Observing that under the RERA Act, rights of the allottees are superior compared with other creditors, the Haryana Real Estate Regulatory Authority (HRERA) has directed a builder company to refund the entire money invested by the home buyers in its now “abandoned” project while expressly stating that “all the complainant, as well as other similarly placed allottees of the disputed project, shall have a superior right to satisfy the claims for refund of money along with interest over the rights of any other person including Financial Institutions and other creditors of any kind”.
HRERA bench of Chairman Rajan Gupta and Members Anil Kumar Panwar and Dilbag Singh Sihag also criticised Director, Town & Country Planning Department, Haryana, for firstly, not ensuring that real estate projects are completed in time and then not cooperating with the authority in resolving such complex issues relating to stuck real estate projects by ignoring its notices.
The bench was deciding complaints moved by 21 home buyers who had invested in a housing project of M/s Piyush Colonisers Ltd.
Advocate Kamal Dahiya, appearing for all 21 complainants, informed the authority that one of the 21 investors had paid Rs 26.25 lakh for purchasing an apartment in the project of the respondents. The deemed date of delivery of the apartment was April 2015 but the project remained far from completion and was in fact, abandoned with no construction work taking place for the past many years.
The respondents were proceeded against ex parte with no one appearing in response to the notice and the directors of the company being in jail and facing civil and criminal proceedings.
The authority noted that with the project being abandoned for past many years, the structure which was already erected had also deteriorated and the respondents did not seem to have the resources to revive the project.
The authority even observed that the respondents have put the allottees in serious difficulties.
The authority also took note of the lackadaisical attitude of the state agencies in cases of stuck up real estate projects as it noted that Director, Town & Country Planning Department, Haryana, had not even cared to respond to its notice issued in October.
“The Director, Town & Country Planning Department, Haryana has not submitted any reply. It is not known whether they have even got the site inspected. Clearly, the DTCP is failing in discharging its legal duties and responsibilities spelt out by way of conditions of license. It is the license granted by the Director which has given birth to this project. In terms of the conditions of the license, director is duty bound to take remedial actions if the project is not developed in time but they have failed to do so. Now, to make matters worse, they are not even bothering to file a reply before this Authority,” said the bench.
Noting that a notice of the proceedings was delivered to the director by hand, the authority directed that the copy of its order be delivered to the Secretary to Government, Haryana Town and Country Planning Department.
“The secretary is requested to issue appropriate directions to the Director for submitting their reply to the authority in all such matters. The Director is duty bound to assist the Authority in resolving such complex issues relating to stuck real estate projects. If they do not cooperate, such projects cannot be completed”.
Coming to the grant of relief to the complainants, the authority observed that there appears to be no scope for completion of the project in near future because the directors of the respondent company are in jail and are facing multiple civil and criminal proceedings.
“The fate of the allottees and complainant in the respondent is completely eroded. The project is already delayed by more than three and half years and keeping in view its current stage of construction, it may further take many more years. In the circumstances, the complainants deserve to be granted relief and as provided under Section 18 of the RERA Act, 2016.”
The authority, therefore, passed the following directions:
- All the complainant, as well as other similarly placed allottees of the disputed project of the respondent company, shall have a superior right to satisfy the claims for refund of money along with interest over the rights of any other person including Financial Institutions and other creditors of any kind.
- If claims of the allottees are not fully satisfied from the Assets of the project in question, the allottees shall be treated as creditors of the respondents at par with other creditors for the satisfaction of their claims from the Assets of the promoters other than the Assets of the project in question.
- The director, Town and Country Planning Department, Haryana is duty bound to protect the interest of the allottees and to ensure that the project on the licence land is completed in accordance with sanctioned plans. The director shall immediately take steps to take over the project and get it completed in the manner considered appropriate. The director shall take over the project regardless of any other proceedings pending against the project assets.
- While all the captioned complaints are being disposed of by this order, executive director of this authority shall file a suo motu complaint against the respondent M/s Piyush Colonisers Limited and also implead director, Town and Country Planning Department, Haryana, as a respondent for monitoring follow-up actions taken on the directions.
- The complainant and others similarly placed allottees may present this order before any authority or court dealing with liquidation of assets of the project as well as other assets of the respondent company and seek satisfaction of the same on priority. It is however made clear that the claims of the allottees shall be restricted to the refund of the money paid by them to the respondent along with interest as provided in Rule 15 of the HRERA Rules, 2017.