Developer Cannot Rely On Unregistered Offer Letter To Postpone Property Possession: Punjab RERA
The Punjab Real Estate Regulatory Authority (Punjab RERA) on 14 October held that a developer cannot rely on an unregistered offer letter to defer its possession obligations when it has failed to execute the mandatory Agreement for Sale under Section 13 of the Real Estate (Regulation and Development) Act, 2016.
Member Arunvir Vashista of the Authority allowed a complaint filed by the legal representatives of deceased allottee Major General Dr. Shamsher Singh Chauhan against Suksha Developers Private Limited and others. He held:
“The respondents cannot rely upon an alleged possession date contained in a commercial understanding while simultaneously failing to execute the statutory Agreement for Sale required under Section 13. More importantly, the statutory obligation to execute the Agreement for Sale cannot be defeated by relying upon an unregistered or informal arrangement to postpone the promoter's obligation for an indefinite period.”
Chauhan booked Complete Business Unit No. 12 (CBU No. 12) in the Sushma Empiria project on 29 January 2020 by paying Rs. 5 lakh. His legal representatives claimed that he paid the entire basic sale consideration of Rs. 3.81 crore between 29 January and 17 June 2020. However, the developer neither executed a registered Agreement for Sale nor transferred the unit.
They alleged that the developer discontinued assured monthly returns of Rs. 4,44,500 from 1 April 2021. They also claimed that the unit's carpet area was approximately 817 square feet smaller than represented, resulting in an alleged excess recovery of Rs. 69.23 lakh.
The developer disputed the claims, maintaining that the actual basic sale consideration was Rs. 1.47 crore. It relied on an offer letter dated 16 June 2020 to contend that the parties had agreed to possession by 31 December 2027. It further claimed that the monthly payments represented discounts linked to proposed additional purchases.
The legal representatives approached Punjab RERA under Section 31 of the Act, seeking execution of the Agreement for Sale, possession, assured returns, delayed possession interest and a refund of excess charges.
The Authority noted that Section 13 prohibits a promoter from accepting more than 10% of a property's cost as an advance or application fee without first entering into a written Agreement for Sale. It held that the developer could not accept substantial consideration without fulfilling this statutory obligation and then rely on an informal arrangement to postpone possession indefinitely.
Further, it held that the absence of an enforceable possession date did not permit the developer to retain the allottee's money indefinitely. It adopted three years from the booking date as a reasonable period for offering possession, determining that possession ought to have been offered by 28 January 2023. Statutory delayed possession interest was therefore payable from 29 January 2023 until lawful possession.
The Bench clarified that the three-year period was not a contractual possession deadline but a reasonable benchmark for determining the commencement of statutory delay. It also distinguished contractual assured returns from statutory delayed possession interest, holding that both could not be recovered twice for the same period.
It directed the developer to pay assured returns at 12% annually on Rs. 3.81 crore from 1 April 2021 to 28 January 2023, after adjusting for amounts already paid. It also ordered the developer to pay statutory delayed possession interest from 29 January 2023 until lawful possession.
The Authority also directed the developer to execute the registered Agreement for Sale, complete the transfer formalities and pay the awarded amounts within 60 days. It required the developer to furnish authenticated carpet-area records within 30 days and refund any verified excess recovery with applicable interest. Lastly, it ordered proceedings against the developer for violating Section 13(1) of the Act.
Accordingly, Punjab RERA disposed of the complaint.
Appearances for complainants: Sanchita Chauhan and Dr. Sandeep Chauhan appeared in person.