para. Interim orders if any, are to be placed in Seventh para. There will be some formal paragraphs in the end. Lastly, there shall be a verification by the Complainant. Format and formal paragraphs, verification etc. should not be skipped or it may have an adverse impact or delay.

15.     From where the drafting shall be started?

After basic particulars in the first three paragraphs, possible prayers or reliefs shall be first framed which can be subsequently modified & finalized while drafting the remaining part.

16.    What facts shall be mentioned in the Complaint?

Only the facts relevant to the allottee shall be briefly stated. For example (1) details of flat, building and project (2) dates of the booking, allotment letter, agreement, possession promised by the promoter, etc. (3) Amounts i.e. total consideration, amounts due and paid, (4) any amount collected in name of sale of parking, subvention scheme, etc. (5) carpet area of the apartment, (6) Promises, claims, representations etc. made by the promoter (7) Present status of the project (8) Obligations that are due but the promoter failed to fulfil (9) Any other specific point to be highlighted. If possible these facts can be given in a table or within a few sentences which shall take a half-page or at the most one page. (10) As much as possible the word or phrases used in any particular document to be relied on by the allottee shall be maintained in the Complaint also, to avoid any confrontation. (11) As much as possible, unnecessary repetition may be avoided.

One should avoid mentioning irrelevant facts or emotional or moral statements. Also, no allegation shall be made for which supporting material is NOT available. Also, the facts that are covered in the Claim paragraph shall be avoided.

This paragraph should be reviewed after finalizing the Claim part of the Complaint and if any point is repeated unnecessarily then it should be removed.

17.    How you draft the Claim part in a Complaint to be filed under RERA?

Claim part should be draft step by step.

(1)  First, separate Claims as per individual Sections shall be listed. Important and major claims shall be listed on top.

(2) As much as possible, the para of each claim shall be divided into appropriate sub-paragraphs.

(3) Claim should be introduced by stating how the particular section has been contravened which entitles the allottee to claim interest and/or compensation from the promoter.

(4) Thereafter, the relevant facts shall be stated and correlated in such a manner that it will satisfy the ingredients or conditions to be satisfied as per the particular Section, to establish the Claim under that particular Section of RERA. At this juncture, relevant documents also be mentioned and be attached as Exhibits. Any important point in any particular document may be reproduced or highlighted at this stage.

(5) In the next step, the losses and damages caused due to such contravention shall be mentioned.

(6) If there is any one-sided or unfair term is added in the agreement or any other document which can be taken as a defence by the promoter, then as an abundant precaution, the allottee shall refer such unreasonable terms and explanatory statement shall be made how that term is illegal and not binding and why promoter should not be given the benefit of such terms.

(7)  If the defence or allegation of the promoter is known, a statement to counter & deny it may be added here to justify the claim of the allottee and to falsify that defence or allegation of the promoter.

(8)  Relevant legal submissions or important ratios of relevant judgments may be quoted so that it can be useful at the time of the hearing.

(9)  If the stand of the Authority can be known from earlier decisions and if it is incorrect, proper defence of allottee against such decision shall be stated in the above paragraph and it shall be framed in such a manner that in the appeal it can be shown that this submission is not considered by the authority and it can be treated as the ground in the Appeal. Correctness of case of allottee shall be highlighted.

(10)  One should avoid specifying any calculation like months, amount etc. unless the same are indisputable and not liable to change.

(11)  One should make the claim related statements wide and clear so that its meaning remains relevant during all subsequent stages of the case.

(12)  One shall verify that no relevant fact or document is escaped so that the other side cannot make an allegation of suppression.

(13)   One shall verify that no relevant fact or document is stated in the manner that may amount as misrepresentation.

(14)  At the end of para for each claim, concluding statement shall be made and statement seeking direction against the promoter shall be made in brief.

(15)  Any fact which is referred in Claim part shall be removed from the 4^th Para related to Facts if not required or elaborated details part shall be removed.

(16)  If the Claim paragraph is properly framed as above, there will not be any need to file rejoinder or written statements, unless compulsory. This paragraph will be useful in appeal also.

(17) It is possible due to typical circumstances, the stand of the allottee for one issue may contradict his stand on the other issue. So, appropriate justification shall be given for the same.

(18)  When large numbers of allottees file complaints and are heard simultaneously, it is possible that due to certain reasons, weakness in case of one allottee may turn against the strong case of another allottee. Same circumstances will arise when more than one advocate is representing such a group of complaints. So, adequate care shall be taken in such cases.

(19)  Flow of the aforesaid sub-paragraphs of each claim shall be checked and finalized.

(20)   Relevant prayer shall be accordingly modified and finalized.

18.    What pleadings must be made by the allottee to get relief u/s 18(1)(a) for a delay in possession by the promoter?

For relief u/s 18(1)(a), if the allottee wants to continue with the project, the complaint must have these pleadings–

(1) that the complainant is having documents confirming that he is an allottee

(2) that such documents record the promoter’s promise about the possession date and all such documents shall be exhibited with the complaint

(3) that the promised date of possession is expired and still the promoter failed to complete the project and/or deliver the flat (4) to explain how the promoter has not made genuine efforts to complete the project within the promised date of possession (5) that the allottee has not consented for any extension of possession date and not give up his right to claim interest and/or compensation (6) that before filing the complaint, the allottee has demanded interest and/or compensation from the promoter for the delay but the promoter has not complied with such requisition.

19.    What if the agreement is not yet executed by the promoter?

Execution of such agreement as per prescribed format is a statutory duty of the promoter u/s 4 of MOFA as well as u/s 13 of RERA. Section-31 does not provide that the execution of the agreement is a must for filing a complaint but it only requires that such complainant must be an allottee as defined under the Act and the promoter has allotted the flat to him. This legal position must be established from the pleadings based on any document containing the essential terms of the contract between the promoter and the allottee viz. Flat No., floor, area, building, price, payment terms, etc. and the allottee shall make out a case that these terms were finally concluded between the parties and have been acted upon by the parties and hence the Execution and registration of Agreement remain a formality. Lastly, the allottee shall plead that because of these reasons there exist a concluded contract between the parties and therefore the promoter shall be liable to discharge his obligations as per the law. Complaint shall plead that the promoter cannot be allowed to take the defence of his wrong or default of not executing such agreement.

20.   What shall be the pleadings in the complaint seeking direction u/s 13 against promoter to execute agreement OR if the provisions of the agreement are not as per RERA?

Pleadings shall establish the points (1) that the complainant is allottee as per the definition in RERA and there exists a concluded contract (2) obligation to execute the agreement is due because the allottee has paid 10% of the price and the promoter is demanding further instalments (3) the provisions in the draft agreement either furnished or uploaded by the promoter on RERA Website shall be compared with the model agreement under RERA as well as relevant provisions in the law.

For example, (1) the promoter cannot sell car parking, (2) promoter shall remove the blanket consents authorizing the promoter to put up additional construction or make changes in the sanctioned plans or postpone the execution of conveyance or formation of society (3) that promoter cannot demand excessive amounts as maintenance charges or other deposits (4) unilateral/unfair provisions related to termination, refund and deductions or forfeiture etc. (5) any other terms that are contrary to actual understanding at the time of sale. Allottee shall seek directions that the promoter shall not be allowed to demand further instalments until the promoter executes the agreement in favour of the allottee after removing the objections.

21.    What if the possession date is not specified by the promoter?

As per Section 3(f) of MOFA, the promoter must disclose the exact date of possession to the allottee and as per Section 4(1A)(a)(ii) of MOFA, the promoter must specify the exact date of possession in the agreement. Under RERA promoter has to disclose possession date on RERA Website in advance while registering the project with RERA. As per Section-11(3)(b), the promoter is required to furnish to the allottee the stage-wise time schedule of completion of the project, including the provisions for civic infrastructure like water, sanitation and electricity. As per Section 13(2), the promoter shall specify the possession date in the agreement. Thus, specifying the possession date is a mandatory obligation of the promoter. As per Section-46 of the Contract Act, if such time is not specified, the promoter shall complete the project within a reasonable period.

So if the possession date is not mentioned, the complainant must plead that the promoter has committed a wrong by not specifying the exact possession date and therefore the possession date shall be presumed after considering the reasonable period for completing the project.

Generally, 36 months are considered as a reasonable period. Reasonable period will depend on various factors and may differ from project to project.

22.    What if the agreement is executed as per MOFA before the implementation of RERA?

RERA is applicable on all ongoing and incomplete projects and therefore complaints related to such projects can be filed under RERA. In Neelkamal Judgment, Bombay High Court has made important observations (1) RERA has been introduced by the parliament in the larger public interest to suppress the mischief. (2) Para-124 say that Under one umbrella, under one regulation and one law all the issues are tried to be resolved. Para-255: Allottees need not require to approach different courts for reliefs prior to RERA. Section 71(1) already provides that pending matters before Consumer Forum can be transferred to RERA.

23.   Suppose flats are booked between 2011 to 15. Promoter has unilaterally changed possession date to November 2020. Promoter executed agreement in the year 2017 with a grace period of 9 months. But so far the only plinth is constructed. Is it possible to file complaints for refund with interest?

Yes, if the conditions as discussed are satisfied. Allottee will receive interest on the amounts paid along with the refund. The initial outcome will depend before which officer the complaint is assigned means whether Judicial or Non-Judicial. So, such allottees shall be ready to go up to the appeal stage. Promoter will oppose on the ground that possession date is still not due and hence the complaint is premature.

Allottee shall find out other reasons for the delay as well and add exhaustive grounds u/s 12, 14 & 18. The same are covered in this discussion.

Allottee shall establish the original possession date on basis of documentary evidence like advertisements and promotional material, etc. and establish that the promoter has purposely withheld agreement and then by misusing its dominating position promoter has unilaterally changed possession date to Nov’2020. But Allottee has never consented for such changes.

Allottee would not have purchased the flat if, at the time of sale of the flat, the possession date is specified as November 2020.

Allottee shall plead that he does not have faith and trust in the promoter anymore and hence the allottee shall not be compelled to continue in the project.

Allottee shall seek reliefs that till the entire amounts are refunded, the promoter shall not be allowed to sell it or mortgage it.

To understand this question, viewers are requested to see my another video with CA Shri Ashwin and Advocate Shri Chetan.

In normal cases, I would suggest the allottee NOT to seek a refund in the present circumstances because the promoter will not be able to refund the amounts immediately and would try to delay refund as much as possible. I anticipate that the market will definitely be stabilized after one year and again there will be an upward trend in 2022. So, if the allottee can find out that the promoter is financially sound and the project is viable the allottee can wait for at least one or two years. Now he shall not seek the refund but go for other reliefs.

24.    In the previous case, the promoter will insist for forfeiture or deduction of a certain amount as per the terms in allotment etc. So what pleadings shall be made to avoid such deductions?

Pleadings must establish that the cancellation is not voluntary but the allottee is compelled to select the option of the refund because of the extreme delay, unfair trade practices and defaults of the promoter and therefore the promoter is not entitled to claim such deductions which are otherwise unfair, one-sided, unreasonable and contrary to provisions of MOFA as well as RERA.

25.    Can allottee seek a refund of other payments and expenses like taxes, stamp duty, registration charges?

Yes because these are expenses/losses caused due to defaults on part of the promoter. For stamp duty, the allottee shall take stand that he would ask the authority to refund to the promoter. So allottee would not require to wait for months. Promoter will be entitled to adjust service tax, VAT, GST etc. in subsequent transactions, so the allottee can seek refund.

26.     How the relief for Section-18(1)(a) for interest and compensation shall be framed?

Allottee can ask three or more reliefs. (1) To Order and direct the Respondent to pay, within the time-bound schedule, interest for every month of delay till handing over of the possession i.e. from the date of original possession date and till actual completion of the project and issuance of full Occupation Certificate of the Building and further direct and order that in case the Respondent failed to comply with the Order within the stipulated time the Respondent shall pay the said interest at the higher interest rate. (2) To Order and direct the Respondent to furnish stage-wise detailed completion schedule of the Building for the remaining work and compliances till receipt of full OC as per Section 19(2) and hand over the legal & peaceful possession of the duly completed flat along with full OC and completion of project in all respect within reasonable period commensurate with present work stage. (3) To direct the Respondent to deposit the adequate amount to pay the interest & compensation to the allottee and to complete the balance work in the project. (4) to pay differential interest towards housing loan if the same exceeds RERA interest rate.

27.   What care must be taken while drafting the claim for entitlement of relief u/s 18(1)(b) in case business of the promoter is discontinued?

 After referring usual facts as discussed earlier, the Allottee shall state how the business of the promoter is discontinued along with supporting documents and facts. As per this Section, the reason is immaterial. Even if the business is suspended or the registration is revoked, the promoter is liable to pay interest and/or compensation.

28.    What care must be taken while drafting the claim for entitlement of relief u/s 18(2) for losses on account of the defective title?

There is a legal rule that "no one gives what they don't have". It is the promoter’s statutory obligation to develop the land and sell flats only if there is no defect in his title. So his title must be free and marketable. If the title is defective, the promoter is not entitled to carry on development or sale of flats because the promoter will not be entitled to transfer the flat to the allottee and transfer the property and building to the society. There can be many reasons that made the title of the promoter defective. A third party may have raised a claim on basis of any right, encumbrance, charge, lien, mortgage, judgment, etc. So, the allottee will not get legal right over the flat till such defect is cleared.

In such cases, the pleadings must satisfy the applicable conditions of this Section to get compensation (1) that the promoter’s title was defective and still he sold the Flat or subsequently it is found that the promoter’s title is defective but he did not clear defects (2) the allottee has suffered a loss due to such defect in title.

29.     How to establish the claim for entitlement of relief u/s 18(3) for promoter’s failure to discharge other obligations imposed under law or agreement?

 Section 18(3) intends to compensate the allottee for losses caused due to reasons other than the delay and defect in title. RERA imposes several obligations on the promoter u/s 4, 7, 11 to 17 and relevant under applicable rules. For example – Delay in the execution of the agreement, delay in the formation of the society, delay in execution of the conveyance, non-disclosure of mandatory information and documents, disclosing false information, diversion of funds, imposing one-sided/unreasonable/unfair terms and conditions in the agreement, non-joining of all promoters while registering the project or not uploading their documents, mortgaging the project without consent, assigning the project without consent, carrying out unauthorized plans beyond sanctioned plans or violating any important conditions of approvals, making additions and alterations to the sanctioned plans/area/amenities/common areas, etc without the previous consent of the allottees, and so on. Similarly, there may be some specific or special obligations undertaken by the promoter under the agreement.

So on the failure of the promoter to discharge such obligations, the allottee can ask compensation. In such cases, the pleadings must satisfy applicable conditions of this Section (1) that promoter was liable to discharge such obligations and the promoter has failed to discharge such obligations within the agreed period or within the mandatory period as per the law (2) that allottee has suffered losses due to such failure.

30.    What care must be taken while drafting the claim for entitlement of relief u/s 12 for losses on account of false statements in advertisement etc?

Pleadings must establish (1) original representations, assurances, promises or claims of the promoter that were relied on by the allottee for purchasing the flat. That can be established from documents like prospectus/brochure/advertisement/plans/design/amenities/specifications and any other promotional material. (2) that these representations or promises are now rendered false. It can be established on basis of the actual conduct of the promoter, revised plans or designs etc. and the actual construction (3) that the allottee has suffered losses due to such false representations or promises etc.

31.   What if the promoter has stopped payment of interest on housing loan as per the subvention scheme?

In such cases, the allottee shall first state the facts of the case in brief along with documents. For example, there exists a subvention agreement wherein the promoter has undertaken the obligation to pay interest on housing loan during the subvention period. In addition to the Subvention Agreement, the Allottee shall rely on and exhibit the other documents related to subvention scheme like payment schedule for ordinary scheme and subvention scheme, advertisements, additional consideration paid for the subvention scheme etc. Normally, the advertisements will specify ratios like 20:80 or 25:75, etc. and represent that on booking the allottee is required to pay 20% of the price and the remaining 80% of the price will be payable on the possession. Later on, the promoter would have got maximum disbursement of the price even if commensurate work is not done. Some promoters commit mischief by unilaterally stopping payment of interest from the date mentioned for subvention period in the standard agreement even though the possession is not given.

In such cases, the allottee shall establish and state that he agreed to purchase that flat in the under-construction project only because of this subvention scheme where the promoter promised to pay interest during the subvention period and that the allottee would not be required to bear an additional financial burden occurred due to the risks associated with the under-construction project.

After stating all such facts, the allottee shall make out his case by establishing that in such cases, the subvention period is fixed on basis of the promised date of possession at the time of booking of the flat and therefore the promoter is liable to pay such interest till possession. That as per the scheme only 20% or 25% was due and still the promoter has got disbursed excess amount. So, the promoter has already enjoyed the benefits of the subvention scheme.

Thus, the statements of the promoter regarding possession date and subvention scheme are now proved as false statements. So as per Section-12 promoter shall compensate for losses caused due to such false statements and as per Section 18(3), the promoter is liable to discharge his obligation to pay the interest on loan till possession.

32.    What will be the consequences of the promoter’s default under the Subvention Scheme and how the allottee can secure his rights?

In the worst scenario, then things will get complicated. Bank may ask the allottee to pay the interest being principal borrower. If the allottee failed to do so, the Bank will recall entire loan, deposit all the cheques issued by the allottee and then the Bank will initiate multiple proceedings against the allottee like arbitration, criminal proceedings u/s 138 of Negotiable Instruments Act if cheques are dishonoured. In such cases, the allottee will be exposed to multiple litigations as well as huge financial liabilities. Allottees will be left with limited options. If the allottee is not able to pay interest on the housing loan, he shall first immediately ask the Bank not to deposit any cheque because the liability to pay such interest was undertaken by the promoter. Depending on the circumstances of each case, the allottee may then immediately file a complaint with RERA Authority and join the Bank as a party. He shall seek refund with direction against the promoter to refund to the Bank the amounts disbursed by the Bank with interest, penalties, expenses etc. In the interim prayer, the allottee shall seek direction from the RERA to ask the promoter to pay or deposit with RERA the outstanding amount payable to the Bank. He may seek directions against the Bank not to take coercive steps.

33.  What care must be taken while drafting the claim for entitlement of relief u/s 14(2) for additions or alterations without consent of allottees?

I along with Adv. Chetan have made a video with a detailed discussion on this topic, so I will request the viewers must go through this video to properly understand this provision.

As per the scheme of MOFA or RERA, (1) the promoter cannot change the sanction plans, area, floor, location, specifications, amenities, common areas, etc. furnished to the allottee at the time of sale because the same would amount to a unilateral modification of the concluded contract (2) all future FSI and benefits available after the sale of the flats will belong to the proposed society of the allottees. So, the promoter is not the true owner of such additional FSI. Therefore, it is mandatory u/s 7, 7A of MOFA and 14(2) of RERA for the promoter to obtain previous consent of the allottees to make such changes or put up such additional construction.

As per my view, Section 14(2) is more important then Section-18. After 2013, the Maharashtra government proposed to increase the FSI and other benefits but that was actually finalized as late as 2019. So, Promoter can get such benefits only if the project is incomplete and construction is not completed. Hence, in almost all incomplete projects that were commenced after 2013, the promoters have purposely stopped the work in anticipation of the increase in FSI and other benefits.

Let us understand with one example. Suppose a project land is approx. 10000 sq.mtrs. Till 2017-18, the total permissible FSI including the Fungible FSI would be approx. 30000 sq. Mtrs. Due to changes in policy and due to DCPR-2034, the FSI and benefits have increased from 30000 to 39500 sq. mtrs. So, the total permissible construction will be increased by 9500 sq. Mtrs. Plus deductions like 15% RG is now not required. Additional 100% FSI is now permitted for Setback or DP Road. The effect of these changes is that 9500 sq. mtrs additional TDR shall not be purchased but only 6000 sq.mtrs needs to be purchased and it will result in saving of 3500 TDR worth of Rs.32.29 Crores because at that time TDR price was Rs.5000 sq.feet. carpet area. Again, due to the option to purchase 0.50% additional FSI at 60% of ready reckoner rates, that FSI will be available at a much lesser price than TDR market price. So, the development cost is taken care of.

Suppose the sale price is 20000 per sq. feet. carpet area. Super built-up price would come to 12100. So the gross value of said additional construction would be 9500 x 20000=Rs.190 Crores.
Every allottee who has purchased the flat before such changes, would suffer losses in proportionate to area of his flat. This will be his permanent loss if the promoter uses additional FSI.
Why it is permanent loss? Because if the promoter had completed the construction as per the original schedule, he could not have utilised this additional FSI. But now, your society could not use it for future redevelopment. Therefore, it is your permanent loss.
But, you will be suffering another permanent loss by sharing the limited the open space and common areas with buyers of additional construction. Because the open space and common areas will not increase in proportion. So, how you will calculate this loss? You are aware that builders still sell on the super built area ratio of 65%. It means 35% of your price is charged for the common areas. So in the present example, the original FSI of 30000 is increased to 39500. It means if the open area was available is considered as 100, it will be proportionately reduced to 76%. So your loss will be 24% and 24% of 35% of your price for common areas will be Rs.9 Lakhs.

To get this benefit, the promoter will delay the project by 4 years.  

Similarly, compensation can be calculated in cases where the promoter has promised huge recreational benefits like a garden, clubhouse and other modern amenities and subsequently, the promoter has cancelled it.

To establish his claim u/s 14(2), the pleadings shall establish what was the original permissible construction or amenities etc., (2) what are the additional construction or changes made or proposed changes (3) what loss the allottee would suffer due to such changes.

34.     Do you suggest to file one complaint or composite complaint?

If the stake of the allottees is higher and the promoter has committed breaches on the wholesale basis, I would suggest that allottees should file three complaints. (1) Individual complaint for delay interest (2) Individual complaint for other reliefs u/s 14, 18(3) etc (3) common complaint by the association of allottees for violations and project completion. I am suggesting this on my basis of experience with MahaRERA. Because the ultimate aim of the allottees is to get timely possession.

35.    Why allottees of big projects shall register and form their association?

There are many reasons. As per my experience, the reasons are:

(1) Due to the impact of liquidity crunch and disruption caused by lockdown, there will be hardly a few selective projects which will be completed in time.

(2) Promoters who have diverted funds and delayed the project to put up additional construction, will not be able to fulfil their promises.

(3)  Individual allottees have many limitations.

(4)  Cost will be shared and saved.

(5)  Allottees can share and make a compilation of all available data on the project and violations that may have been committed by the promoter. So the complaint can become exhaustive.

(6)  Individual allottees initially think emotionally and such emotions settle down after some time like bubbles of soda. Individual allottee easily gets frustrated and gives up the claim and hence he cannot take such matter till its logical end.

(7)  On the other hand, there are some promoters particularly having big projects, do not work as per the logic of a layman and common flat purchaser. Such promoters they try to mislead the Authority. They play every possible trick and drag the final hearing of every complaint as much as possible.

(8)  Individual complaints do not get the needed attention from the Authority. Authorities at lower level particularly Non-Judicial Members having bureaucratic mindset generally have a sympathetic approach towards the big builders. Such officers prefer to dispose of subsequent matters by group hearing and passing copy-paste orders.

(9)       Besides the promoter, one need to stop sanctioning authorities, project financer, professionals like architect etc. from helping the promoter in committing wrongs. So if they are joined in the complaint related to violations, directions for their reply can be sought in such complaint. Such reply may go against the promoter and help the allottee.

36.     Why do you suggest separate complaint be filed by the association for the violations?

(1)  Due to his limitations, individually allottee will not bother to get penalize a promoter and individual allottee restricts his complaint to get interested and compensation.

(2)  Bigger projects have many complicated issues so individual allottees will be able to achieve their main objective to get possession even if they got some order in their complaints to get interest for delay.

(3)  Unlike complaints about contraventions, it is in the interest of allottees that complaint on violation is heard in detail on every point and may go on for 6-7months.

(4)  So If a common complaint about violation is filed, allottees can tighten every nook and corner and compel the promoter to work as per the ideal roadmap with full transparency and accountability.

37.    What is the difference between violation and contravention?

Generally, as per the popular sense, all contraventions can be considered as violations by modifying the language. But considering the provisions regarding jurisdiction, violations will be those breaches or non-compliances which do not have direct financial implications on the individual allottees even though there is legal injury and the contraventions will be those breaches or non-compliances which have direct financial implications on the individual allottees in addition to legal injury.

38.    What reliefs shall be sought for the violations committed by the promoter?

As per my experience, allottees should seek (1) forensic audit of accounts of the project so find out diversion of funds (2) reply from authorities and professionals involved (3) order to bring back funds that were diverted (4) timely compliance of orders already passed in individual complaints (5) if the promoter is adamant, directions to initiate criminal proceedings, levy of penalties and blacklisting as per Section 34(c), (6) to allow allottees monitoring the project progress and use of funds (7) reporting to RBI for action against project loan provider for failure to monitor the project.

39.    How allottees can find that their promoter will not be able to complete the project and what they plead in their complaint?

Allottees need to apply for reports submitted by the project engineer, architect and CA with the RERA Authority. Depending on case to case, with help of the thorough professionals having experience in successfully dealing with the stalled projects, allottees can find out the fate of their projects. If the allottees get the negative report, they should approach RERA Authority u/s 7&8 for taking over of their project, without waiting further. Before that, the Allottees shall get prepare revival plans with 2-3 options from the professionals and commitments from maximum allottees. Allottees shall take the project financer, claimants, contractors and professionals into confidence and seek their co-operation.

40.  Is it possible to amend the pending complaint if the allottee got some new important information?

In such cases, the allottee needs to file an application and satisfy the authority that (1) without such information the authority will not be able to decide the important issue in the complaint (2) genuine reasons that prevented the allottee from adding that information in the complaint (3) who was responsible to bring that information on the record before authority. Depending on the stage of the complaint, the Authority may allow such application considering the provisions under Section 38(2) or 71(1) as the case may be and the principle of natural justice. If the allottee feels that the Authority may not allow to amend the complaint and the absence of new information will harm his case, the allottee shall apply for withdrawal of the complaint with the liberty to file a fresh complaint.

41.    Whether the allottees have right to hear before the Authority grants further extension u/s 6?

Yes. As per the Neelkamal Judgment of Bombay High Court, the Authority shall hear the allottees before granting a further extension to the promoter. Allottees shall insist to impose some stringent conditions in the interest of project and allottees like (1) forensic audit (2) to fix the time-bound schedule after getting a report from the project architect (3) direction against the promoter to make adequate arrangement of funds to complete the project (4) direction to discharge remaining obligations including compliance of orders passed by the authority, society formation and conveyance (5) any other relevant point.

42.   Whether the allottees have right to hear before the Authority allow the promoter u/s15 to transfer or assign his rights to another developer?

Yes. Allottees shall take participation in such hearing and insist to impose some stringent conditions in the interest of project and allottees.

43.   What if the promoter has already transferred or assigned his rights to another developer and new developer insist to accept refund and refuse to allot flat?

After the implementation of RERA i.e. 1^st May 2017, every promoter needs to obtain previous permission u/s 15 from the RERA Authority as well as from 2/3^rd allottees to transfer or assign promoter’s rights to another developer or before changing the control in the management. New developer will enter into shoes of the old promoter. Such transfer will not change the rights of the existing allottees in any manner. All existing allotment letters and agreements will be binding on the new promoter. So, allottee can file a complaint against the new developer to discharge remaining obligations of the old promoter as per the terms agreed with the old developer.

44.    What if the promoter has defaulted and the bank who has financed the project want to sell the project? What will impact on the rights of the existing allottees?

Provisions of Section-15 will apply to the new promoter. Things may get complicated if the matter is before NCLT. Supreme Court has already given detailed judgments in this regard. Allottees will get the right to represent and be part of the resolution process.

45.  Why do you think that the allottee should engage a professional to draft and handle his complaint? Many allottees consider it as an additional financial burden.

Our entire discussion confirms that there are so many aspects, which an individual allottee may not be able to deal with. One of the main reasons behind contradictory orders on the same issue is perhaps is that the complaints were not drafted properly and/or not presented properly. There are examples where the favourable orders of the Authority could not sustain in appeal because of technical reasons. Mostly, the arguments of the individual allottees are based on emotional and moral grounds, so Members of Authority gets irritated. There are many examples where highly educated persons who have filed complaints on their own and appear personally, did not get expected order because of technicalities related to legal matters. That loss is much higher than the fees payable to a professional. Authorities did not have enough resources to tackle the multifold increase in complaints. So time to decide a complaint is getting spread over months. For this reason, also an individual complainant would not afford attending so many hearings. Only if the claim is very simple and amount involved is less than 10-15 Lakhs, and allottee is not bothered about interest and/or compensation, delay in hearing etc., then he may take risk to file and contest the complaint on his own.