M/S Pivotal Infrastructure PVT. LTD. vs. Prakash Chand Arohi

Facts

The appellant, M/s Pivotal Infrastructure Pvt. Ltd., a promoter, and the respondent, Prakash Chand Arohi, a home buyer, entered into an apartment buyers agreement on February 14, 2011. Possession of the flat was to be delivered within 42 months upon payment of Rs. 30,07,750/-. A revised agreement was made on March 29, 2013, and the respondent paid Rs. 30,91,384/- by October 1, 2013. An additional demand of over Rs. 19,00,000/- arose due to a price revision. The respondent filed a complaint before the Haryana Real Estate Regulatory Authority, admitting a 23-month delay in possession. The appeal challenges orders from the Authority and the Haryana Real Estate Appellate Tribunal.

Held

The Court held that the appellant cannot recover the GST from the respondent. The GST became payable due to the delay in possession. Had the appellant delivered possession as agreed, the respondent would not have incurred this additional liability. Therefore, the appellant must account for this additional cost. Regarding the interest for delayed possession, the Court found no force in the appellant's argument, as the rate was fixed by subordinate legislation under the enabling power of Section 18 of the RERA Act, 2016, specifically Rule 15 of the Haryana Real Estate (Regulation and Development) Rules, 2017. Concerning the increase in the super area, the Court noted that the apartment buyers agreement does not clearly distinguish between general and limited common areas. The authorities correctly ordered that the entire common area be calculated and divided proportionately among all unit buyers. The Court found that the limited common area on each floor is not exclusively for the owners of that specific floor, and in the absence of a clear distinction in the agreement, the promoter cannot go beyond it. The appeal was disposed of with the parties bound by their stands taken before the Court.

Key Issues

1. Whether the appellant can claim additional payment from the respondent for an increase in the super area of the flat, specifically concerning common areas on each floor, as distinct from general common areas (Section 12 of RERA Act, 2016). The appellant argued that common areas on each floor, such as galleries and open spaces, are exclusive to the flat owners on that floor and should not be counted towards the common area for all buyers. The respondent contended that the entire common area must be divided amongst all home buyers and that the appellant cannot create a distinction between different types of common areas. 2. Whether the appellant is entitled to recover Goods and Services Tax (GST) from the respondent, which became payable from July 1, 2017, due to the delay in possession (Section 18 of RERA Act, 2016). The appellant argued that GST is payable as per the agreement. The respondent argued that if possession had been delivered on time in August 2014, no GST would have been payable, and thus the appellant's default caused this additional liability. 3. Whether the interest awarded for delayed possession at the rate of SBI/MCLR + 2% is erroneous (Section 18 of RERA Act, 2016 read with Rule 15 of Haryana Real Estate (Regulation and Development) Rules, 2017). The appellant challenged the rate of interest. The respondent submitted that the interest rate was awarded as per the RERA Act and the relevant Rules.