IMPORTANT JUDGMENTS ARISING OUT OF RERA ACT, 2016

AUTHOR :SMRITI LEGAL LLP

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Important Judgements arising out of Real Estate (Regulation and Development) Act, 2016

Introduction

The RERA Act, 2016 is a comparatively recent legislation. The provisions established have been done so with
due diligence to all possible legal scenarios and a wide pallet of recourses have also been mentioned. That being
said, disputes still arise due to the advancement in transaction methods, technology, market factors and so on.

Since it is not possible to amend the legislation frequently, orders passed as part of judgement would hold good
vis-à-vis application. The ratio decidendi in the below mentioned landmark cases have shaped the RERA Act
and real estate laws to what we witness this day.

1. Emaar Mgf Land Ltd Co & Anr v. Aftab Singh (2017)

The petitioner is a builder enterprise which entered into an agreement with the respondent and other persons to
build flats. An agreement was entered into and the work had begun. The builder was unable to finish the
completion of the building within the stipulated time. With reference to an arbitration clause mentioned in the
aforementioned agreement, the builder made reference to this clause and suggested that the parties settle the
matter in a court of arbitration. The respondents did not agree and filed a complaint under the Consumer
Protection Act. The builder contended the same stating jurisdictional reasons i.e., the present dispute is one
regarding real estate and it would fall within the ambit of the RERA Act and not the Consumer Protection Act.
This legal question was the bone of contention in the case.

Ratio Decidendi: Persons who consume the services of builders have the right to seek redressal under the
Consumer Protection Act and also under the RERA Act.

2. Vinod Kumar Aggarwal v. Jaipur Development Authority (2020)

Section 13 of the RERA Act states that the promoter shall not be entitled to anything more than 10% of the
transaction value and this shall be payable only after the terms and conditions of the agreement have been
fulfilled. The bone of contention in the present case was whether the central law which is the RERA Act would
prevail over a local law with regards to the terms of an agreement and place of construction. The area where the
construction was planned was not technically approved by the local authority which is the Jaipur Development
Authority. The said agreement quoted for a price which exceeded the standard 10%. These were the contentions
which were addressed.

Ratio Decidendi:

1. The RERA Act would prevail over the local law regarding real estate transactions.
2. The agreement must be executed mandatorily before any made is to be made.

3. Vishal Arya v. Unitech Ltd (2013)

This case essentially was dealt in the consumer forum as the RERA Act had not come into the picture during the
initial proceedings. When an allottee and a builder enter into a standard for of agreement, there exists a clause
based on the concept of force majeure. This essentially means that due to external and unavoidable
circumstances, the agreement cannot be executed. The present case relates to an instance where the petitioner
had entered into an agreement with the respondent and had already paid the price as well. But the construction
work had not yet begun. When asked, the respondent stated the reason of force majeure. This was contested in
the Consumer forum and the first appeal was held under the provisions of RERA Act stating that the petitioner
must be refunded with the price paid by him with three-months interest.

Ratio Decidendi: The clause of force majeure cannot be claimed unless some part of the agreement has already
been fulfilled.

4. Wg. Cdr. Arifur Rahman Khan and Aleya Sultana and Ors. v. DLF Southern Homes Pvt. Ltd. (2019)

The respondents in the present case, entered into an agreement to build homes within a stipulated time of three
years and had procured the money from all the allottees in advance. Upon the expiry of such period, the
respondent showed no signs of the completed flats. Therefore, the petitioners prayed that they be reimbursed
with the money spent and that an additional interest be levied for the unnecessary delay. The respondents
claimed that they could not claim anything.

Ratio Decidendi: When the builder does not handover the property within stipulated time without requesting
any extension, then such action shall be monetarily penalised.

5. Avinash Saraf, Neha Saraf v. Runwal Homes Pvt Ltd. (2017)

The petitioners in this case contended to claim compensation for the non-delivery of property within the
stipulated time. Now, this has been discussed in earlier cases as well. The bone of contention in the present case
arises from a statement made by the respondent. The respondents claim that the provision for compensation
would be available under Section 79 of the RERA Act but the agreement signed between the parties was in the
year 2014, which was before the Act came into existence. Therefore, the bone of contention is regarding the
jurisdiction of RERA Act with regard to its applicability.

Ratio Decidendi: RERA Act would apply retrospectively only in cases where the allottees are aggrieved by the
actions of the builders or the promoters.

6. Sanjeev Dhakar Vs. M/s. Arkanade Realty

The petitioner in this case had paid the builder for a house in an apartment complex. The agreement was signed
between them and executed as well by both parties. What becomes the issue is the parking space which was to
be allotted to the petitioner. The parking space was not provided and the same was actually sold to another
allottee. The petitioner contended this.

Ratio Decidendi: When a builder takes up a project to provides apartment complexes, the allottees must also
receive their assigned parking spaces, it would fall under the ambit of the RERA Act.

7. Geetanjali Aman Construction Vs Hrishikesh Ramesh Paranjape

The bone of contention for the present case is with regards to the interpretation of Section 3(2) of the RERA Act.
The provision deals with the registration of estate and what would be considered as the qualifying conditions.
The section states the ‘a plot which does not exceed 500 sq. ft. or the building does not exceed eight floors’. The
question of interpretation came into picture as there was a disputed estate with 9 floors.

Ratio Decidendi: The interpretation of clauses regarding conditions to be fulfilled must be read in their truest
form.

8. Sushil Ansal v. Ashok Tripathi, Saurabh Tripathi (2020)

This case is a unique one as it talks about the credit factor of a builder. In the instant case, the builder was
declared bankrupt and they owed money to allottees to a tune of Rs. 73 Lakhs. This meant that the allottees
would be legally called financial creditors to the builder. The bone of contention here is, where can these
creditors seek redressal from.

Ratio Decidendi: When an allottee is also a creditor to the builder, he may seek redressal only under the RERA
Act for cancellation/refund and consumer forum.

9. Jitendra Jagdish Tulsiani vs. Lavasa Corporation Ltd (2018)

The contention of the present case relates to a specific type of transfer of property-lease. RERA Act does not
specifically mention what type of transfer comes under its jurisdiction. Therefore, the authorities themselves
dismissed the above-mentioned petition.

Ratio Decidendi: RERA Act is applicable with the transfer of immoveable property and the regulation of the
same. Leasing is a type of transfer and it would come under the ambit of the RERA Act.

10. Rakesh Kumar Gupta Vs. Ansal API (2017)

The RERA Act aims to protect the allottees first and only then the builders and promoters. But there have been
instances, where the builders and promoters have to be protected due to a multitude of reasons. The present case
relates to an instance where the allottee delayed in the possession of the property by 45 days. This cost the
promoter some expenses on maintenance which was huge.

Ratio Decidendi: If the allottee delays in occupying the property, then the allottee must pay a 10% interest on
the transactional value as compensation.

This blog is written by Supraja Sheshadri, an intern of Smriti Legal LLP.