Bathinda Development Authority To Refund ₹13.25 L To Allottee, Arbitration Clause No Bar: Punjab RERA

The Punjab Real Estate Regulatory Authority (the Authority) on 19 February, held that the existence of an arbitration clause or a statutory bar under State law does not oust its jurisdiction under the Real Estate (Regulation and Development) Act, 2016, and that in the absence of a valid Completion Certificate and completion of development works, an allottee is entitled to refund with interest for delay in handing over possession.

The RERA, comprising Member Binod Kumar Singh, directed the Bathinda Development Authority to refund Rs. 13.25 lakh along with interest at 10.80% to Gora Singh (the Complainant) for failure to deliver possession of the allotted plot within the stipulated time.

The Authority held:

“At the very outset it is concluded that none of the legal issues raised by the respondents have any merit. The Hon'ble Supreme Court in the matter of 'Emaar MGF Land Ltd. Vs. Aftab Singh' (Civil Appeals No.23512-23513 of 2017) held that mere presence of an arbitration class does not preclude the jurisdiction of this Authority.”

The Complainant had applied in December 2013 for a 150 sq. yard freehold residential plot under a scheme launched by the Respondents at Mansa at Rs. 7000 per sq. yard and deposited Rs. 1.05 lakh as 10% earnest money. A Letter of Intent was thereafter issued demanding 15% amounting to Rs. 1.57 lakh, which he paid on 22.04.2014.

An Allotment Letter dated 6 July 2016 was issued allotting Plot No. 213. The Complainant paid the entire sale consideration of Rs. 13.25 lakh.

As per the scheme and the allotment terms, possession was to be delivered within 18 months from the date of allotment or upon completion of development works, whichever was earlier. Possession was thus due by 5 January 2018. However, the Respondents failed to complete the project and hand over possession.

The Complainant alleged that even after several years the project remained incomplete and that basic amenities such as water, electricity and sewage had not been provided. He further stated that the Respondents had admitted deficiencies in earlier appellate proceedings and that similar matters had been allowed by the Authority and upheld by the Appellate Tribunal. Despite repeated requests, the Respondents refused to refund the amount, and no Completion Certificate had been issued.

At the outset, the Authority rejected the legal objections raised by the Respondents. Relying on the decision of the Supreme Court in Emaar MGF Land Ltd. v. Aftab Singh, it held that the existence of an arbitration clause does not oust the jurisdiction of the Authority.

With respect to the Completion Certificate, the Authority noted that the Respondents admittedly did not possess a Completion Certificate for the project. It held that RERA, 2016, being a Central legislation, would prevail over any conflicting State law and that obtaining a Completion Certificate is mandatory under RERA. It held:

“Regarding the non-availability of the Completion Certificate (CC) is concerned it is true that the respondent does not have a CC for this project. The reliance placed by the respondents on Section 44 of the PAPR Act also cannot be accepted. A Completion Certificate is a requirement under the Act of 2016 which is a Central legislation and has to prevail in case of conflict with a State Law.”

Referring to Sections 88 and 89 of RERA, the Authority observed that the Act operates in addition to other laws and has an overriding effect in case of inconsistency. Accordingly, the plea that Section 174 of the Punjab Regional and Town Planning and Development Act, 1995 barred the jurisdiction of the Authority was rejected.

On merits, the Authority noted that the Respondents relied on certain certificates indicating partial completion of civil, public health and electrical works to the extent of 95%, 80% and 75% respectively. However, these certificates had been issued by Divisional Engineers who were not competent to issue Completion Certificates. The photographs placed on record also did not establish completion of the project.

The Authority, found that the Respondents had failed to rebut the Complainant's consistent stand that the development works were incomplete and the project was not in a habitable condition.

Accordingly, it directed a refund of Rs. 13.25 lakh along with interest at 10.80%.