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Judgment
The noticee i.e. M/s Hiptage Infrastructure Pvt. Ltd. is the promoter of project ‘Devika Sadar’: Multilevel Parking cum Commercial Complex at Qutub Road, New Delhi-110006, which is registered with the Authority under Reg. No. DLRERA2021P0001 on 19.01.2021.
The project ‘Devika Sadar’ was registered on 19.01.2021 with a validity upto 31.03.2022.
The validity of registration was extended by this Authority on 07.04.2022 upto 24.10.2022 on account of Covid-19, Second wave.
As no further application for extension in validity of the registration was made before this Authority, a show-cause notice was issued under Section 7 of the Real Estate (Regulation and Development) Act, 2016 (hereinafter referred to as “RE(RD) Act, 2016”) to the noticee on 07.07.2023 seeking explanation as to why the registration of the project should not be revoked.
After the issuance of the show cause notice, the matter was first listed for hearing on 07.11.2023 and case was thereafter heard on 30.11.2023, 24.01.2024 and 13.02.2024.
The noticee was directed to appear before the Authority on 30.11.2023 and explain the delay and negligence on their part for not applying for the extension in validity of the Registration (which expired on 24.10.2023), as per the Act and Rules made thereunder.
During the hearing on 30.11.2023, the Counsel on behalf of the noticee submitted that they have filed a detailed reply and explained as to why they could not apply for the extension within the stipulated time.
The noticee in reply to the show cause notice informed the Authority that the delay in filing the application was due to the following reasons:
The project was obstructed due to various Government Notifications curbing construction activities in the region of Delhi/NCR vide Notifications dated 13.11.2021, 17.11.2021, 21.11.2021, 26.11.2021, 30.11.2021, 03.12.2021, 17.12.2021, 20.12.2021, 05.08.2022, 05.10.2022 and 19.10.2022 issued by the Department of Environment & Forests, Government of NCT of Delhi and the Commission for Air Quality Management to prevent deterioration of environment and air quality of Delhi/NCR.
Despite all the construction bans, the noticee duly completed the construction of the project before 24.10.2022.
The application for the grant of Completion cum Occupation Certificate was submitted on 28.11.2022. Due to the inspection of the project by the Structural Engineer/ Architect and the reports of the Chartered Accountants, there was about a month’s delay in applying for Completion cum Occupancy Certificate.
After the noticee made the application before the Competent Authority i.e. Municipal Corporation of Delhi, the Competent Authority took 6 months to grant the Completion Cum Occupation Certificate for the project. The Competent Authority finally gave the Completion Cum Occupation Certificate to the noticee on 24.05.2023. The noticee further clarified that such delay on the part of the Competent Authority may be attributed to ‘force majeure’ events such as elections, government intervention, etc. that remain beyond the reasonable control of the noticee and thereby, rendering it impossible to obtain the Completion cum Occupation certificate at an earlier occasion despite the best efforts of the noticee.
The noticee quoted the judgment of The Hon’ble National Consumer Dispute Redressal Commission (NCDRC) in the Judgment titled “Anil Kumar Sharma vs. Satya Developers Pvt. Ltd.” in Consumer Case No. 281 of 2018 wherein the Hon’ble NCDRC had taken the note of the delay caused by DTCP in issuance of Occupancy Certificate(OC) and has allowed an extension of the grace period in favour of Developer due to delay caused by the Competent Authorities i.e. DTCP in granting the OC.
Consideration of facts and Analysis
We have noted that the noticee was given first extension on account of COVID-19, Second Wave on 07.04.2022 extending validity of registration upto 24.10.2022. The noticee should have applied for extension beyond 24.10.2022, three months prior to the last date of validity of registration, giving reasons prescribed in Form ‘E’ alongwith prescribed fee.
Section 6 of the RE(RD) Act, 2016 provides for extension of registration, according to which registration of a project can be extended by the Authority on an application to be made by the promoter on account of ‘force majeure’ or circumstances beyond the control of promoter in prescribed format. The explanation appended to section 6 of the Act, 2016 clearly provides the meaning of the expression ‘force majeure’, according to which ‘force majeure’ shall mean a case of war, flood, drought, fire, cyclone, earthquake or any other calamity caused by nature affecting the regular development of the real estate project. The text of Section 6 of RE(RD) Act, 2016 is reproduced as under:
“6.Extension of Registration: The registration granted under section 5 may be extended by the Authority on an application made by the promoter due to force majeure, in such form and on payment of such fee as may be specified by regulations made by the Authority:
Provided that the Authority may in reasonable circumstances, without default on the part of the promoter, based on the facts of each case, and for reasons to be recorded in writing, extend the registration granted to a project for such time as it considers necessary, which shall, in aggregate, not exceed a period of one year: Provided further that no application for extension of registration shall be rejected unless the applicant has been given an opportunity of being heard in the matter.
Explanation - For the purpose of this section, the expression "force majeure" shall mean a case of war, flood, drought, fire, cyclone, earthquake or any other calamity caused by nature affecting the regular development of the real estate project.”
Rule 6 of National Capital Territory of Delhi Real Estate (Regulation and Development)(General) Rules, 2016 (hereinafter referred to as "the Rules, 2016”) framed under section 84 of the Act, 2016 provides the procedure for extension of registration of the project. The extension of registration is permissible on an application to be made by the promoter in Form-E. It also requires certain other formalities to be completed by the promoter seeking extension of registration. Rule 6(3) provides that extension of registration of a project shall not be beyond the period provided as per local laws for completion of the project or any phase thereof. Rule 6 of the Rules, 2016 is extracted hereunder;
“6.Extension of registration of project.- (1) The registration granted under the Act, may be extended by the Authority, on an application made by the promoter in Form ‘E’, in triplicate, until the application procedure is made web based, within three months prior to the expiry of the registration granted.
(2)The application for extension of registration shall be accompanied with a demand draft or a bankers cheque drawn on any scheduled bank or through online payment mode, as the case may be, for an amount equivalent to half the registration fees as prescribed under sub-rule (3) of rule 3 along with an explanatory note setting out the reasons for delay in the completion of the project and the need for extension of registration for the project, along with documents supporting such reasons:
Provided that where the promoter applies for extension of registration of the project due to force majeure he shall not be liable to pay any fee.
(3)The extension of registration of the project shall not be beyond the period provided as per local laws for completion of the project or phase thereof, as the case may be.
(4)In case of extension of registration, the Authority shall inform the promoter about such extension in Form ‘F’ and in case of rejection of the application for extension of registration the Authority shall inform the promoter about such rejection in Form ‘D’:
Provided that the Authority may grant an opportunity to the promoter to rectify the defects in the application within such time period as may be specified by it.”
It is pertinent to note that in the present case, the validity of registration expired on 24.10.2022 but the noticee neither obtain the completion cum occupancy certificate nor applied for extension in validity of the registration till 24.10.2022 under Section 6 of RE(RD) Act, 2016 read with Rule 6 of the Rules, 2016.
The noticee even failed to make an application for obtaining Completion cum Occupancy Certificate till 24.10.2022. The application was made before the Competent Authority to obtain the Completion cum Occupancy Certificate by the noticee on 28.11.2022. So, a logical inference is that till 28.11.2022, the project was not completed. Therefore, not seeking extension of registration of the project beyond 24.10.2022 is violation of the Section 6 of RE(RD) Act, 2016.
From the above, we note the following:
After the lapse of the registration on 24.10.2022, the noticee failed to apply for the extension in validity of the registration as per prescribed procedure.
The due diligence on part of the noticee is seen missing as he neither obtained the Completion cum Occupancy Certificate nor applied for seeking further extension in validity of the registration.
Further, Section 61 of RE(RD) Act, 2016 provides for the penalty in case of contravention of any other provision apart from Section 3 or Section 4 or the Rules or Regulations made thereunder. Section 61 states as under:
“61.Penalty for contravention of other provisions of this Act.- If any promoter contravenes any other provisions of this Act, other than that provided under section 3 or section 4, or the rules or regulations made thereunder, he shall be liable to a penalty which may extend up to five per cent. of the estimated cost of the real estate project as determined by the Authority.
Considering the facts in the present case, it is quite clear that there has been a serious lapse on the part of the noticee in applying for extension in validity of registration. In the RE(RD) Act, 2016, the duties of promoter have been well defined and they are expected to complete the project following the provisions of the Act. Any lapse on the part of promoter affects the project and in turn the allottees. We consider it as our bounden duty to discipline all promoters, real estate agents and allottees and ensure that law of the land is followed in letter and spirit. Though, we can levy a penalty up to five percent of the total cost of project for the above lapse of promoter, but striking a balance and considering that the project is now complete, we would consider it justiciable if a penalty of Rs. 20 Lakhs (Rupees Twenty Lakh Only) is imposed on the noticee i.e. M/s Hiptage Infrastructure Pvt. Ltd., i.e. the promoter of the project.
In view of the above, we direct the noticee to deposit Rs. 20 Lakhs (Twenty Lakhs Only) as penalty, in Bharatkosh account within 45 days of this order.
Further, since the project stands already completed therefore, the validity of the registration is extended up to 24.05.2023 i.e. till the date of receipt of Completion cum Occupancy Certificate, ex-post facto.
The case is disposed of accordingly.