Development Authority Constructing Flats for Sale Is a Promoter Under RERA: Haryana RERA

The Haryana Real Estate Regulatory Authority (RERA), Panchkula, has recently held that a development authority that constructs and allots flats for sale falls within the definition of a “promoter” under Section 2(zk) of the Real Estate (Regulation and Development) Act, 2016, and can be directed to refund the allottee with interest for failure to hand over possession within a reasonable time.

Passing the order in a complaint filed by Balwan Singh, Member Nadiam Akhtar directed the Housing Board Haryana to pay Rs 3,46,507 as the balance refund with interest, noting that the Board had retained the complainant's money for years without offering possession of the flat.

The Authority observed, "Plain reading of the definition given under section 2(zk) makes it clear that any development authority in respect of allottees of building/apartment, as the case may be, constructed by such authority for sale is a promoter in respect of allottees of those buildings/apartments. Here, Housing Board Haryana is a Development Authority and has issued an allotment letter to complainant on 12.02.2015 and issued provisional registration number 36/RTK05/T-B/HGB and final registration number 120 at Rohtak Sector-5. Hence, Housing Board is covered under the definition of promoter under section 2(zk).."

The dispute arose from a housing scheme floated in 2014 by Housing Board Haryana for allotment of multi-story flats at Sector-5, Rohtak to serving and ex-defence and paramilitary personnel of Haryana on a hire-purchase basis.

Balwan Singh applied for a Type-B flat and deposited Rs 1,57,000 in June 2014 and Rs 2,36,000 in March 2015. Although a registration number was issued, no builder-buyer agreement was executed, and possession was never offered.

Despite applications in April 2019 and December 2019 and a legal notice in June 2022, the Board neither completed the project nor refunded the full amount, following which the complaint was filed under Section 31 of the RERA Act, seeking a refund with interest and compensation.

Housing Board Haryana opposed the complaint, stating that the scheme had been scrapped on February 13, 2023, and that Rs 4,89,422 had already been refunded with interest at 3.20% per annum.

It relied on directions of the Punjab and Haryana High Court in matters relating to Rohtak housing schemes and argued that, being a statutory authority under the Haryana Housing Board Act, 1971, it could not be treated as a promoter under RERA.

Rejecting the objection, the Authority held that Housing Board Haryana clearly falls within the definition of a promoter and that the dealings between the parties were in the nature of an allottee-promoter relationship, giving the Authority jurisdiction to examine the dispute.

On the merits, the Authority noted that the Board had collected Rs 3,93,000 from the allottee but did not complete the project or offer possession within a reasonable time, which entitled the allottee to withdraw and seek refund with interest under the Act.

Taking into account the amount already refunded, the Authority worked out the remaining liability at Rs 2,67,511 and directed that the balance, along with interest, be paid, the total payable coming to Rs 3,46,507, calculated from the date of refund till realization.

The board has been directed to make the payment within 90 days. The Authority clarified that any claim for compensation or litigation costs will be decided separately by the adjudicating officer under the Act.

For Complainant (Balwan Singh): Advocate Lakshay Sikri

For Respondents (Housing Board Haryana): Advocate Arvind Seth