Sec 40 RERA – Homebuyers have the right to get back the amount invested with interest as arrears of land income from the builder: Supreme Court
The Supreme Court, in its judgment rendered Thursday, November 11, had, among others, considered that the amount invested by beneficiaries, which is often their savings, as well as the related interest as quantified by the regulatory authority or the contracting officer can be recovered by them as arrears property income from builders, under Section 40 (1) of the Real Estate (Regulation and Development) Act 2016 (âActâ).
“While harmonizing the interpretation of the regime of the Law with the right of recovery as mandated in Article 40 (1) of the Law, bearing in mind the intention of the legislator to provide for a rapid recovery of the amount invested by the beneficiary as well as However, if Article 40 (1) is interpreted strictly and it means that only penalties and interest on the principal amount are recoverable as arrears of land income, this would go to contrary to the fundamental objective of the Law “, the court ruled.
A bench including Judges Uday Umesh Lalit, Ajay Rastogi and Aniruddha Bose recognized that a significant portion of beneficiaries invest hard-earned money, often their savings, and even opt for loans just to be able to to get a roof in the form of their apartments / apartments / units. Refuting the proponent’s contention that under Section 40 (1) homebuyers are only entitled to collect interest or penalties as arrears of land income, the Court held ruled that recipients were entitled to recover all of the life savings they had invested with the related interest. The Court observed that under Article 18 which deals with the power of the authority to order repayment of the principal, there would be no interest until the principal had been determined by the ‘competent authority. Thus, reading the statute as a whole, the Court determined that the principle and interest are treated as a composite amount to be collected as arrears of land income under section 40 (1) of the Act.
The judgment was handed down by the Supreme Court in a batch of civil appeals filed against the dismissal of the petitions by the Allahabad High Court. The written petitions were filed by the developers / property developers (appellant) challenging the order made by the sole member of the regulator on homebuyer complaints, directing the developers to repay the principal amount as well as the interest. .
The developers had argued that under section 40 (1) of the law, only interest or penalty imposed by the authority can be collected as arrears of land revenue and no certificate of collection for the amount. principal cannot be issued.
Considering the argument, the Court observed that under a strict interpretation of Article 40 (1), if it is read that only penalties and interest on the principal amount are recoverable, then the same would be a derogation from the essence of the law. Examining section 18, section 40 (1) and the scheme of the law, the Court held that although there appears to be an ambiguity in section 40 (1) of the law, reading the provision relevant in a harmonized manner, keeping in mind the intention of the legislator, the recovery of the amount invested as well as the interest quantified by the authority or the contracting officer is the best way forward. The Court ruled that:
“Taking into account the regime of the law, what must be returned to the beneficiary is his own savings, the interest calculated / quantified by the authority becomes recoverable and this arrears becomes enforceable in law. There appears some ambiguity in section 40 (1) of the law which, in our opinion, by harmonizing the provision with the object of the law, gives effect to the provisions is allowed to operate rather than the execution of the one or the other redundant, noting the meaning of the legislature and the principle stated above in consideration, we clearly indicate that the amount which has been determined and reimbursable to the beneficiaries / buyers either by the authority or the contracting officer in terms of order is recoverable under section 40 (1) of the Act. “
[Case Title: Newtech Promoters and Developers Pvt. Ltd. v. State of UP And Ors., LL 2021 SC 641]
The RERA authority may delegate a single member to rule on the homebuyers’ complaint under Article 31: Supreme Court
Case name and citation: Newtech Promoters And Developers Pvt. Ltd v State of the UP | LL 2021 SC 641
Case n Â° and Date: CA 6745 6749 DE 2021 | November 11, 2021
Coram: Judges Uday Umesh Lalit, Ajay Rastogi and Aniruddha Bose
Counsel: Sr. Adv Kapil Sibal, Sr. Adv Gopal Sankarnarayanan for appellants, Sr. Adv Madhavi Divan, Sr. Adv for respondents, SG Tushar Mehta for UoI
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