Oral promise of possession under RERA Act tenable?

Whether a promoter is required to enclose commencement certificate obtained from the competent authority while submitting an application for registration of his project as per Section 4(2)(c) of Real Estate (Regulation and Development) Act, 2016?

By Dr. Sanjay Chaturvedi, LLB, Ph.D.

Umesh Magar and other various complainants V/s Kul Developers Pl’t. Ltd (CC005000000000093) Order dated: 2nd January 2018.

These complainants complain that the respondents have failed to deliver possession of their flats in the year 2016 as orally agreed. They claim their amount with interest u/s. l8 of RERA. However, when they have been confronted with the dates mentioned in their agreements for sale, they have not pressed their complaints u/s 18 of RERA as the agreed dates for possession have not been crossed yet.

The complainants have mentioned that while registering the project with Maha RERA, the respondents have mentioned wrong dates of possession/completion of a project as mentioned above. They have not enclosed commencement certificate and thereby they have contravened Section 4 of RERA.
The respondents contend that they have agreed to deliver possession of the flats booked by the complaints within five years from the date of their agreements. The agreed dates have not lapsed. They have not revised the dates of possession mentioned in the agreements and the flats of the complainants shall be completed within the agreed period of construction.

Maha RERA Observed: When a project is registered under RERA common man presumes that all the requirements of the law are complied with and it is safe to transact with the promoter. Registration certificate acts like a guarantee of soundness and viability of the project. That is why it is incumbent on the promoter to quote registration number of his project in every advertisement. Commencement certificate helps to bring transparency and efficiency to the housing industry. Various ongoing projects in the State are being delayed only because approvals, permissions and no objections have not been taken before the commencement of construction activities.

The allottees are sufferers. On the other hand, once promoter obtains IOD, he gets his project registered and starts to sell the units of his project through all the sanctions are not at their place. This causes deception also when promoter fails to qualify his project for commencement certificate. In my opinion, if the aims and objects of the Act are to be achieved in their true spirit, it is necessary to compel a promoter to enclose commencement certificate at the time of registration of the project itself. It appears that it is the intention of parliament that promoter should not sell any unit of his project unless and until commencement certificate is obtained after taking all permissions and after complying with all the legal compliances.

Therefore, to equate IOD with commencement certificate is illegal and unethical also. It is the duty of Real Estate Regulatory Authority to deprecate the practice of issuance of IOD and encourage the practice of issuance of commencement certificate to protect and develop the housing industry and to protect consumers also in the days to come. Moreover, section 4(2) (c) uses the words ‘shall enclose commencement certificate’ which is indicative of the fact that Parliament wants to make it mandatory. Hence I hold that this provision is mandatory.

In view of the provisions of law, as discussed, it is necessary to enclose the commencement certificate up to the plinth at least, along with registration form which has not been enclosed by the respondents. However, a software developed by Maha RERA has not made it mandatory to enclose commencement certificate and that is why the respondents have not enclosed it. They cannot be blamed for this legal lapse. In my opinion compliance with this legal provision is necessary. It is the right time to bring reform in the system which may cause some hardship at the beginning to some promoters but it is necessary for the healthy growth of housing industry. Therefore, it becomes necessary to direct the respondents to enclose commencement certificate and to direct the Secretary of Maha RERA also to make necessary changes in the software to ensure the enclosure of commencement certificate.

The complainants have relied upon the advertisements brochures and the information provided by the respondents to Maha RERA while registering their project to allege that the information contained therein is different from each other. They contend that they are ditched as they relied upon advertisements and representations of the respondents which are different than those contained in their agreements. The respondents have relied upon clause 17.08.12 of the agreement which provides, ‘this agreement constitutes and is the repository of the entire agreement between the parties relating to the subject matter and supersedes and cancels all previous agreements, negotiations and representations in respect thereto.”

The crucial question is, whether the earlier negotiations, representations either oral written or in electronic form shall be superseded, cancelled or not. My answer is when both the parties have subsequently executed the registered agreement for sale then the terms and conditions contained therein shall prevail as it is a renovation of a contract. Hence, it is not necessary for me to discuss those representations negotiations which were earlier and subsequent to the agreements for sale. There is no case of complainants that the agreements contain any false statement. Hence this allegation also fails.

The respondents shall deliver the possession of the booked flats of the complainants on or before the agreed dates mentioned in their agreements for sale with all the amenities agreed to be provided.

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