Shriram R. Jagtap, Member (J)

1. Feeling aggrieved by the order dated 15th July, 2019 passed by Member-1, MahaRERA in complaint No. CC006000000056091, the Appellant (Developer) has preferred instant appeal on the grounds enumerated in the memorandum of appeal.

2. Brief facts which are necessary for disposal of this appeal are that the Developer has launched a residential housing project consisting of rehab component and sale component under SRA scheme, which was a redevelopment of unnumbered plot of Dadar Naigaon division in Sewree Wadala Estate Scheme No. 57 in F/S. Ward of MCGM. The name of project of sale component is "Ruparel Ariana". The complainant, who is an allottee, booked two residential flats bearing Nos. 1602 and 1603 on 16th floor in the project known as "Ruparel Ariana" of Developer for total consideration of Rs. 2,75,67,000/-. The consideration of flat No. 1602 is Rs. 1,50,00,000/- and consideration of flat No. 1603 is Rs. 1,25,67,000/-. On 29th April, 2014 and 30th April, 2014 the allottee paid Rs. 11,00,000/- to Developer for both the flats (Rs. 5,50,000/- for each flat). Thereafter, the allottee has paid Rs. 1,42,80,118/- from time to time towards part consideration of flat No. 1602 and Rs. 58,81,299/- towards part consideration of flat No. 1603.

3. On 27th September, 2016 Developer executed a registered agreement for sale in respect of flat No. 1602 in favour of allottee but with mala fide intention have not executed a registered agreement for sale in respect of flat No. 1603 despite having received 47% of the total consideration. The Developer, by letters dated 5th March, 2018 and 31st March, 2018 raised demand of Rs. 32,31,239/- for flat No. 1603. The allottee verbally communicated to the Developer that he had incurred expenses for the marriage of his son and promised the Developer that he will make the payment of the balance at the earliest. However, by letter dated 11th April, 2018 the Developer terminated the allotment/transaction alleging therein that the allottee failed to satisfy the demand raised by the Developer.

4. Being aggrieved by the fact that the Developer was not willing to execute a registered agreement for sale in respect of flat No. 1603 allottee filed complaint and sought relief of directions to respondent:-

(i) To withdraw the termination letter dated 11th April, 2018.

(ii) To execute agreement for sale with respect to flat No. 1603.

5. After hearing the parties, the authority passed the order under challenge in this appeal whereby the Developer is directed to execute agreement for sale with respect to flat No. 1603 within a period of one month.

6. We have heard arguments of learned Counsel for parties. While arguing the matter to assail the impugned order, the learned advocate Mr. Anosh Sequeira for Developer has mainly urged following contentions.

(i) Allottee booked two flats bearing No. 1602 and 1603 in the building known as "Ruparel Ariana". The Developer issued two distinct allotment letters for both flats to allottee. By email dated 26th July, 2016, the Developer communicated details regarding payment of stamp duty, registration charges, etc. to allottee for execution of agreement for sale. Since allottee did not have funds to pay amount of stamp duty and other payments for both the flats, at the request of allottee the agreement for sale with respect to flat No. 1602 only was executed and registered. On specific request of allottee and with a view to accommodate allottee due to his financial constraint the execution and registration of agreement for sale for flat No. 1603 was kept in abeyance. However, the authority failed to appreciate that the allottee was not ready and willing to comply with his obligations under the letter of allotment, more particularly with respect to entering into an agreement for sale as provided for in clause No. 8 thereof.

(ii) The learned authority failed to appreciate that allottee did not have the financial ability to honour his commitments under the letter of allotment by paying stamp duty and registration charges.

(iii) The learned authority failed to appreciate that the loan taken by allottee was only against flat No. 1602 and not for flat No. 1603 and that the payment made against flat No. 1602 could not be accounted towards the flat No. 1603.

(iv) The learned authority failed to appreciate that Developer issued demand notices to the allottee for flat No. 1603 during the period 11.6.2015 to 27.3.2018 for slab Nos. 5th to 42nd floor aggregating to a total outstanding of Rs. 22,93,447/-, but the allottee in spite of ample opportunities of two years to make the payments failed and neglected to make the payment thereby constraining the Developer to take coercive steps.

(v) The learned authority failed to appreciate that at no point in time the allottee did ever raise a grievance, written or oral, in response to the demand letters of the Developer, stating in any manner that the demands were illegal or seeking that an agreement be entered into. The learned authority failed to appreciate that if the Developer had any mala fide intentions the Developer could have avoided or neglected the execution and registration of agreement for sale for flat No. 1602. There was no reason for Developer to execute and register agreement in respect of one flat and deny execution and registration of other. The learned authority failed to appreciate that not a single letter or correspondence is produced by allottee in his complaint to show that allottee has ever written to Developer to execute and register agreement for sale in respect of flat No. 1603.

(vi) Allottee in his reply to the appeal has for the first time made a bald statement that he paid stamp duty and registration charges for both flats. This contention was never raised before the learned authority. Apart from this no particulars are provided as to how and when this payment was allegedly made therefore this contention of allottee is after thought.

(vii) The learned authority failed to appreciate that allottee had to clear the entire outstanding at the time of execution and registration of the agreement for sale for flat No. 1603. Allottee always had an outstanding for flat No. 1603 due to his admitted financial constraint and therefore he sought time to make payment of the balance consideration in April, 2018.

(viii) Allottee's promise to pay stamp duty and registration charges and Developer's promise and obligation to enter into and register an agreement for sale are reciprocal promises. Unless and until allottee pays the necessary stamp duty and registration charges the Developer could not enter into agreement for sale, even though Developer was always ready and willing, inter alia as demonstrated by execution of agreement for sale in the case of flat No. 1602, providing the details for payment of stamp duty and registration charges to allottee. As per clause 8 of allotment letter and as per provisions of Section 17 of the Indian Stamp Act, 1899, the allottee is supposed to pay stamp duty and registration charges. As per provisions of Section 51 and 52 of Indian Contract Act, 1872, parties shall perform their respective promises. However, since allottee failed to perform his promise of payment of stamp duty and registration charges, the allotment became voidable at the option of Developer, which option was duly exercised by Developer vide its termination notice dated 11th April, 2018. The Developer was not in breach of Section 13 of RERA as the prerequisite on the part of allottee to pay the stamp duty and registration charges was not made.

(ix) On realizing that allottee was in breach of his obligation under the allotment letter, allottee put up a false case to cover up the same as and by way of after thought, that the loan was sanctioned by Bank, but it was not disbursed and tried to blame the Developer for the same. However, no documents are produced to support this claim. Therefore, in view of ratio and dictum laid down by the Hon'ble Supreme Court in the case of Gopal Krishnaji Ketkar Vs. Mohamed Haji Latif & Others report in (1968) 3 SCR 862 [LQ/SC/1968/123] : AIR 1968 SC 1413 [LQ/SC/1968/123] adverse inference can be drawn against allottee that no loan has been sanctioned by Bank for flat No. 1603. The allottee has suppressed the material facts from authority as well as this appellate Tribunal and failed to produce documents in attempt to cover up the aforesaid stand. Therefore, in view of observations of Hon'ble Supreme Court in the case of S.P. Chengalvaraya Naidu v. Jagannath reported in (1994) 1 SCC 1, [LQ/SC/1993/933] the defense of allottee deserves to be struck down.

(x) By the letter dated 11.4.2018 Developer has terminated the transaction of allotment of flat and on 3.7.2018 allottee replied the said termination letter but there is no mention in the reply that allottee is ready and willing to pay balance amount as well as stamp duty and registration charges. The learned authority erred in holding that the termination letter for flat No. 1603 issued by Developer was mala fide, one sided and was contrary to the provisions of RERA.

(xi) Lastly, learned advocate Mr. Anosh Sequeira has sorely submitted that if this Tribunal finds that agreement for sale is required to be executed for flat No. 1603, the allottee cannot be permitted to take advantage of his own wrong and he be directed to pay interest in accordance with the provisions of Section 19(6) and (7) of RERA on the outstanding amounts with respect of flat No. 1603.

7. To refute the contentions of Developer and while supporting the impugned order to have been correctly passed, the learned advocate Mr. R.F. Totala urged following contentions.

(i) The impugned order clearly records that despite having received substantial amount from the allottee towards the consideration of both flats, agreement for sale has been executed by Developer only for flat No. 1602. The allottee has paid Rs. 58,81,299/- to Developer towards part consideration of flat No. 1603 which is exactly 47% of total consideration but the Developer instead of executing agreement for sale illegally raised the demand of balance consideration and also insisted the allottee for payment of stamp duty and registration charges.

(ii) The Developer cannot accept more than 20% under MOFA and more than 10% under RERA without registration of the agreement for sale. However, the Developer has not only accepted more amount than prescribed by statute but also denied the execution of agreement for sale in respect of flat No. 1603 and thereby violated provisions of RERA.

(iii) The letter dated 11.4.2018 shows that the Developer has not terminated allotment of flat on account of failure of allottee to pay stamp duty and registration charges. However, it discloses that the Developer has terminated allotment of flat on account of failure of allottee to satisfy the demands raised by Developer, which is against the provisions of RERA.

(iv) Lastly the advocate Mr. R.S. Totala has submitted that appeal be dismissed with exemplary cost.

8. Having considered the rival submissions of the parties, the impugned order and record, the point which arises for our consideration is whether the impugned order is sustainable in law. We answer the same in the affirmative for following reasons.

REASONS

9. At the outset we would like to observe that it is not in dispute that allottee has paid Rs. 1,42,80,188/- from time to time towards part consideration of flat No. 1602 and Rs. 58,81,299/- towards part consideration of flat No. 1603 to Developer. It is not in dispute that on 27th September, 2016 Developer executed a registered agreement for sale only in respect of flat No. 1602. It is also not in dispute that by the letters dated 5th March, 2018 and 31st March, 2018 the Developer raised further demand of Rs. 22,93,447/-. Since the allottee failed to satisfy the said demand of Developer, the Developer by letter dated 11.4.2018 terminated allotment of flat. According to Developer the allottee has failed and neglected to pay outstanding Rs. 22,93,440/- and also failed and neglected to pay stamp duty and registration charges. Therefore, the Developer was left with no option but to terminate allotment of flat.

10. We would like to observe that RERA has been enacted for beneficial objective of safeguarding interest of purchasers/allottees with the overall aim to promote the Real Estate Sector. Section 13 of RERA mandates the execution and registration of the agreement. This Section imposes obligation on the promoter not to accept deposit of more than 10% without agreement. Section 4 of MOFA also imposes similar obligation on the promoter that not to accept deposit of more than 20% without agreement. It is not in dispute that allottee has booked flat No. 1603 for a consideration of Rs. 1,25,67,000/. The allottee has paid Rs. 58,91,299/- towards part consideration of flat No. 1603 which is exactly 47% of the total consideration. Despite having received 47% of the total consideration, the Developer by letters dated 5th March, 2018 and 31st March, 2018 raised further demand of Rs. 22,93,447/- for flat No. 1603 and that too without execution and registration of agreement for sale. This is clear violation of Section 13 of RERA on the part of the Developer. Section 61 of RERA makes contravention of the provisions of RERA including Section 13 an offence.

11. It is specific contention of the Developer that allottee failed and neglected to pay stamp duty and registration charges. Therefore, the Developer has terminated allotment of flat. We are of the view that the Developer could have adjusted the amount for stamp duty and registration charges from the amount of Rs. 58,81,299/-. However, the Developer instead of executing agreement for sale illegally terminated allotment of flat. No doubt, Sub-Section 5 of Section 11 regulates the promoter's right to cancel the allotment but at the same time it cannot be ignored that the Promoter can exercise such right only in terms of the agreement for sale. In the instant case, the Developer has exercised his right to cancel booking or allotment of flat without agreement. This act of Developer is illegal.

12. A perusal of letter dated 11.4.2018 would show that there is no mention in the said letter that the Developer terminated or cancelled the allotment of flat on account of failure of allottee to make payment of stamp duty and registration charges. The said termination letter discloses that the Developer has terminated the allotment of flat on account of non fulfillment of his demand of balance amount by allottee. Therefore, we are of the view that the Developer has not only violated the provisions of Section 13 of RERA but his act of termination of allotment without cogent reason defeats the aim and objective of RERA. Therefore, for the foregoing reasons we have come to the conclusion that the impugned order is sustainable in law. The appeal is devoid of merit, therefore, it is liable to be dismissed with cost. We answer the point accordingly and pass the following order.

ORDER

1) Appeal No. AT006000000031832 is dismissed.

2) The Developer/Appellant to pay costs of Rs. 20,000/- to allottee within 30 days from this order, failing which the Developer shall be liable to pay interest @ 2% above the highest MCLR of State Bank of India on the said amount from 22.5.2022 till the date of final payment.

3) Copy of this order be sent to authority and respective parties as per Provisions of Section 44(4) of RERA 2016.