Promoter M/s. Shivparvathi Constructions Faces Setback as Appellate Tribunal Upholds Delay Compensation Order

In a significant development, the Karnataka Real Estate Appellate Tribunal has delivered a judgment upholding the delay compensation order against promoter M/s. Shivparvathi Constructions. The case, with reference number FR No. (K-REAT) 53/2023, revolves around a real estate project called "The Orchard." The tribunal's decision comes as a setback for the promoter, as it validates the claims made by allottees D S Rudramuni and Geetha M regarding project delays and non-delivery of possession. This in-depth article delves into the details of the case and the implications of the tribunal's ruling.

Background of the Case

The dispute stems from an agreement of sale signed on April 16, 2015, between M/s. Shivparvathi Constructions and allottees D S Rudramuni and Geetha M. The agreement pertained to Flat No. 203 in the Farkleberry block of "The Orchard" project, located in Bangalore. As per the agreement, the promoter was obligated to complete the project and deliver possession of the flat by April 16, 2017, including a grace period of six months.

Allegations and Complaint

Alleging a breach of the agreement by the promoter, the allottees filed a complaint before the Karnataka Real Estate Regulatory Authority (K-RERA). The complaint, bearing number CMP/200130/0004909, sought delay compensation due to the failure of timely project completion and possession. The complainants argued that M/s. Shivparvathi Constructions had not fulfilled their obligations as agreed upon, leading to financial and emotional distress.

Authority's Order

After considering the complaint, objections from the promoter, and hearing both parties, the K-RERA passed an order on December 29, 2022. The order acknowledged the complainants' claims and held the promoter liable for delay compensation. It directed M/s. Shivparvathi Constructions to pay interest on the delay period amounting to Rs. 50,11,552 calculated at the rate of 9% per annum from April 16, 2017, to April 30, 2017. Furthermore, interest was to be paid at the rate of SBI MCLR + 2% from May 1, 2017, to November 21, 2019.

Promoter's Appeal and Non-Compliance

Displeased with the K-RERA's decision, M/s. Shivparvathi Constructions filed an appeal before the Karnataka Real Estate Appellate Tribunal under Section 44 of the Real Estate (Regulation and Development) Act, 2016. The appeal aimed to set aside the order passed by the K-RERA.

However, the promoter failed to comply with office objections raised by the tribunal. Specifically, the requirement to deposit the total amount payable to the allottees as per the impugned order, as mandated under the proviso to Section 43(5) of the Act, was not fulfilled. Despite granting sufficient opportunities to comply, the appellant did not meet the prescribed obligations.

Tribunal's Judgment

Taking into account the non-compliance of office objections, including the failure to deposit the necessary amount, the Karnataka Real Estate Appellate Tribunal dismissed the promoter's appeal. The tribunal referred to the proviso to sub-Section (5) of Section 43 of the Real Estate (Regulation and Development) Act, 2016, which mandates the pre-deposit of a statutory amount by the appellant.

Citing the Supreme Court's judgment in the case of M/s NEWTECH PROMOTERS AND DEVELOPERS PVT. LTD Vs. STATE OF U.P AND OTHERS, the tribunal emphasized that the pre-deposit requirement is not onerous or in violation of constitutional rights. Consequently, the dismissal of the appeal led to the rejection of any pending interim applications associated with the case.

Implications and Conclusion

The Appellate Tribunal's decision to uphold the delay compensation order against M/s. Shivparvathi Constructions carries significant implications. It affirms the rights of the allottees and reinforces the importance of timely project completion and delivery in the real estate sector. The judgment sets a precedent for promoting accountability among promoters and ensuring that homebuyers receive due compensation for project delays.

In conclusion, the case of M/s. Shivparvathi Constructions vs. D S Rudramuni and Geetha M serves as a reminder of the legal recourse available to homebuyers facing project delays. The tribunal's ruling highlights the need for promoters to adhere to their contractual obligations, protecting the interests of allottees and maintaining the integrity of the real estate industry.

Note: The information provided in this article about Karnataka Real Estate Regulatory Authority (KRERA) is for informational purposes only. It is not intended as legal or professional advice and readers should consult qualified professionals for advice specific to their circumstances. The information provided in this article is based on the FR No. (K-REAT) 53/2023 before the Karnataka Real Estate Regulatory Authority

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