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Big relief for homebuyers: SC says builder-buyer agreement must be considered as flat allotment date, not when project got RERA registered

Homebuyers have welcomed the order saying that the apex court has restored the sanctity of the builder-buyer agreement and the developers' stand of linking the allotment or handover of flats with the date of RERA registration has been dispelled

Providing relief to thousands of homebuyers, the Supreme Court has ruled that the period of allotment of a housing unit to a homebuyer has to be considered from the date of the builder-buyer agreement and not from the date of registration of the project under the Real Estate (Regulation and Development) Act, 2016.

Homebuyers have welcomed the order, saying that the apex court has restored the sanctity of the builder-buyer agreement and the developers' (whose projects have been delayed) stand of linking the allotment or handover of flats with the date of RERA registration has been dispelled.

The builder-buyer agreement becomes effective upon signing and all obligations of the flat buyers get linked to the timelines set out in the builder-buyer agreement but developers all along have been taking undue benefit of a delayed RERA registration and linking their obligations with the RERA registration date, said legal experts.

The court made the observation in a judgment in the case pertaining to M/S Imperia Structures Limited vs Anil Patni and another case by a division bench comprising Justices UU Lalit and Vineet Saran.

The builder-buyer agreement in the said case was executed on November 30, 2013. The project was registered under RERA on November 17, 2017 and according to the agreement, the unit was to be handed over within 42 months from the date of the agreement.


While the buyers had first moved the National Consumer Disputes Redressal Commission (NCDRC) following delay in the project and the consumer court had ordered the builder to pay compensation but the builder moved the Supreme Court. He had contended that the RERA registration was valid until December 2020 and therefore the project cannot be said to be delayed.

The Supreme Court rejected the argument and said that the period of allotment had expired even before the RERA registration. “Merely because the registration under RERA Act is valid until 31.12.2020 does not mean that the entitlement of the concerned allottees to maintain an action stands deferred,” the Supreme Court noted.

Also Read: Homebuyers can approach consumer courts for refund, compensation for delays despite RERA: SC

“It is relevant to note that even for the purpose of Section 18 (of RERA) the period has to be reckoned [with] in terms of the agreement and not the registration,” the apex court observed.

The entitlement of the complainants must be considered in the light of the Builder-Buyer Agreement, it said.

Earlier, the court had rejected the builder’s argument that RERA barred remedies for homebuyer under the Consumer Protection Act and made it clear that buyers can still approach the consumer forum for redressal, including refund and compensation from real estate firms, for delay in handing over possession of their homes, despite the enactment of Real Estate (Regulation and Development) Act, 2016.

“It is good that the apex court has clarified the matter and hopefully it has now been settled once and for all. RERA authorities should now order payment of compensation from as per the builder buyer agreement, the sanctity of which has been upheld through this order,” said Abhay Upadhyay, president, Forum For People's Collective Efforts and member, Central Advisory Council, RERA, MoHUA.

What this order means is that if a residential project’s RERA registration expires later than the handover date promised by the builder under the builder-buyer agreement, it does not mean that buyer’s entitlement to raise claim or cause of action gets deferred, legal experts said.

“A buyer is well within his right to enforce the handover date stipulated in the builder-buyer agreement. Section 18(a) of RERA (which provides for builder’s liability to refund in case of handover delay) uses the words “in accordance with the terms of the agreement for sale or, as the case may be, duly completed by the date specified therein” which also signifies that handover date is to be reckoned as the one stipulated in the builder buyer agreement,” said Vaibhav Suri, Partner, L&L Partners.

On the issue of the developer receiving additional time for completing projects in the light of the COVID-19 pandemic whereby the deadline for completion of projects where the completion date is on or after March 23, 2020 shall be extended by six months from the original date, the apex court has made it clear that if the apartments were booked in November 2013 then as promised under the builder buyer agreement, the construction should have completed in 42 months.

“Since the period of 42 months has expired well before the project was registered under the provisions of RERA Act, and merely because the RERA registration is valid until December 2020 does not mean that the entitlement of home buyers stands deferred,” explains M Arun Kumar, Partner, IndusLaw.

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Vandana Ramnani
first published: Nov 5, 2020 09:55 am
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