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Judgment
A complaint was filed in FORM ‘M’ on 25.03.2021 by Wing Commander N N Verma (hereinafter referred as “Complainant”) stating that he took membership in the Central Secretariat Services Officers Society (hereinafter referred as “Respondents or Respondent Society”) on 01.08.2017 and booked a 4 BHK apartment + servant quarter + two garages having area of 2345 sq. ft. An apartment was allotted by the Respondents to him vide membership certificate dated 01.08.2017 at a total sale consideration of Rs.85,00,000/- (Rs. Eighty Five Lakh Only) out of which the Complainant has made a payment of Rs. 47,01,000/- (Rs. Forty Seven Lakh One Thousand Only) 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 do not have any license and/or approval from the concerned authorities for constructing the project. Therefore, the Complainant seeks refund of amount deposited with Respondents along with interest.
Complainant himself appeared. Sh. Ankit Kumar Vats, Counsel along with Shivangi Kumar, Adv. appeared on behalf of the Respondents.
A preliminary hearing in the case was held on 27.07.2021 and a notice to the Respondents was issued on 02.09.2021.
The matter was heard in several hearings dated 27.07.2021, 02.09.2021, 11.11.2021, 30.11.2021, 18.01.2022 and 24.02.2022. The Respondents filed their written submissions on 07.03.2022.
The Respondents were directed vide order dated 11.11.2021 to file a reply by 30.11.2021 and the case was listed for hearing on 30.11.2021. Since the Respondents did not file a reply even by 30.11.2021, the Authority imposed a cost of Rs.1,00,000/- on the Respondents and granted another opportunity to file reply. The Respondents filed a reply on 23.12.2021 without submitting the cost imposed upon them. However, the cost imposed upon them was not deposited.
We have heard the arguments and perused the written submission & records. For the sake of convenience, the arguments and submissions made on behalf of Respondents are summarized as under:
A. Summary of arguments and submissions made by the Respondents
The Respondents are a registered society under the Society Registration Act, 1860 and therefore RERA, NCT of Delhi does not have jurisdiction to adjudicate in this matter.
The Respondents are neither ‘promoter’ within the meaning of section 2(zk) of RE(RD) Act, 2016, nor the Complainant an “allottee” within the meaning of section 2(d) of the RE (RD) Act, 2016.
The Respondent Society launched a housing scheme for the welfare of its members and contributions have been taken from them for the purpose. The Central Secretariat Services Officers Society (CSSOS) is a social service organization, working with an aim of promoting and facilitating welfare of serving and retired government/ PSU/ bank employees and their families. The Respondent Society has been formed by working government officers after taking an NOC from the Department of Personnel & Training. Although, Respondent Society aims to work in many segments including employment, careers, skill development, investment, health, orphanage, education, recreation and housing etc, it is presently engaged in offering high quality cost effective residential units to its members.
The Respondents have not launched/floated any housing scheme for general public. The Complainant voluntarily approached for membership of the society and he was well aware about the society’s organizational structure and functioning of society.
The Respondents did not issue any kind of advertisement through any medium informing persons about any real estate project, or offering for sale flats/apartment.
The Complainant is neither allottee of the Respondents nor does any agreement for sale has been entered into between the Complainant and Respondents.
No prospectus was issued by the Respondents offering for sale any real estate project.
In the complaint neither any ground for institution of the complaint nor any contravention of RE(RD) Act, 2016 has been mentioned.
The Respondents have not launched any housing project in any manner. The Respondents have taken initiative to make a unique platform where members participate in the Land Pooling Policy of DDA. The society through its platform tried to create an investment tool for ensuring robust returns and dream home for members.
There is no housing or real estate project in the name of CSSOS. The society not being a commercial entity, does not sell flats to public, rather it seeks membership. From those, who are found eligible and interested, cost of land amount is taken on the basis of their expression of interest for size of accommodation and for purchase of land from farmers for submission of purchased land on behalf of such members to DDA under Land Pooling Policy.
The CSSOS is a registered society under the provision of the Society Registration Act, 1860 with Regd. No. S-/E/784/Distt. South-East/2015, and the working of the society is coordinated and decided by way of General Body Meetings in furtherance to the aims and objectives of the society. In every General Body Meeting updates about the ongoing project were provided to the members of the society.
Even at the time of membership, the Complainant was aware that the amount paid is non-refundable, and the reason for non-refund was that all the money has been used for land pooling and society has no money left to refund the same. Moreover, delay was caused due to non- performance of obligation on part of few members of the society, the details of which was conveyed during General Body Meeting held on 02.04.2021.
B. Analysis and Consideration:
A perusal of the documents available on record shows that the membership certificate was issued in the name of the Complainant i.e., Mr. N N Verma and the Respondents have issued five receipts dated 24.08.2017, 30.10.2017 and 06.08.2018 acknowledging deposits of Rs. 11,000/-, Rs.11,72,500/-, Rs.11,72,500/-, Rs. 23,45,000/- and Rs.1,000/- respectively. Hence, the payment of Rs. 47,01,000/-(Rs. Forty Seven Lakh One Thousand Only) by the Complainant to the Respondents is admitted.
A perusal of record shows that Respondent Society has been registered under Societies Registration Act, 1860 vide registration no. S-E/784/Distt. South- East/2015 issued on 27.11.2015 by the Registrar of Societies, South-East District, Govt. of NCT of Delhi and as per section 20 of the said Act they could not have undertaken “housing” as an activity. Section 20 of the Societies Registration Act, 1860 is reproduced hereunder as:
“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, 1[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.
State Amendment:
*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 Respondents, a Society registered under Society Registration Act, 1860, though not authorized to undertake “housing” activity; advertised membership, misled the people, made members for their housing project and collected monies from them therefore, would come under the purview of RE (RD) Act, 2016. The Respondents by collecting the monies in the name of housing project has, on the face of it, committed a fraud on the members and general public.
The statement of objects and reasons of the Real Estate (Regulation and Development) Act, 2016 (hereinafter referred as "RE(RD) Act, 2016") clearly states that the RE(RD) Act, 2016 attempts to balance the interests of consumers and promoters by imposing certain responsibilities on both. It seeks to establish symmetry of information between the promoter and purchaser, transparency of contractual conditions, sets 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 RERD 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 project either through advertisement or otherwise.
In the present complaint, the Complainant intend to withdraw from the project and is seeking refund of the amount paid with Respondents in respect of subject unit under section 18(1) of the RERD Act, 2016 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 RERD Act, 2016 cast a duty upon the promoter to provide any correct and updated information to its members regarding the current status of the project and the likely date by which the project will be completed. 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 Complainant but also misled him by concealing information that their society cannot undertake housing activity. The Respondents under no circumstances should have collected more than ten percent (10%) of unit costs from the Complainant before obtaining RERA registration and signing agreement for sale.
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 case records, it is observed that the Respondents had filed an application for waiver of cost and prayed before this Authority to waive of the cost of Rs.1,00,000/- imposed upon them. However, in that application, they have not mentioned any valid reason which led to failure in the filing of reply. Therefore, the application for waiving the cost is dismissed. The Authority decides that this cost be paid to the Complainant.
From the facts produced before us it is clear that the Respondent Society issued the membership certificate to the Complainant for a unit and collected money from the Complainant without registering the project with RERA, Delhi under section 3 of RE (RD) Act, 2016. Further, they collected an amount of more than ten percent (10%) of total sale consideration from the Complainant in violation of section 13 of RE (RD) Act, 2016. These two actions of the Respondent Society make them liable for action under sections 59 & 61 of RE (RD) Act, 2016. The Authority take cognizance and initiate suo-moto action for this violation. The office is directed to issue a notice to Respondent Society seeking their explanation by 31.05.2022 as to why action should not be taken against them under sections 59 & 61 of RE (RD) Act, 2016. The suo-moto case be dealt as new case and posted for hearing on 31.05.2022.
In the light of the aforesaid, we consider it appropriate to direct the Respondents Central Secretariat Services Officers Society (CSSOS) to refund the entire amount of Rs. 47,01,000/- (Rs. Forty Seven Lakh One Thousand Only) to the Complainant within 45 days of issuance of this order along with interest at the rate of 9% per annum (MCLR+2%) from the date of payment of each sum until the date of its actual return and also pay to him Rs.1,00,000/- cost imposed vide order dated 30.11.2021.
The case is disposed of accordingly.
No orders as to costs.