Contravention Of Obligations Cast Upon Promoters Under RERA Act: Authority Fully Empowered To Award Interest U/S 38(1), Holds Allahabad HC [Read Order]

A Division Bench of Justices Surya Prakash Kesarwani and Dr. Yogendra Kumar Srivastava observed that the RERA Act was enacted to protect the interest of consumers and thus, it must be interpreted to give effect to such intent.

The Court was hearing a writ petition filed by Paramount Prop Build Pvt. Ltd., against an order of the UP RERA directing it to pay monthly interest to the allottees, on account of delay in delivery of possession.

The Petitioner had contended that the impugned orders are without jurisdiction inasmuch as the power to grant interest, does not vest with the authority.

The Court on the other hand observed that a combined reading of Section 18 and 38 of the RERA Act empower the authority to impose interest in case of contravention.

It observed that Section 18 of the Act is in respect of return of amount and compensation in case the promoter fails to complete or is unable to give possession of an apartment, plot or building.

Section 18(1) provides for two different contingencies. In case the allottee wishes to withdraw from the project, the promoter shall be liable on demand to return the amount received by him to the allottees in respect of the apartment, plot or building as the case may be with interest at such rate as may be prescribed including compensation in the manner as provided under the Act. Alternatively, where the allottee does not intend to withdraw from the project, the promoter shall, as per the proviso to Section 18(1), be liable to pay interest for every month of delay, till the handing over of the possession, at such rate as the case may be prescribed.

Further, Section 38(1) of the Act confers powers upon the Authority to impose penalty or interest, in regard to any contravention of obligations cast upon the promoters, the allottees and the real estate agents, under the Act.

The case at hand, the bench noted, is one where the promoter has failed to give possession of the apartments, duly completed by the specified date, and the allottees do not intended to withdraw from the project.

Thus, it said that the proviso to Section 18(1) casts an obligation on the promoter to pay to the allottees interest for every month of delay, till the handing over of the possession, at the prescribed rate.

It held,

"The promoter having contravened the afroesaid obligation with regard to giving possession of the apartment by the specified date, and complaints in this regard having been filed by the allottees, the Authority exercising powers under Section 38(1) is fully empowered to impose interest in this regard to contravention of the obligation cast upon the promoter."

Case Title: Paramount Prop Build Pvt. Ltd. v. State of UP & Ors.

Appearance: Advocates Syed Imran Ibrahim and Gaurav Tripathi (for Petitioner); Standing Counsel Wasim Masood (For Respondents)

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