Case title:

NBCC (INDIA) LIMITED FORMERLY NATIONAL BUILDING CONSTRUCTION CORPORATION LTD & ORS v JOSHY VARGHESE

Date of Order:

19th SEPTEMBER 2023

Bench:

HON’BLE JUSTICE A. BADHARUDEEN

Parties:

APPELLANT –NBCC (INDIA) LIMITED FORMERLY NATIONAL BUILDING CONSTRUCTION  CORPORATION LTD.,

THE GENERAL MANAGER, NBCC (INDIA) LTD

RESPONDENT - JOSHY VARGHESE

SUBJECT:

The Kerala Real Estate (Regulation and Development) Act, 2016, is the subject of the case that is mentioned. It appears to specifically involve disagreements between a promoter/developer and allottees over matters like flat possession, interest payments, and other obligations connected to a real estate project. The Kerala Real Estate (Regulation and Development) Act, 2016, as well as any related rules and regulations, are all central to the case's interpretation and application of various provisions.

IMPORTANT PROVISIONS:

OVERVIEW:

Real estate contracts in Kerala, India are at the centre of the legal dispute in the presented case. It examines whether a developer upheld its commitments to deliver properties in accordance with the contract. In addition, the case looks at compensation and interest rates, with implications for disagreements over real estate contracts. It emphasises how crucial clear terms, compliance with regulations, and legal resolution are in intricate real estate projects.

Brief Facts –

1. It relates to disagreements over the delivery of property and real estate contracts.
2. The "promoter," a developer, failed to complete and deliver properties in accordance with the agreed-upon terms.
3. Delays, a halt in operations, or other factors contributed to the failure to deliver the properties.
4. The "allottees," or complainants, sought redress for the developer's noncompliance.
5. Kerala Real Estate (Regulation and Development) Act, 2016, Section 18 and Kerala Real Estate (Regulation and Development) Rules, 2018, Rule 18, were invoked.
6. The return of funds, compensation, and interest due to allottees in the event of developer noncompliance are covered by these legal provisions.
7. Determining the proper interest rates and compensation was another issue in the dispute.
8. The Kerala Real Estate Regulatory Authority took part in the decision-making process.
9. The case raised concerns about the eligibility for statutory interest and whether the allottees' receipt of statutory interest would be barred by a claim for a lower interest amount.
10. After the Regulatory Authority issued orders, the situation was appealed.
11. The appeals contested the Regulatory Authority's decision to grant interest.
12. The Kerala Real Estate Appellate Tribunal ultimately made a decision in the case.

ISSUES RAISED: Whether the grant of interest by the Kerala Real Estate Regulatory Authority in excess of the amount claimed is legal?

ARGUMENTS ADVANCED BY THE APPELLANT:

1. The appellant made a point of stating that the respondent's initial claim for interest at a fixed rate of 12% should be upheld.
2. They argued that a party shouldn't be granted the higher statutory interest rate when they voluntarily limit their claim for interest to a rate lower than the statutory interest.
3. The appellant argued that the regulatory authority has the authority to issue orders, including the imposition of penalties, in accordance with the law and rules, as stated in Rule 36 of the Kerala Real Estate (Regulation and Development) Rules 2018.
4. It was argued that even if the complainant requested a lower interest rate than what is legally required, the regulatory authority had the discretion to grant the statutory interest.
5. According to the appellant, the purpose of the legislation should be to permit the statutory interest to be granted regardless of the interest rate that the complainant initially claimed.
6. They argued that they shouldn't be denied the statutory interest to which they are legally entitled because the complainant chose to request a lower interest rate.
7. The appellant argued that the regulatory authority's decision to grant interest at a rate of 14.75% was appropriate and that the court did not need to intervene.

JUDGEMENT ANALYSIS:

1. According to the court, the statutory interest as outlined in Section 18 of the Kerala Real Estate (Regulation and Development Act) of 2016 and Rule 18 of the Kerala Real Estate (Regulation and Development Rules) of 2018 should be granted at the exact rate outlined in those two documents.
2. It was stated that because the allottee had requested interest at a lower rate (12%), the law's intent was to ensure that statutory interest was awarded, and this did not preclude the allottee from receiving the statutory interest.
3. The court emphasised Rule 36 of the Rules, which gave the Regulatory Authority the authority to issue orders and impose penalties in accordance with the law and rules and also indicated the Authority's discretion to grant statutory interest.
4. As a result, the court determined that there was no need to interfere with the Regulatory Authority's decision to award interest at a rate of 14.75% (as confirmed by the Appellate Authority).
5. As a result, the appellant's two miscellaneous second appeals were rejected.

CONCLUSION:

In conclusion, the court upheld the applicable rules and the statutory interest rate set forth in the Kerala Real Estate (Regulation and Development) Act, 2016. It was decided that the allottee could still receive the statutory interest despite the fact that the allottee had claimed an interest rate that was lower than the statutory rate. As a result, the court dismissed the appellant's appeals and upheld the Regulatory Authority's decision to award interest at the legal rate of 14.75%, as upheld by the Appellate Authority.