Case Note & Summary
The case involves a dispute under the Real Estate (Regulation and Development) Act, 2016 (RERA) regarding the refund of amounts paid by an allottee to a joint developer. The appellant, Wadhwa Group Housing Private Ltd., and respondent No.2, SSS Escatics Pvt. Ltd., entered into a Joint Development Agreement on 5 September 2012 to develop a slum rehabilitation project named 'The Nest' in Mumbai. Respondent No.1, Vijay Choksi, booked a flat in the project on 19 July 2013 for a consideration of Rs.2,65,35,000/- and paid Rs.1,20,00,000/- to respondent No.2. The project was registered under RERA as an ongoing project, with the appellant declared as a promoter (investor). The project was delayed, and the area of the flat was shown incorrectly on the MahaRERA website. Respondent No.1 approached MahaRERA under Sections 12 and 18 of RERA seeking refund. MahaRERA dismissed the complaint, but the Maharashtra Real Estate Appellate Tribunal partly allowed the appeal on 18 October 2022, directing both the appellant and respondent No.2 to refund the entire amount paid by respondent No.1 with interest and costs. The appellant challenged this order, contending that since it had not received any payment from respondent No.1, it could not be made liable to refund. The High Court analyzed the provisions of Sections 12 and 18 of RERA and held that liability to refund arises only if the promoter has received the amount. Since the appellant did not receive any payment, it cannot be directed to refund. The court also noted that joint and several liability cannot be imposed without statutory basis or agreement. The High Court allowed the appeal in part, setting aside the Appellate Tribunal's order to the extent it fastened liability on the appellant, while upholding the refund liability of respondent No.2.
Headnote
A) Real Estate Law - Promoter Liability - Refund under RERA - Sections 12, 18, Real Estate (Regulation and Development) Act, 2016 - The issue was whether a joint developer who did not receive any payment from the allottee could be directed to refund the amount paid to the other joint developer. The High Court held that liability to refund under Section 18 arises only if the promoter has received the amount. Since the appellant did not receive any payment, it cannot be made liable to refund. The Appellate Tribunal's order was set aside to the extent it fastened liability on the appellant. (Paras 1-20) B) Real Estate Law - Joint Development Agreement - Liability of Co-Promoters - Sections 12, 18, Real Estate (Regulation and Development) Act, 2016 - The court considered whether co-promoters are jointly and severally liable for refund. It held that joint and several liability cannot be imposed without statutory basis or agreement. The appellant was only an investor/promoter and had not received any consideration. (Paras 15-20)
Issue of Consideration
Whether a joint developer who has not received any payment from the allottee can be directed to refund the amount paid by the allottee to the other joint developer under Sections 12 and 18 of the Real Estate (Regulation and Development) Act, 2016.
Final Decision
Appeal partly allowed. The order of the Appellate Tribunal dated 18 October 2022 is set aside to the extent it fastens liability on the appellant to refund the amount paid by respondent No.1. The liability to refund the amount with interest and costs is solely on respondent No.2.
Law Points
- Joint development agreement
- promoter liability
- refund under RERA
- Section 18 RERA
- Section 12 RERA
- liability for refund of amounts not received
