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2022 SCC OnLine Ker 3614 : AIR 2022 (NOC 774) 362

In the High Court of Kerala at Ernakulam

(BEFORE M.R. ANITHA, J.)

MSA No. 4 of 2021

Unnikrishnan Chandran Pillai … Appellant/Complainant;
Versus
Tata Reality Infrastructure Ltd., represented by its Chairman and
Another … Respondents 1 and 2.
And
MSA No. 5 of 2021
Unnikrishnan Chandran Pillai … Appellant/Complainant;
Versus
Tata Reality Infrastructure Limited and Another … Respondents 1
and 2.
MSA No. 4 of 2021 and MSA No. 5 of 2021†
Decided on July 14, 2022
Advocates who appeared in this case:
By Advs. Johnson Gomez
S. Biju (Kizhakkanela)
Sanjay Johnson
John Gomez
Sreedevi S.
Enlin Mary Rodrigus
Mohamed Sheharan
Dinoop P.D.
Sanjith Johnson
By Advs. Isaac Thomas
V. Abraham Markos
Abraham Joseph Markos
P.G. Chandapillai Abraham
Alexander Joseph Markos
Sharad Joseph Kodanthara
By Advs. Johnson Gomez
Sanjay Johnson
John Gomez
Sreedevi S.
Mohamed Sheharan
Dinoop P.D.
By Advs. V. Abraham Markos
Abraham Joseph Markos
Isaac Thomas
P.G. Chandapillai Abraham
Alexander Joseph Markos
Sharad Joseph Kodanthara
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The Judgment of the Court was delivered by

M.R. ANITHA, J.:— These appeals have been filed under Section 58 of the Real
Estate (Regulation and Development) Act, 2016, against the common order dated
12.08.2021 in REFA Nos. 21 & 27 of 2021 on the files of the Kerala Real Estate
Appellate Tribunal, Ernakulam.
2. M.S.A. No. 4/2021 has been directed against the order in REFA No. 21/2021
which was preferred against the order passed by the Kerala Real Estate Regulatory
Authority (for short, K-RERA), Thiruvananthapuram on 16.10.2020 in Complaint No.
185/2020 and M.S.A. No. 5/2021 has been directed against the order in REFA No.
27/2021 which was filed against the order of the learned Adjudicating Officer (A.O.)
attached to K-RERA dated 23.04.2021 in CCP No. 110/2020.
3. Appellant booked an apartment in July, 2019 in the multi-storied residential
apartment project named ‘Tritvam’ at Marine Drive in Kochi launched by the first
respondent. He paid total amount of Rs. 16 lakhs towards advance amount. Advance
payment was received by the first respondent before executing the agreement as
provided under Section 13 of the Act. However, in October 2019, the promoter
requested the appellant to make payment of the amount required for registration of
the sale agreement. For that appellant requested by letter to cancel the booking of the
apartment on the ground of inability to raise the money and also requested the
promoter to return the advance amount of Rs. 16 lakhs paid by him, to which, the
promoter sent a reply letter intimating that out of Rs. 16 lakhs received, an amount of
Rs. 15,16,667/- is liable to be forfeited in view of the default on the part of the
appellant and expressed willingness to return Rs. 83,333/-. Aggrieved by that reply,
the appellant approached K-RERA with a complaint No. 185/2020, claiming advance
payment with interest along with Rs. 5 lakhs towards compensation. Further he made
a request for imposing penalty for violation of Section 13.
4. The respondents contended that the complaint is not maintainable before K-
RERA and contended that provisions of the Act would not apply. The claim is also
contended to be not maintainable under Section 18 of the Act. K-RERA dismissed the
complaint reserving the right of the appellant to approach the Adjudicating Officer in
Form N under Section 71 of the Real Estate (Regulation & Development) Act, 2016
r/w. Rule 37 of the Kerala Real Estate (Regulation & Development) Rules, 2018.
Against which, REFA No. 21/2021 was filed.
5. Appellant also filed CCP No. 110/2020 before the A.O. claiming the advance
amount of Rs. 16 lakhs with interest and also compensation of Rs. 5 lakhs. The A.O.
dismissed the complaint finding that the power to order return of amount with interest
is upon the K-RERA. It is also found that claim under Section 18 of the Act is not
maintainable since he has made a claim on the ground of his own default and not on
account of any default on the part of the respondents. Aggrieved by that order REFA
No. 27/2021 was filed before the Kerala Real Estate Appellate Tribunal (in short
‘Tribunal’) and by the impugned common order, Tribunal disposed the matters and the
operative portion of the order reads as follows:
1. In a case where compensation is claimed by an allottee addition to the advance
amount and interest, the jurisdiction to decide the claim shall be with the
Adjudicating Officer attached to the Real Estate Regulatory Authority.
2. When the claim of the allottee is only for advance amount with interest, the
jurisdiction to decide the same shall be with the Real Estate Regulatory
Authority, and the Adjudicating Officer shall be the exclusive authority when the
claim is only for compensation under Section 12, 14, 18 and 19 of the Act.
3. When an issue regarding registration is raised before the Adjudicating Officer, as
to whether a given project is liable to be registered under the Act, the
Adjudicating Officer shall direct the party to approach the Real Estate Regulatory
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Authority for orders regarding registration within such time fixed the
Adjudicating Officer failing which, the Adjudicating Officer himself shall address
the Real Estate Regulatory Authority, and refer the matter of registration to be
decided by the Real Estate Regulatory Authority. Till a decision on the issue of
registration is taken, and orders are passed by the Real Estate Regulatory
Authority, the Adjudicating Officer shall keep the matter pending, and shall
proceed with the matter after a decision is taken by the Real Estate Regulatory
Authority.
4. Dismissal of the appellant's application in CCP No. 110/2020 dated 23/4/2021 by
the learned Adjudicating Officer is confirmed without prejudice to the right of the
appellant to approach the appropriate forum for the reliefs.
5. The findings of the Real Estate Regulatory Authority in the appellant's Complaint
No. 185/2020 that the Real Estate Regulatory Authority has no jurisdiction to
decide the claim for compensation clubbed with advance amount and interest is
confirmed, but the complaint is remitted to Kerala Real Estate Regulatory
Authority for the purpose of initiating appropriate proceedings and passing
orders appropriately in the matter of registration of the given project, and also
for initiating necessary action for imposition of penalty and otherwise, for the
alleged violation of Section 13 of the Act, if such violation is proved.”
6. When the matter came up for hearing, the learned counsel for the appellant
would submit that he is challenging paragraph Nos. 4 and 5 of the above order alone
in this proceedings.
7. When the matter came up for admission the following substantial question of law
has been formulated:
“(i) Whether Clause 21 of Annexure A of Kerala Real Estate (Regulation and
Development) Rules, 2018 forms part of the Rules since the same is included as
part of the statutory form of the agreement for sale.
(ii) Whether Clause 21 has to be treated as a mandatory Rule especially in view of
the note attached to Annexure A Form.
(iii) Whether the term “in accordance with the terms of agreement for sale” as used
in several provisions of the Act refers to the terms and conditions contained in
Annexure A to the Kerala Real Estate (Regulation and Development) Rules,
2018?”
8. In addition, the following substantial question of law is also formulated:
(iv) Promotor on violating the express provisions under Section 13(1) of the Act
whether can deny the benefit under the proviso to Section 11(5) of the Act to the
allottee?
9. Records were called for. Heard both sides.
10. A three Judges Bench of the Hon'ble Apex Court in Newtech Promoters and
Developers Pvt. Ltd. v. State of U.P. [2021 SCC OnLine SC 1044] have made a detailed
probe to various provisions of the Real Estate (Regulation and Develoopment) Act,
2016 (in short ‘the Act’) and the Uttar Pradesh Real Estate (Regulation and
Development) Rules, 2016 and considered the question whether the Act 2016 is
retrospective or retroactive in its operation and what will be its legal consequence if
tested on the anvil of the Constitution of India. Following questions were dealt with:
“1. Whether the Act 2016 is retrospective or retroactive in its operation and what
will be its legal consequence if tested on the anvil of the Constitution of India?
2. Whether the authority has jurisdiction to direct return/refund of the amount to
the allottee under Sections 12, 14, 18 and 19 of the Act or the jurisdiction
exclusively lies with the adjudicating officer under Section 71 of the Act?
3. … ………………..
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4. … ………………..
11. Chapter II of the Act, 2016, deals with registration of real estate projects and
its mandatory nature. It has been discussed in paragraph No. 33 of M/s. Newtech
Promoters which reads thus:
“Under Chapter II of the Act 2016, registration of real estate projects became
mandatory and to make the statute applicable and to take its place under sub-
Section (1) of Section 3, it was made statutory that without registering the real
estate project with a real estate regulatory authority established under the Act, no
promoter shall advertise, market, book, sell or offer for sale, or invite persons to
purchase in any manner a plot, apartment or building, as the case may be in any
real estate project but with the aid of proviso to Section 3(1), it was mandated that
such of the projects which are ongoing on the date of commencement of the Act
and more specifically the projects to which the completion certificate has not been
issued, such promoters shall be under obligation to make an application to the
authority for registration of the said project within a period of three months from
the date of commencement of the Act. With certain exemptions being granted to
such of the projects covered by sub-section (2) of Section 3 of the Act, as a
consequence, all such home buyers agreements which has been executed by the
parties inter se has to abide the legislative mandate in completion of their ongoing
running projects.”
12. The term “on going project” has also been dealt with in paragraph No. 34.
Paragraph Nos. 34, 37, 41 and 54 are relevant to be extracted, which read thus:
“34. The term “ongoing project” has not been so defined under the Act while the
expression “real estate project” is defined under Section 2(zn) of the Act which
reads as under:—
“2(zn) “real estate project” means the development of a building or a building
consisting of apartments, or converting an existing building or a part thereof into
apartments, or the development of land into plots or apartments, as the case
may be, for the purpose of selling all or some of the said apartments or plots or
building, as the case may be, and includes the common areas, the development
works, all improvements and structures thereon, and all easement, rights and
appurtenances belonging thereto;”
37. Looking to the scheme of Act 2016 and Section 3 in particular of which a
detailed discussion has been made, all “ongoing projects” that commence prior to
the Act and in respect to which completion certificate has not been issued are
covered under the Act. It manifests that the legislative intent is to make the Act
applicable not only to the projects which were yet to commence after the Act
became operational but also to bring under its fold the ongoing projects and to
protect from its inception the inter se rights of the stake holders, including
allottees/home buyers, promoters and real estate agents while imposing certain
duties and responsibilities on each of them and to regulate, administer and
supervise the unregulated real estate sector within the fold of the real estate
authority.
41. The clear and unambiguous language of the statute is retroactive in
operation and by applying purposive interpretation rule of statutory construction,
only one result is possible, i.e., the legislature consciously enacted a retroactive
statute to ensure sale of plot, apartment or building, real estate project is done in
an efficient and transparent manner so that the interest of consumers in the real
estate sector is protected by all means and Sections 13, 18(1) and 19(4) are all
beneficial provisions for safeguarding the pecuniary interest of the
consumers/allottees. In the given circumstances, if the Act is held prospective then
the adjudicatory mechanism under Section 31 would not be available to any of the
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allottee for an on-going project. Thus, it negates the contention of the promoters
regarding the contractual terms having an overriding effect over the retrospective
applicability of the Act, even on facts of this case.
54. From the scheme of the Act 2016, its application is retroactive in character
and it can safely be observed that the projects already completed or to which the
completion certificate has been granted are not under its fold and therefore, vested
or accrued rights, if any, in no manner are affected. At the same time, it will apply
after getting the on-going projects and future projects registered under Section 3 to
prospectively follow the mandate of the Act 2016. . …………..”
13. As per Section 3(1), the respondent's project will come under the “on going
project” since the project is not over and completion certificate is not issued and it is
obligatory for the respondent to make an application to the Authority for registration of
the project. So directions in that regard in the impugned order passed by the Tribunal
has already been answered by the dictum laid down in Newtech Promoters and
Developers Pvt. Ltd., referred above. So, the respondent is bound to register the
project under the Act.
14. Next is with regard to the claim of the appellant for return of advance amount.
The dismissal of the appellant's application in CCP No. 110/2020 by the Adjudicating
Officer was confirmed by the Appellate Tribunal by which the Adjudicating Officer has
found that the jurisdiction of the Adjudicating Officer does not extend to all individual
disputes other than the adjudgment of compensation as specifically indicated in
subsection 1 of Section 71 of the Act and the jurisdiction of authority extend to every
aspect under the Act except the sole jurisdiction of adjudgment of compensation
vested with the Adjudicating Officer.
15. In M/s. Newtech Promoters the Apex Court while answering point No. 2 as to
whether Authority has jurisdiction to return/refund of the amount to the allottee under
Sections 12, 14, 18 and 19 of the Act or the jurisdiction exclusively lies with the
adjudicating officer under Section 71 of the Act has been discussed in paragraph Nos.
83, 84, 85, 86, which read thus:
83. So far as the single complaint is filed seeking a combination of reliefs, it is
suffice to say, that after the rules have been framed, the aggrieved person has to
file complaint in a separate format. If there is a violation of the provisions of
Sections 12, 14, 18 and 19, the person aggrieved has to file a complaint as per
form (M) or for compensation under form (N) as referred to under Rules 33(1) and
34(1) of the Rules. The procedure for inquiry is different in both the set of
adjudication and as observed, there is no room for any inconsistency and the power
of adjudication being delineated, still if composite application is filed, can be
segregated at the appropriate stage.
84. So far as submission in respect of the expeditious disposal of the application
before the adjudicating officer, as referred to under sub-section (2) of Section 71 is
concerned, it pre-supposes that the adjudicatory mechanism provided under
Section 71(3) of the Act has to be disposed of within 60 days. It is expected by the
regulatory authority to dispose of the application expeditiously and not to restrain
the mandate of 60 days as referred to under Section 71(3) of the Act.
85. The provisions of which a detailed reference has been made, if we go with
the literal rule of interpretation that when the words of the statute are clear, plain
and unambiguous, the Courts are bound to give effect to that meaning regardless of
its consequence. It leaves no manner of doubt and it is always advisable to
interpret the legislative wisdom in the literary sense as being intended by the
legislature and the Courts are not supposed to embark upon an inquiry and find out
a solution in substituting the legislative wisdom which is always to be avoided.
86. From the scheme of the Act of which a detailed reference has been made and
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taking note of power of adjudication delineated with the regulatory authority and
adjudicating officer, what finally culls out is that although the Act indicates the
distinct expressions like ‘refund’, ‘interest’, ‘penalty’ and ‘compensation’, a conjoint
reading of Section 18 and 19 clearly manifests that when it comes to refund of the
amount, and interest on the refund amount, or directing payment of interest for
delayed delivery of possession, or penalty and interest thereon, it is the regulatory
authority which has the power to examine and determine the outcome of a
complaint. At the same time, when it comes to a question of seeking the relief of
adjudging compensation and interest thereon under Sections 12, 14, 18 and 19,
the adjudicating officer exclusively has the power to determine, keeping in view the
collective reading of Section 71 read with Section 72 of the Act. If the adjudication
under Sections 12, 14, 18 and 19 other than compensation as envisaged, if
extended to the adjudicating officer as prayed that, in our view, may intend to
expand the ambit and scope of the powers and functions of the adjudicating officer
under Section 71 and that would be against the mandate of the Act 2016.
16. So from the above without any further discussion it can be concluded that even
if a single application seeking combination of reliefs like return of money and interest
as well as compensation have been claimed the aggrieved person has to file in
different format i.e. if there is violation of provisions under Section 12, 14, 18 and 19 a
complaint as per Form (M) has to be filed before the K-RERA under Rules 36(1) of
Kerala Real Estate (Regulation and Development) Rules, 2018 and for compensation in
Form N under Rule 37(1) of the Rules and that segregation can be made at
appropriate stage. So when the appellant herein filed a composite petition claiming
combination of reliefs like return of advance amount, interest as well as compensation,
the compensation part of it has to be separated and given to the A.O and the other
complaint has to be decided by the K-RERA since the scheme of the Act provide the
power of adjudication with the A.O and the refund, interest, penalty it is the K-RERA
which has power to examine and determine the outcome of the compliant. Whereas
when a question seeking the relief of adjudging compensation and interest thereon
under Sections, 12, 14, 18 and 19 came up the A.O exclusively has power to
determine in view of Section 71 r/w Section 72 of the Act. It is also made clear that
the adjudication under Sections 12, 14, 18 and 19 other than compensation if
extended to the A.O it may intend to expand the ambit and scope of the power and
functions of the A.O under Section 71 and that would be against the mandate of the
Act, 2016.
17. Now the main question for consideration before this Court is whether the
advance amount of Rs. 16 lakhs claimed by the appellant is entertainable by the K-
RERA. The A.O has found that the claim for return of amount with interest solely based
on the fact that the appellant was constrained to cancel the booking of apartment due
to his inability to raise the necessary funds for paying the total amount of apartment
will not come within the purview of sub-section (1) of Section 18 or sub-section (4) of
Section 19 to claim return of amount with interest and to seek compensation. The
Tribunal also confirmed that finding of the A.O without prejudice to the right of the
appellant to approach the appropriate forum for the reliefs.
18. According to the learned counsel for the appellant, the total cost of the project
is Rs. 1,51,66,674/-. But, as advance, an amount of Rs. 16 lakhs has been received
from him. He would contend that Section 13(1) specifically prohibits acceptance of a
sum more than ten per cent of the cost of the apartment, plot, or building as advance
payment or an application fee, from a person without first entering into a written
agreement for sale with such person. He would also contend that as per Rule 10 of the
Rules the agreement for sale shall be in the form in Annexure A and sub-rule (2) of
Rule 10 provides that any application letter, allotment letter, agreement or any other
document signed by the allottee in respect of the apartment, plot or building prior to
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the execution and registration of the agreement for sale for such apartment, plot or
building shall not be construed to limit the rights and interests of the allottee under
the agreement for sale or under the Act or the Rules or the Regulations made
thereunder. He would also relies upon term 21 attached to Annexure A agreement for
sale which reads thus:
BINDING EFFECT : Forwarding this Agreement to the Allottee by the Promoter
does not create a binding obligation on the part of the Promoter or the Allottee
until, firstly, the Allottee signs and delivers this Agreement with all the schedules
along with the payments due as stipulated in the Payment Plan within 30 (thirty)
days from the date of receipt by the Allottee and secondly, appears for registration
of the same before the concerned Sub-Registrar as and when intimated by the
Promoter. If the Allottee(s) fails to execute and deliver to the Promoter this
Agreement within 30 (thirty) days from the date of its receipt by the Allottee and/or
appear before the Sub-Registrar for its registration as and when intimated by the
Promoter, then the Promoter shall serve a notice to the Allottee for rectifying the
default, which if not rectified within 30 (thirty) days from the date of its receipt by
the Allottee, application of the Allottee shall be treated as cancelled and all sums
deposited by the Allottee in connection therewith including the booking amount
shall be returned to the Allottee without any interest or compensation whatsoever.
So, according to him, as per term 21 attached to Annexure A even if the promoter
cancel the application of the allottee he is bound to return all sums deposited by
the allottee in connection therewith including the booking amount.
19. The learned counsel would also relies on Section 18 of the Act and gave
emphasis on sub-section (3) of Section 18 which provides that if the promoter fails to
discharge any other obligations imposed on him under this Act or the rules or
regulations made thereunder or in accordance with the terms and conditions of the
agreement for sale, he shall be liable to pay such compensation to the allottees, in the
manner as provided under this Act. He would further relies on Section 11(5) of the Act
which empowers the promoter to cancel the allotment but only in terms of the
agreement for sale. Proviso to sub-section 5 of Section 11 further provides that the
allottee may approach the Authority for the relief, if he is aggrieved by such
cancellation and such cancellation is not in accordance with the terms of the
agreement for sale, unilateral and without any sufficient cause.
20. Learned counsel for the respondents on the other hand would contend that
either Section 11(5), 18(3) or 18(5) will not come to the rescue of the appellant to
claim return of advance amount since all those Sections applies in different context.
21. Section 11 comes under Chapter III under the caption “Functions and Duties of
Promoter” with regard to creating of web page on the website of the K-RERA and enter
all the details of the proposed project as provided under sub-section (2) of Section 4,
in all the fields provided, for public viewing, the advertisement of different future
developments. He is also bound to provide the information to the allottee regarding
the sanctioned plans, layout plans along with the specifications approved by the
competent authority and is also responsible to obtain completion certificate or
occupancy certificate etc.
22. Section 18 of the Act deals with return of amount and compensation which is
relevant in this context to be extracted, which reads thus:
Return of amount and compensation
(1) If the promoter fails to complete or is unable to give possession of an
apartment, plot or building,—
(a) in accordance with the terms of the agreement for sale or, as the case may
be, duly completed by the date specified therein; or
(b) due to discontinuance of his business as a developer on account of
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suspension or revocation of the registration under this Act or for any other
reason, he shall be liable on demand to the allottees, in case the allottee
wishes to withdraw from the project, without prejudice to any other remedy
available, to return the amount received by him in respect of that
apartment, plot, building, as the case may be, with interest at such rate as
may be prescribed in this behalf including compensation in the manner as
provided under this Act:
Provided that where an allottee does not intend to withdraw from the
project, he shall be paid, by the promoter, interest for every month of
delay, till the handing over of the possession, at such rate as may be
prescribed.
(2) The promoter shall compensate the allottees in case of any loss caused to
him due to defective title of the land, on which the project is being developed
or has been developed, in the manner as provided under this Act, and the
claim for compensation under this subsection shall not be barred by limitation
provided under any law for the time being in force.
(3) If the promoter fails to discharge any other obligations imposed on him under
this Act or the rules or regulations made thereunder or in accordance with the
terms and conditions of the agreement for sale, he shall be liable to pay such
compensation to the allottees, in the manner as provided under this Act.
23. Section 18 provides that if the promoter fails to complete or is unable to give
possession of the apartment, plot or building in accordance with the terms of
agreement for sale or duly completed by the date specified therein or due to
discontinuance of his business as a developer on account of suspension or revocation
of the registration under the Act or by any other reason he is liable on demand of the
allottee in case the allottee wishes to withdraw from the project, without prejudice to
any other remedy available, to return the amount received by him in respect of that
apartment. Sub-section (3) provides that if the promoter failed to discharge any other
obligations imposed on him under this Act or the rules or regulations or in accordance
with the terms and conditions of agreement for sale, he shall be liable to pay
compensation to the allottees. It is true that sub-section (3) of Section 18 only speaks
about the compensation to be payable on failure of the promoter to discharge any
obligation imposed on him under the Act, rules or regulations. One thing to be noted
while analysing Section 18 is that the liability casts upon the promoter to return the
amount received on satisfaction of the conditions like failure on his part to complete or
unable to give possession in accordance with the terms of agreement or due to
discontinuance of his business as the developer on account of suspension or revocation
of registration under the Act etc.
24. Section 16 of the Act deals with the obligations of the promoter. Section 19 of
the Act deals with the rights and duties of the allottees. Sub-section 4 of Section 19
provides that the allottees is entitled to claim the refund of the amount paid along
with interest as well as compensation as provided under the Act from the promoter, if
the promoter fails to comply or is unable to give possession of the apartment, plot or
building as the case may be, in accordance with the terms of agreement for sale or
due to discontinuance of his business as a developer on account of suspension or
revocation of his registration etc. So none of the provisions under the Act expressly
enables the allottee to claim the return of advance on his unilateral cancellation of the
booking of the apartment, prior to the execution of agreement for sale.
25. Section 13 of the Act prohibits the promotor to accept the sum more than 10%
of the cost of the apartment or building as advance payment or an application fee from
person without first entering into a written agreement for sale with such person and
register the said agreement for sale. The appellant has got a specific contention that
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the sale consideration of the apartment unit booked is Rs. 1,51,66,674/- whereas,
according to the respondent, total consideration of the unit is Rs. 1,68,48,685/-. But,
on perusing the records it would go to show that the sale consideration of the unit
booked as per the application submitted by the appellant with respect to the Unit 6A is
Rs. 1,51,66,674/- as borne out from the records and Annexure-R3 in the records
called for from K-RERA. If that be so, admittedly Rs. 16,00,000/- received by the
respondent from the appellant would be in excess of 10% as provided under Section
13. The A.O as well as the K-RERA found concurrently that if respondent received
more than 10% of the cost of apartment in advance payment in violation of Section
13, according to the A.O whether the appellant is entitled for any relief based on it or
on the basis of Section 13 of the Act read with Clause 21 prescribed under Annexure-A
agreement for sale are matters to be considered by the Authority not the A.O. The
Tribunal while disposing the matter remitted the complaint to the Authority for
initiating appropriate proceedings and passing orders in the matter of registration of
the given project and also for initiating necessary action for imposition of penalty and
otherwise for the alleged violation of Section 13 of the Act, if such violation is proved.
Learned counsel for the respondent also would contend that the course open to the
Authority is only to initiate proceedings for violation of Section 13 of the Act and there
is no provision in the Act or Rules for return of advance amount since the appellant
himself unilaterally withdrawn from the project.
26. How far that contention of the respondent can be sustained in law is the point
for determination mainly in these appeals.
27. Section 12 of the Act provides that where any person makes an advance or a
deposit on the basis of the information contained in the notice, advertisement or
prospectus or on the basis of any model apartment, plot or building as the case may
be, and sustains any loss or damage by reason of any incorrect, false statement
included therein, he shall be compensated by the promoter in the manner as provided
under the Act. Proviso to Section 12 further states that if the person affected by such
incorrect, false statement contained in the notice, advertisement or prospectus, or the
model apartment, plot or building, intends to withdraw from the proposed project, he
shall be returned his entire investment along with interest at such rate as may be
prescribed and the compensation in the manner provided under the Act. So, what
Section 12 indicates is about the return of the entire investment along with interest to
the allottee if the advance was on an incorrect or false statement contained in the
notice, advertisement, prospectus etc of the promoter. It is true that it does not
provide for return of the advance with interest if the allottee himself withdraws from
the project for his own reasons.
28. In paragraph No. 80 of New Tech Promotors, there is a discussion with
regard to refund claim of the allottee when he himself defaulted the terms of
agreement and an argument was advanced that if the allottee himself defaulted the
terms, it has to be determined by the A.O. But the Apex Court categorically found that
if the allottee has made a default either in making instalments or made any breach of
the agreement the promoter has a right to cancel the allotment in terms of Section 11
(5) of the Act and proviso to Sub Section 5 of Section 11 enables allottee to approach
the Regulatory Authority to question the termination or cancellation of agreement by
the promotors and thus the interest of the promotor is equally safeguarded. So, sub
Section (5) of Section 11 enables the promotor to cancel the allotment in terms of the
agreement for sale but proviso to sub Section 5 as held by the Apex Court enables the
allottee to approach the K-RERA for relief if he is aggrieved by the cancellation and if
the cancellation is not in agreement with the agreement for sale unilaterally and
without saying any sufficient cause.
29. Rule 10 of the Rules provides that the agreement for sale for the purpose of
Sub Section (2) of Section 13 shall be in the form in Annexure-A. Sub Rule (2) further
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provides that any application like allotment letter, agreement or any other document
signed by the allottee in respect of the apartment called building prior to the
registration of agreement of sale shall not be construed to limit the rights and interest
of the allottee under the agreement for sale and under the Act or the Rules or the
regulations made thereunder. I have also stated earlier that the learned counsel for
the appellant relies on condition No. 21 attached to Annexure A agreement provided
under Rule 10 of the Rules which expressly provides that if the allottee does not rectify
the defect within thirty days of the notice issued by the promoter, the application of
the allottee shall be treated as cancelled and all sums deposited by the allottee in
connection therewith including the booking amount shall be returned to the allottee
without any interest or compensation whatsoever. It is true that a condition stipulated
in the agreement attached to the Rules cannot have any binding effect or has any
enforceable effect as provisions under the Act. But it would make the intention of the
Rule making authority explicit that even if the allottee failed to rectify the default, the
option available to the promoter is to cancel the allotment and in such contingency,
the promoter is liable to return the booking amount without any interest or
compensation.
30. Section 13 expressly prohibits the promoter to accept any sum more than 10%
without first entering into a written agreement for sale and register the agreement for
sale with the allottee. If at all the promoter in the case on hand had complied with the
direction provided under Section 13, he could not have received Rs. 16,00,000/-,
which is more than 10% of the cost of unit booked without entering into an agreement
for sale as contemplated under Section 13. If at all such an agreement had been
executed in between the promoter and the appellant when there was default on the
part of the allottee in paying the balance consideration the option available to the
promoter is cancellation of allotment as contemplated under sub Section 5 of Section
11. Then, the appellant could have availed the benefit under the proviso to Section 11
(5) of the Act by approaching the K-RERA for such cancellation. Here merely due to
the lapses of the promoter in receiving Rs. 16,00,000/- which is an amount in excess
which he could have received as per Section 13 without entering into an agreement for
sale as provided therein, the appellant cannot be left without any remedy provided
under Section 11(5) of the Act. Allottee cannot be penalised for the lapses of the
promotor in receiving excess amount without executing sale agreement as provided
under Section 13(1) of the Act.
31. Clause 21 attached to Annexure-A of Rule 20 of the Rules decipher the
intention of the rule making authority to return the entire booking amount on
cancellation of the agreement due to the default of allottee in rectifying the defect with
respect to registration of agreement. As discussed earlier, only because of the fact that
an agreement for sale as contemplated under Section 13 read with Rule 10 was not
executed by the appellant before the advance of more than 10% of the total sale value
of the unit, disabled him in taking the recourse to proviso to Section 11(5) of the Act.
It is also found earlier that the act of the promoter in receiving advance exceeding
10% of the total sale value of the unit is in violation of Section 13(1) of the Act.
32. It is relevant in this context to quote the maxim “nullus commodum capere
potest de injuria sua propria meaning no man can take advantage of his own wrong.”
Union Of India v. Major General Madan Lal Yadav : (1996) 1 KLT (Online) 901 (SC) was
a case in which an action was taken against the respondent under Section 122 of the
Army Act, 1950 on account of dereliction of duty and action. Relevant paragraph reads
as follows:
“… ………….. On consideration of the charge, the proceedings were adjourned from
day to day till the respondent appeared on March 2, 1987. It is obvious that the
respondent had avoided trial to see that the trial would not get commenced. Under
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the scheme of the Act and the Rules, presence of the accused is a pre-condition for
commencement of trial. In his absence and until his presence was secured, it
became difficult, may impossible, to proceed with the trial of the respondent-
accused. In this behalf, the maxim nullus commodum capere potest de injuria sua
propria-meaning no man can take advantage of his own wrong - squarely stands in
the way of avoidance by the respondent and he is estopped to plead bar of
limitation contained in Section 123. In Broom's Legal Maximum [10th Edn.] at page
191 it is stated “it is a maxim of law, recognized and established, that no man shall
take advantage of his own wrong; and this maxim, which is based on elementary
principles, is fully recognized in Courts of law and of equity, and, indeed, admits of
illustration from every branch of legal procedure. The reasonableness of the rule
being manifest, we proceed at once to show its application by reference to decided
cases. It was noted therein that a man shall not take advantage of his own wrong to
gain the favourable interpretation of the law. In support thereof, the author has
placed reliance on another maxim frustra legis auxilium quoerit qui in legem
committit. He relies on Perry v. Fitzhowe [[L.R.] 8 Q.B. 757]. At page 192, it is
stated that if a man be bound to appear on a certain day, and before that day the
obligee put him in prison, the bond is void. At page 193, it is stated that “it is
moreover a sound principle that he who prevents a thing from being done shall not
avail himself of the non-performance he has occasioned”. At page 195, it is further
stated that “a wrong doer ought not to be permitted to make a profit out of his own
wrong”. At page 199 it is observed that “the rule applies to the extent of undoing
the advantage gained where that can be done and not to the extent of taking away
a right previously possessed”.
33. In Devendra Kumar v. State Of Uttaranchal : 2013 Supp (3) KLT 62 (SC) :
(2013) 9 SCC 363 : AIR 2013 SC 3325 the applicability of the maxim has again come
up. In paragraph 23 of the said judgment it has been held that a person having done
wrong cannot take advantage of his own wrong and plead bar of any law to frustrate
the lawful trial by a competent court. In such a case, the legal maxim ‘Nullus
Commodum Capere Potest De Injuria Sua Propria’ applies. The persons violating the
law cannot be permitted to urge that their offence cannot be subjected to inquiry, trial
or investigation. Paragraph 23 of the said judgment is relevant in this context which is
extracted below:
“……………….. A person having done wrong cannot take advantage of his own
wrong and plead bar of any law to frustrate the lawful trial by a competent Court. In
such a case the legal maxim Nullus Commodum Capere Potest De Injuria Sua
Propria applies. The persons violating the law cannot be permitted to urge that their
offence cannot be subjected to inquiry, trial or investigation. (Vide: Union of India
v. Maj. Gen. Madan Lal Yadav, (1996) 4 SCC 127 : AIR 1996 SC 1340; and Lily
Thomas v. Union of India, (2000) 6 SCC 224 : AIR 2000 SC 1650 nor can a person
claim any right arising out of his own writing.
34. In the present case, the promoter after having violated the law in receiving
more than 10% of the sale value of the unit without executing a sale agreement as
provided under Section 13(1) has contended that the appellant is not entitled for the
benefit under Section 11(5) proviso. The appellant is forbidden from claiming the
benefit solely for the reason that a written agreement was not executed as provided
under Section 13(1) when the law prohibits the promoter itself to receive in advance
in excess of 10% of the total sale value and thereafter refuse to repay the amount
contending that there is no agreement for sale or that the appellant himself withdrawn
from the project etc. cannot be sustained in law. Proviso to Section 11(5) enables the
appellant allottee to approach the K-RERA for redressal of grievances when the
promoter cancels the agreement as per Section 11(5). So, the receipt of amount in
excess prescribed limit as contemplated under Section 13(1) is itself a violation of the
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provisions of law by the promoter and thereafter the promoter cannot find fault with
the appellant contending that he himself withdrawn from the project or that no
agreement was executed so as to attract the proviso to Section 11(5) of the Act.
35. At the same time, since the appellant himself withdrawn from the project, I do
not think that he would be entitled to get any amount towards compensation. It has
already been found that the issue regarding claim of refund of amount and interest is
to be dealt with by the Regulatory Authority which has the power to examine and
determine the outcome of the complaint. Since the appellant himself withdrawn from
the project there is no scope for adjudging the relief of compensation and interest as
per Section 12, 14, 18 and 19 of the Act.
36. Section 31 of the Act enables any person aggrieved to file complaint to the K-
RERA or the A.O for any violation or contravention of the provision of the Act or Rules
and Regulations against any promotor, allottee or real estate agent as the case may
be. Section 34 of the Act states about the functions of the authority and Section 34
clause (f) provides that the authority has to ensure compliance of obligations cast
upon the promoters, the allottees and the real estate agents under the Act and the
Rules and Regulations made thereunder.
37. Section 35 of the Act deals with the powers of K-RERA which is relevant to be
extracted which reads thus:
Section 35:“Powers of Authority to call for information conduct investigations” -
The Real Estate (Regulation and Development Act, 2016)
(1) Where the Authority considers it expedient to do so, on a complaint or suo
motu, relating to this Act or the rules of regulations made thereunder, it may,
by order in writing and recording reasons therefor call upon any promoter or
allottee or real estate agent, as the case may be, at any time to furnish in
writing such information or explanation relating to its affairs as the Authority
may require and appoint one or more persons to make an inquiry in relation to
the affairs of any promoter or allottee or the real estate agent, as the case
may be.
(2) Notwithstanding anything contained in any other law for the time being in
force, while exercising the powers under sub-section (1), the Authority shall
have the same powers as are vested in a civil court under the Civil Procedure
Code, 1908 while trying a suit, in respect of the following matters, namely:—
(i) the discovery and production of books of account and other documents, at
such place and at such time as may be specified by the Authority;
(ii) summoning and enforcing the attendance of persons and examining them
on oath;
(iii) issuing commissions for the examination of witnesses or documents;
(iv) any other matter which may be prescribed”
38. So, the above factors would reveal that the K-RERA have the same powers as
are vested in a civil court under the Civil Procedure Code, 1908 while trying a suit with
respect to discovery and production of books of accounts and other documents at such
place and at such time and summoning and enforcing the attendance of persons and
examining witnesses etc.
39. Section 37 further provides that K-RERA for the purpose of discharging its
functions under the provisions of Act or Rules or Regulations can issue directions from
time to time to promoters allottees or real estate agents as the case may be and such
direction shall be binding on all concerned. Section 38 further provides about the
powers of K-RERA to impose penalty or interest in regard to any contravention of
obligation cast upon the promoters, allottees and real estate agents under the Act or
Rules and Regulations. So, the above provisions under the Act also would speak in
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volumes about the power and authority of the K-RERA to resolve the issue when a
complaint is preferred or suo motu in relation to the Act and Rules. So, when it has
come out that there is express violation of the provisions of the Act from the part of
the promoter in receiving more than 10% of the sale value as advance without
executing agreement by the promoter the Authority is well within its powers to resolve
the issue when a complaint is filed by an aggrieved allottee, to regulate and promote
the real estate sector without again driving the allottee to civil court for redressal of
the grievance to get the advance amount unauthorisedly received by the promoter.
The statement of objects and reasons of the Act also points that the Act has been
established for regulation and promotion of the real estate sector and to ensure sale of
plot, apartment, building etc in an efficient and transparent manner and to protect the
interest of the consumers in real estate sector. It is to ensure greater accountability
towards the customers, consumers and to reduce frauds and delays, the Act has been
promulgated. It seeks to establish symmetry of information between the promoter and
purchaser, transparency of contractual conditions, set minimum standards of
accountability and a fast-track dispute resolution machanism. Real Estate (Regulation
and Development) Act, 2016 is a beneficial legislation intending to safeguard the
interest of the consumers as well as promoters by imposing certain responsibilities on
both. So, bearing in mind the great objectives with which the Act has been
promulgated if at all it could not redress the grievance of consumers like the appellant
the very purpose of the Act would become otiose.
40. In the result, order in M.S.A. No. 04/2021 and M.S.A. No. 05/2021 stands
modified and Kerala Real Estate Regulatory Authority, Thiruvananthapuram is also
directed to reconsider the complaint No. 185/2020 filed by the appellant for return of
advance amount with interest and pass fresh orders in accordance with law within two
months from the date of receipt of certified copy of this judgment in the light of the
principles of law discussed above. Parties shall bear their respective cost.
———
† (From the Order dated 12/08/2021 in Refa No. 21/2021 of the Kerala Real Estate Appellate Tribunal)

(From the Order dated 16/10/2020 in Complaint No. 185/2020 of Kerala Real Estate Regulatory Authority)

(From the Order dated 12/08/2021 in Refa No. 27/2021 of the Kerala Real Estate Appellate Tribunal)

(From the Order dated 23/04/2021 in Ccp No. 110/2020 of the Adjudicating Authority)

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