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Judgment
By this common order we shall decide three complaints titled as above, each filed separately in FORM ‘M’ before this Authority under section 31 of the Real Estate (Regulation and Development) Act, 2016 (hereinafter referred to as “RE (RD) Act, 2016”) as common questions of facts and law are involved and they are filed against common Respondents or Respondent Society i.e., Sansadiya Adhikari Welfare Society.
The fulcrum of the issue involved in these three complaints pertains to failure of the Respondents to start the project even after 8 years after launch. Thus, the Complainants are seeking refund of the amounts deposited by them along with interest.
The details of the complaints, date of filing of complaint, preliminary hearing, reply, other hearings, unit details, amount paid by the Complainant(s), and dates of payment receipts issued by the Respondents are mentioned in the table below:
S. no. | Case no. and Name of Complainant(s) | Dates of filing of complaint, preliminary hearing, reply | Dates of hearings | Unit details | Amount paid by the Complainant(s) as per receipts | Dates of payment receipts issued by Respondents |
|---|---|---|---|---|---|---|
| 1. | Com/10/03/2022 Sh. Utpal Kumar Tripathi | 25.03.2022, 07.06.2022, 01.05.2023, 13.07.2023 | 06.09.2022, 12.10.2022, 18.01.2023, 22.03.2023, 03.05.2023, 20.07.2023, 06.09.2023, 04.10.2023 | 3 BHK flat | Rs.12,40,250/-(Rupees Twelve Lakh Forty Thousand Two Hundred and Fifty Only) | Four receipts: i. Nil, ii. 07.09.2013, iii. 25.04.2014, iv. 25.04.2014 |
| 2. | Com/14/04/2022 Ms. Nehal Tripathi | 04.04.2022, 07.06.2022, 01.05.2023, 13.07.2023 | 06.09.2022, 12.10.2022, 18.01.2023, 22.03.2023, 03.05.2023, 20.07.2023, 06.09.2023, 04.10.2023 | 3 BHK flat | Rs.12,40,250/-(Rupees Twelve Lakh Forty Thousand Two Hundred and Fifty Only) | Four receipts: i. Nil, ii. 07.09.2013, iii. 25.04.2014, iv. 25.04.2014 |
| 3. | Com/17/04/2022 Sh. Mayank Srivastava | 04.04.2022, 07.06.2022, 01.05.2023, 13.07.2023 | 06.09.2022, 12.10.2022, 18.01.2023, 22.03.2023, 03.05.2023, 20.07.2023, 06.09.2023, 04.10.2023 | 3 BHK flat | Rs.12,40,250/-(Rupees Twelve Lakh Forty Thousand Two Hundred and Fifty Only) | Five receipts: i. 14.10.20213 ii. 14.10.20213 iii. 22.02.20214 iv. 22.02.2014 v. 19.04.2014 |
The arguments and submissions made on behalf of the Complainants in the abovementioned cases are summarized as under:
In the years 2013 and 2014, the Complainants took membership in the Respondent Society and paid a certain amount on different dates towards membership fees and land charges to the Respondents.
The Respondent Society had promised to develop their housing project under the Delhi Development Authority’s (DDA) Land Pooling Policy.
The Complainant submitted that the Respondents did not purchase the land and start the project even after 8 years since launch. Therefore, the Complainants seek refund of amount deposited with Respondents along with interest.
The Authority issued notice of complaints dated 07.06.2022 to the Respondents by speed post and also by email to file reply. The Respondents filed replies in all three complaints and written submissions.
The arguments and submissions made on behalf of the Respondents are summarized as under:
The society was formed in 2013 by the employees of the Lok Sabha Secretariat (hereinafter referred to as “LSS”) with due approval of the competent authority. The main purpose of the society is to provide dwelling units to the employees of the LSS and other similarly placed government employees. The society is registered under the Societies Registration Act, 1860 as other societies for the Central Government employees and Railway employees.
The Complainant-1, Sh. Utpal Tripathi applied for membership of the society by submitting a cheque bearing number 873790 drawn on SBI dated 27.06.2013 and made a total payment of Rs. 12,40,250/-. The Society did not advertise inviting the members. Sh. Utpal Tripathi is the husband of Ms. Neha Tripath.
The Complainant-2, Ms. Neha Tripathi applied for membership of the society by submitting a cheque bearing number 873791 drawn on SBI dated 27.06.2013 and made a total payment of Rs. 12,40,250/-. The Society did not advertise inviting the members.
The Complainant-3, Sh. Mayank Srivastava applied for membership of the society by submitting a cheque bearing number 354051 drawn on SBI dated 28.09.2013 and made a total payment of Rs. 12,40,250/-. The Society did not advertise inviting the members and he being a central government employee also approached the Respondent society through one of his friends in Lok Sabha.
The basic purpose of the society is to provide dwelling units to its members on no-profit and no-loss basis in terms of Delhi Development Authority’s Land Pooling Policy floated under MPD 2021. The society is, therefore, working for the welfare of the members only who are from Lok Sabha/Rajya Sabha Secretariat and other govt. organizations. It was never an objective of the society to earn profit from the members.
The members contributed their share to purchase the agricultural land way back in 2015 and waited to follow the development of Land Pooling Policy of DDA. Since then, the society has not enrolled any new members.
The society has updated the members on the policy issues through regular General Body Meetings (GBM). The Complainant himself has never submitted all relevant documents to the society as requested from time to time. He had failed to attend GBMs as organized by the society over the years.
The land purchased with the amount received from members have been registered on DDA's registration portal at the first available opportunity in December, 2021 and all the members are waiting for further directions and instructions from DDA. The Complainants made withdrawal requests due to the increased cost due to reduction in FAR under Land Pooling Policy from 400 to 200 by the DDA in 2018, to which the Complainants have never raised any issue with the society.
The society is refunding the contributions of the members who are willing to surrender their membership as and when some amount is deposited by the members.
The complaints are not maintainable as there is no relation of allottee and promoter between the Complainants and the Respondents.
That the Preamble of the Societies Registration Act, 1860 has been amended by the Delhi Society Amendment Act, 1983 whereby the word “Literary, Scientific and Charitable Societies” has been substituted with promotion of social welfare, activities conducive to the protection and improvement of natural environment (including forests, lake, rivers and wild life), compassion for living creature, literature, science, sports, games, or the fine art. Now as per the amended preamble, promotion of Welfare activity has been added and welfare societies/organizations can be registered under the Societies Registration Act, 1860. Welfare Society is one category that can be registered under this Act as mentioned in the Guidelines and Procedure for seeking Registration of a Society for Art, Culture & Social Welfare under the Societies Registration Act, 1860.
The Respondent Society is also a welfare organization with the similar objectives of making available housing projects to its members on no profit no loss basis and registered under Societies Registration Act, 1860.
On 04.10.2023, after arguments were heard, the Ld. Counsel for Respondents sought liberty to file some documents. The Respondents accordingly submitted documents giving the following details:-
Details of the amount collected from the members:- Rs. 80,03,04,551/-
Amount spent on purchase of land:- Rs.68,42,66,019/-
Amount refunded to the members at the request of withdrawal from membership since the beginning:- Rs.11,23,81,390/-
Amount spent for the miscellaneous purposes:- Rs.16,21,257/-
Balance amount lying in the bank account:- Rs.20,35,885/-
Details of land purchased/registered and also the advance amount paid against “Agreement to Sale”.
Details of miscellaneous expenditure.
Details of refund made to the members after inclusion of purchased land in P1 Zone under Land Pooling Policy vide notification dated 10.09.2021 and circular dated 10.11.2021.
Copy of application submitted by Sh. Utpal Kumar Tripathi and Ms. Nehal Tripathi dated 27.05.2019 seeking withdrawal from membership along with interest @ 18 from payment date.
Copy of email from Sh. Mayank Srivastava dated 20.03.2022 seeking withdrawal from membership along with interest @ 18 from payment date.
Withdrawal list pending as of 10.09.2023.
Circulars dated 10.04.2013 along with the Membership Application Form, Circular dated 23.04.2013 regarding Memorandum of Association and Rule and Regulation of Society, Circular dated 16.11.2018 seeking suggestions and views of members on change in the land Pooling Policy FAR and Circular dated 31.01.2019 intimating the additional contribution required for the land cost in view of the changes land pooling policy for reduced FAR.
The cases were reserved for orders on 04.10.2023. We have perused the records and heard the submissions of both the parties.
Analysis and Consideration:
The RE (RD) Act, 2016 has been enacted to induct professionalism and standardization in the real estate sector, paving way for catalyzing investments and accelerating growth of sector in long run. The RE (RD) Act, 2016 is a special law enacted to address issues in the real estate sector. All disputes between homebuyers/allottees and promoters/developers relating to any real estate project covered under RE (RD) Act of 2016, can be raised before the concerned Real Estate Regulatory Authority (RERA). Section 79 of the RE (RD) Act, 2016 even bars jurisdiction of civil courts to entertain any suit or proceeding in respect of any matter which the Authority is empowered to determine under the Act. Moreover, section 89 of RE (RD) Act, 2016 says that provisions of this Act shall have an overriding effect on anything inconsistent in any other law in force.
A perusal of record shows that the Respondent Society is registered under Societies Registration Act, 1860 vide registration no. ROS/North/24/2013 by the Registrar of Societies, South-East District, Govt. of NCT of Delhi. A Society registered under the Societies Registration Act, 1860 cannot undertake housing as an activity considering the provision made under Section 20 which is reproduced as under:
“20. To what societies Act applies.—
The following societies may be registered under this Act:— Charitable societies, the military orphan funds or societies established at the several presidencies of India, societies established for the [promotion of science, literature, or the fine arts for instruction]*, the diffusion of useful knowledge, [the diffusion of political education], the foundation or maintenance of libraries or reading-rooms for general use among the members or open to the public, or public museums and galleries of paintings and other works of art, collections of natural history, mechanical and philosophical inventions, instruments, or designs.”
The main argument of the Respondent Society is that they were planning to construct the houses for their members as social welfare activity and not for commercial purpose. It was submitted that by virtue of Delhi Societies Amendment Act, 1983, welfare activities by such societies are permissible. Section 20 of the Societies Registration Act, 1860 has been amended to the following effect:
*Section 20 (Delhi) in The Societies Registration Act, 1860
“ —In section 20, for the words “promotion of science, literature, or the fine arts”, substitute the words “promotion of social welfare, activities conducive to the promotion and improvement of the natural environment (including forests, rivers and wild life), compassion for living creatures, literature, science, sports, games or the fine arts”. [Vide Act 26 of 1983, sec. 2(c) (w.r.e.f. 22-6-1983).]”
The Delhi Amendment in section 20 does not allow the society to undertake housing activity for its members as social welfare activity. Therefore, this argument cannot stand scrutiny of law as any activity for own benefit cannot be termed as social welfare activity. Moreover, the Respondents have not placed on record any material to substantiate their claim of welfare work. The Respondents formed the society with the sole purpose of the development of land and construction of houses and enrolled members to generate funds for the project.
The Respondents, a Society registered under the Societies Registration Act, 1860, though not authorized to undertake “housing” activity; advertised membership, misled the people, made members for their housing project, and have collected monies from them. Thus, notwithstanding the registration under the Societies Registration Act, 1860, the aim and objective of the Respondent Society is to raise a “real estate project”. Therefore, its activities are under the jurisdiction of the Authority.
The Respondents submitted that society does not fall in the definition of "promoter" under the RE (RD) Act, 2016. We are unable to accept this argument.
In the RE (RD) Act, 2016, an exhaustive definition of "promoter" is provided under section 2 which is reproduced below:
2. (zk) “promoter” means,-
i)a person who constructs or causes to be constructed an independent building or a building consisting of apartments, or converts an existing building or a part thereof into apartments, for the purpose of selling all or some of the apartments to other persons and includes his assignees; or
ii) a person who develops land into a project, whether or not the person also constructs structures on any of the plots, for the purpose of selling to other persons all or some of the plots in the said project, whether with or without structures thereon; or
iii) any development authority or any other public body in respect of allottees of-
(a)buildings or apartments, as the case may be, constructed by such authority or body on lands owned by them or placed at their disposal by the Government; or
(b)plots owned by such authority or body or placed at their disposal by the Government, for the purpose of selling all or some of the apartments or plots; or
iv) an apex State level co-operative housing finance society and a primary co-operative housing society which constructs apartments or buildings for its Members or in respect of the allottees of such apartments or buildings; or
v)any other person who acts himself as a builder, coloniser, contractor, developer, estate developer or by any other name or claims to be acting as the holder of a power of attorney from the owner of the land on which the building or apartment is constructed or plot is developed for sale; or
vi) such other person who constructs any building or apartment for sale to the general public.
Explanation.- For the purposes of this clause, where the person who constructs or converts a building into apartments or develops a plot for sale and the persons who sells apartments or plots are different persons, both of them shall be deemed to be the promoters and shall be jointly liable as such for the functions and responsibilities specified, under this Act or the rules and regulations made thereunder;
The Hon’ble Real Estate Appellate Tribunal, NCT of Delhi has examined the definition of promoter in relation to societies registered under the Societies Registration Act, 1860 in the case of Jeevan Ashray Welfare Society Vs. Diwakar Garg in Appeal No.27/REAT/2021 decided on 12.05.2023 and observed as under:
“The appellant society by no stretch of imagination is a welfare society even though their registration is under the Societies Registration Act, 1860. The registration of the appellant society, as also similarly placed Cooperative Societies under the Multistate Cooperative Societies Act or the Societies Registration Act or similar such enactment, despite their sole or primary object being to develop land and construct apartments, is clearly an abuse of the process of law for escaping other stringent statutes which make them accountable to the buyers as also the Regulatory Authorities. As noted above, despite opportunities, appellant was not able to show any activity of the Society which could be termed as a welfare activity. The sole intent of the registration of this and similarly placed societies is to develop land and construct apartments and in the process to enrich themselves inappropriately by tweaking, twisting or abusing the law, which cannot be permitted under the garb of an argument that the appellant and similarly placed societies are not ‘promoter’ within the meaning of section 2(zk) solely for reasons of their registration under the Societies Registration Act or the Multistate Cooperative Societies Act or similar such enactments.
A literal interpretation of the definition of promoter under section 2(zk) itself is clear and apparent, notably sub-clause (iv) which provides for an Apex State Level Cooperative Housing Finance Society and a Primary Cooperative Housing Finance Page 6 of 7 Society, similar to the appellant society, which constructs apartments or buildings for its Members to be a promoter. Section 2(zg) of the Act, which defines the word ‘Person’ used while defining the word ‘Promoter’, reinforces the above position of law. The appellant society is registered under the Societies Registration Act, 1860 and their activity as a society is confined to constructing a ‘real estate project’, as defined under Section 2 (zn) comprising apartments for its members. The appellant society has a large number of members, who have been solicited for membership on assurances of a plot of land on a share of plot of land and an apartment to be constructed by the society. The appellant society admits having purchased land for development and construction of apartments and such activity makes them amenable to the Real Estate (Regulation and Development) Act, 2016 and for prior registration of their project under Section 3 of the Act at the appropriate stage. The context of the activities of the appellant has been shown on record by way of documents that the members have been assured of a constructed apartment and that the respondents have deposited moneys with the appellant from time to time as per the demands raised by the society. The contours of the activities and the conduct of the appellant does make them fall within the ambit of the definition of promoter as provided in Section 2 (zk) of
the Act. Even though, we are not examining the felicity or correctness of their registration under the Societies Registration Act, but their amenability to the Real Estate (Regulation and Development) Act, 2016 cannot be doubted. Even the elaborated definition of the word ‘Person’ used to define the promoter, as given in Section 2(zg) categorically includes in its fold a cooperative society registered under any law relating to cooperative societies, as also an association of persons or body of individuals, whether incorporated or not, thus shutting the door to prevent unscrupulous persons from hiding under the garb of their registration under any other law relating to cooperative societies. In view of the aforesaid discussion, the contention of the appellant that it is not a promoter as defined under the Act and that they are not amenable to RERA jurisdiction, is rejected and the finding of the Authority that appellant is a ‘Promoter’ within the meaning of Section 2(zk) of the Act, is upheld.”
Thus, we are of the considered view that Respondent Society is squarely covered in the definition of “promoter” as defined in the RE (RD) Act, 2016. Therefore, any real estate project promoted by Respondents is required to be registered with the Real Estate Regulatory Authority.
Another argument of the Respondents is that they have collected money only for purchase of land for submitting to DDA under its Land Pooling Policy. The receipts are placed on record by the Complainants in which it has been clearly stated that the Respondents are collecting money for membership and land charges. The Respondent Society had also shared circular no. SAWS/1/2019 dated 31.01.2019 in which different categories of flats were mentioned as 2 BHK, 3 BHK, and 4 BHK with certain land costs. The Respondents collected monies for the housing project and purchase of land was a part of the housing project. The aim and objective of the Respondent Society, thus, was to raise housing project and the Complainants invested money and became members of the Society to purchase a flat in their housing project and not for purchase of land only. Considering this, we are of the view that the Respondents acted as ‘promoter’ inviting the general public to acquire membership in the housing project.
Since the Respondents acted as promoter, they would come under the purview of the RE (RD) Act, 2016. The Respondents by collecting the monies in the name of housing project have, on the face of it, committed fraud on the members and general public. Therefore, the Respondents cannot shirk away from their obligation cast upon them by RE (RD) Act, 2016.
The statement of objects and reasons of the RE(RD) Act, 2016 clearly states that the Act attempts to balance the interests of consumers and promoters by imposing certain responsibilities on both. It also seeks to establish symmetry of information between the promoter and purchaser, enhance transparency of contractual conditions, set minimum standards of accountability and a fast-track dispute resolution mechanism.
An allottee/house buyer can seek refund of amount invested with promoter under Section 18 of RE(RD) Act, 2016, if the promoter fails to complete project by the date specified in agreement to sale with interest including compensation and also under Section 12 of RE(RD) Act, 2016 if he/she was misled by any information furnished by promoter with regard to the proposed project either through advertisement or otherwise.
In the present complaint, the Complainants intends to withdraw from the said project and are seeking refund of the amount paid to the Respondents in respect of subject unit under Section 18(1) of the RE(RD) Act, 2016 on account of delay which reads as under:
“Section 18. Return of amount and compensation.-
18(1). If the promoter fails to complete or is unable to give possession of an apartment, plot, or building,
(a). in accordance with the terms of the agreement for sale or, as the case may be, duly completed by the date specified therein; or
(b). due to discontinuance of his business as a developer on account of suspension or revocation of the registration under this Act or for any other reason, he shall be liable on demand to the allottees, in case the allottee wishes to withdraw from the project, without prejudice to any other remedy available, to return the amount received by him in respect of that apartment, plot, building, as the case may be, with interest at such rate as may be prescribed in this behalf including compensation in the manner as provided under this Act.”
Section 12 of the RE(RD) Act, 2016 casts a duty upon the promoter to provide correct and updated information to allottees regarding the project. It reads as under:
“Section 12. Obligations of promoter regarding veracity of the advertisement or prospectus.-
Where any person makes an advance or a deposit on the basis of the information contained in the notice advertisement or prospectus, or on the basis of any model apartment, plot or building, as the case may be, and sustains any loss or damage by reason of any incorrect, false statement included therein, he shall be compensated by the promoter in the manner as provided under this Act:
Provided that if the person affected by such incorrect, false statement contained in the notice, advertisement or prospectus, or the model apartment, plot or building, as the case may be, intends to withdraw from the proposed project, he shall be returned his entire investment along with interest at such rate as may be prescribed and the compensation in the manner provided under this Act.”
The Respondents, in complete disregard to their duties, not only failed to furnish correct information to the Complainants but also misled them by concealing information that their society cannot undertake housing activity.
The law is well settled that the allottees/homebuyers hold an unqualified right to seek refund of the amount with interest at such rate as may be prescribed in this behalf. A conscious decision has been taken by the legislature to cast an obligation upon the promoter to refund the amount on demand along with interest at rate prescribed. It has also been held through the recent judgments of the Hon’ble Supreme Court that the Regulatory Authority has exclusive jurisdiction to direct refund of the amount, and interest on the refund amount to the allottees. (Vide: Imperia Structures Ltd. Vs. Anil Patni and Another, 2020 (10) SCC 783, and Newtech Promoters and Developers Pvt. Ltd. v. State of UP And Ors. LL 2021 SC 641).
On perusal of the documents on record and submissions made by both the parties, the Authority is of view that the Respondents are in contravention of the Sections 18 and 12 of RE (RD) Act, 2016. As such, the Complainants are entitled to get the refund of the amount paid by them alongwith interest at prescribed rate @ 10.75% p.a. (i.e., MCLR plus 2%) as per provisions of Section 18 and Section 12 of RE (RD) Act, 2016 read with Rule 15 of the The National Capital Territory of Delhi Real Estate (Regulation and Development) (General) Rules, 2016.
In the light of the aforesaid, we consider it appropriate to direct the Respondents, the Sansadiya Adhikari Welfare Society (SAWS) to refund the entire amount paid by each of the Complainants as enumerated in the table in para no. 3 of this order within 45 days of issuance of this order along with interest at the rate of 10.75% per annum (MCLR+2%) from the date of payment of each sum until the date of its actual return.
The cases are disposed of accordingly.
No orders as to costs.