Ranjita Panigrahi v Z Estates

Promoter has the right to claim penalty interest and cancel the allotment of the flat due to default and delay in payment of consideration by the buyer: Odisha RERA

FACTUAL BACKGROUND

• A complaint petition was filed before the Hon’ble Authority to compel the respondent to withdraw the cancellation letter of the allotted flat dated 23.02.2023, to take back the demand draft of Rs. 81,36,400/- dated 13.03.2023, and to hand over the possession of Flat no. 1403 at Wing-G, Block-3 along with the twin parking slots as per their agreement for sale.

• Subsequently, the Complainants had also filed a petition for Interim relief before the Hon’ble Authority to direct the Respondent or any of its agents, not to create any third-party interest in the subject property, which was granted by the Hon’ble Authority.

ARGUMENTS ADVANCED ON BEHALF OF COMPLAINANT

• While addressing the facts of the case, the complainants have alleged that they entered into an agreement for sale with the respondent for a flat in the "Z-ONE” VYOM Project. The allotment letter for the flat was issued on 15.12.2017, and they made a booking payment of Rs. 10,00,000. The agreement for sale was executed with payment of another Rs. 1,00,000/- on 31.03.2022 for a total consideration of Rs. 91,36,400/-.  

• Consequently, the complainants were required to pay the balance consideration amount of Rs. 81,36,400/- within the stipulated time in seven instalments as per the Agreement for sale. However, the Complainants had failed to make any payments beyond the initial booking amount. In their defence, they have submitted that they were not able to make further payments as their home loan was not sanctioned as the same was not entertained due to the order passed by the Hon’ble High Court of Orissa vide WP (C) PIL No.18799/2021, imposing restrictions on all the Fresh registration of the properties.

• The Complainants have argued that the delay in securing a bank loan for which they were unable to pay the full consideration amount on time was beyond their control. Further, the cancellation of the flat booking and demand of substantial amount to the tune of Rs. 1,23,13,649/- as delayed interest and penalty by the Respondent is illegal and arbitrary. They assert that the respondent's cancellation of the flat allotment and refusal to handover the flat is unjust. Hence, the complaint.

ARGUMENTS ADVANCED ON BEHALF OF RESPONDENT

• Respondent denying all the allegations of the Complaint, states that a provisional allotment letter was issued on 15.12.2017 and as the complainant wanted to sanction a home loan, therefore the agreement for sale was executed on 31.03.2023 and there was no delay on their end. It is further submitted that the complainants never paid any instalments as per the agreement for sale causing a delay of several years in payment. As stated by the Respondents, sufficient time was allowed to the complainants for paying the balance but had received no payments beyond the initial booking amount, justifying the cancellation of the allotment.

• The Respondent states that the penalty interest of Rs. 1,23,13,649 is calculated as per the State Bank of India marginal cost of lending rates and the same is not arbitrary. Further the Respondent requests the Authority to direct the complainants to appear before the Sub-registrar to execute the cancellation deed so that the flat can be re-sold by the Respondent. Hence, the Respondent have prayed for the Complaint case to be dismissed and the Interim Order granted by the Authority to be recalled.

COURT FINDINGS

Issue No. 1 - Maintainability of Complaint and Valid Cause of Action:

The Authority while addressing the maintainability of the case have held that as the project was started in the year 2017 which is ongoing project and the same was completed in the year 2022, providing the complainants with a valid cause of action and therefore the Complaint case is maintainable in the eye of law.

Issue No. 2 - Liability to receive Balance Consideration and execution of Sale Deed:

In order to address the liability of the Respondent to receive the balance consideration amount of Rs. 81,36,400/- from the complainants, the Authority held that the complainants had failed to pay the balance consideration amount of Rs. 81,36,400/- for more than three to four years, even after the project was completed therefore, the respondent was not at fault for not delivering possession of the flat.

The Authority has further determined that the Complainants cannot claim for the registration of the flat on the ground that they paid the balance consideration amount of Rs. 81,36,400/- after series of requests and reminders and delay of several years. Therefore, the complainants' claim for the execution of a sale deed was rejected.

Issues No. 3 and 4 – Entitlement of Penalty Interest and Relief Claimed:

In order to determine the complainant’s liability to pay interest and the consideration amount totalling to the tune of Rs. 1,23,13,649, the Hon’ble Authority has held that the complainants did not pay instalments in time which was clearly stated in the Agreement for sale, resulting in accrued interest and penalties.

It is Further held that even after series of correspondences, the complainants failed to pay the same therefore, the respondent's cancellation of the flat allotment is deemed legal and not arbitrary. Thus, the respondent's demand for Rs. 1,23,13,649 was justified and both issues were resolved in favour of the respondent.

Therefore, the Authority dismissed the Complaint of the complainants without cost, and the respondent's position was upheld.

JUDGEMENT

The three-member bench of the Odisha Real Estate Regulatory Authority while deciding the Complaint case No. 121 of 2023 filed u/s 31¹ of the Real Estate (Regulation & Development) Act, 2016 (referred to as 'the Act, 2016') against the respondent, held that cancellation of the allotment of flats by the Respondent is legal and justified due to the failure of the Complainants to pay the instalments of the balance consideration in time, resulting in accrued interest and penalty.

The Hon’ble Authority after hearing both the parties have passed the order that the complaint petition was dismissed without cost, and the respondent's position was upheld.

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