MahaREAT Grants Homebuyer Interest for Delayed Possession, Dismisses Builder's contention of delayed approval of the Occupation Certificate From Authorities

April 5, 2024

MahaREAT Grants Homebuyer Interest for Delayed Possession, Dismisses Builder’s Contention of Delayed Approval of the Occupation Certificate From Authorities

The Maharashtra Real Estate Appellate Tribunal (MahaREAT/Tribunal) panel, led by Justice Shri Shriram R. Jagtap (Judicial Member) and Dr. K. Shivaji (Technical Member), has ruled in favor of the homebuyer by awarding interest for the delayed possession. This decision comes as the Tribunal dismissed the builder’s argument citing the delayed approval of the Occupation Certificate, attributing it to internal conflicts between the Maharashtra Housing and Development Authority (MHADA) and the Municipal Corporation of Greater Mumbai (MCGM) over approval procedures

For clarity, an Occupation Certificate is a document issued by the local municipal authority, confirming that a building has been constructed in accordance with approved plans and meets all required safety standards and regulations.

Background:

Homebuyers purchased the flat in the Veena Serenity project, located at Chembur, Mumbai. The sales agreement was finalized on March 22nd, 2015, with a total price of ₹1,31,93,985. Clause 30 of the agreement specified the Builder’s obligation to hand over possession of the flat to the homebuyer within 30 months from the agreement’s date. Despite the homebuyer having paid 90% of the total amount, the Builder failed to meet the possession deadline.

As a result of the Builder’s inability to deliver possession within the agreed-upon timeframe, the Homebuyer lodged a complaint with MahaRERA, seeking possession of the flat and compensation for the delay. In its ruling dated October 26th, 2018, MahaRERA instructed the Builder to compensate the homebuyer for the delay by paying interest, effective from August 1st, 2019, until October 2018. Furthermore, MahaRERA recommended that the homebuyer take possession of the flat upon completing the full payment.

Aggrieved by MahaRERA’s order, the Builder filed an appeal before MahaRERA Appellate Tribunal.

The Builder’s argument centered around provisions within the sales agreement permitting a reasonable extension of time for possession delivery, particularly considering unforeseen circumstances beyond the Builder’s influence. The Builder asserted that the construction delay primarily stemmed from factors beyond their control, particularly internal conflicts between the Maharashtra Housing and Development Authority (MHADA) and the Municipal Corporation of Greater Mumbai (MCGM). Consequently, crucial sanctions and approvals essential for the project were delayed, despite the Builder fulfilling all compliance obligations punctually.

MahaRERA Appellate Tribunal upheld the MahaRERA order dated October 26th, 2018, and directed the Builder to compensate for the delay in possession of delivery of the flat by paying interest from August 1st, 2018, until the date when possession of the flat was taken. The tribunal cited a pertinent section of The Real Estate (Regulation and Development) Act, 2016, which reads as follows:

Section 18 – Return of amount and compensation

(1) If the promoter fails to complete or is unable to give possession of an apartment, plot or building,— (a) in accordance with the terms of the agreement for sale or, as the case may be, duly completed by the date specified therein; or (b) due to discontinuance of his business as a developer on account of suspension or revocation of the registration under this Act or for any other reason,

he shall be liable on demand to the allottees, in case the allottee wishes to withdraw from the project, without prejudice to any other remedy available, to return the amount received by him in respect of that apartment, plot, building, as the case maybe, with interest at such rate as may be prescribed in this behalf including compensation in the manner as provided under this Act:

Provided that where an allottee does not intend to withdraw from the project, he shall be paid, by the promoter, interest for every month of delay, till the handing over of the possession, at such rate as may be prescribed.

(3) If the promoter fails to discharge any other obligations imposed on him under thisAct or the rules or regulations made thereunder or in accordance with the terms andconditions of the agreement for sale, he shall be liable to pay such compensation tothe allottees, in the manner as provided under this Act.

MahaRERA Appellate Tribunal relied upon the precedent set by the Supreme Court in the case of M/s Newtech Promoters and Developers Pvt. Ltd vs. State of Uttar Pradesh & Ors. In this case, it was established that if a builder fails to deliver possession of the apartment, plot, or building within the agreed-upon timeframe specified in the agreement, then the homebuyer’s entitlement under the Act to seek refund and demand interest for the delay remains unconditional and absolute, irrespective of any unforeseen events or court/tribunal stay orders.

Consequently, the MahaRERA Appellate Tribunal directed the builder to compensate for the delay by paying interest for the late delivery of possession. Furthermore, the MahaRERA Appellate Tribunal affirmed that homebuyers retain an unconditional and absolute right to claim interest at the prescribed rate under Section 18 of the RERA for delays in possession delivery from the agreed-upon date.

Posted and reproduced in Public Interest by

Adv. Sulaiman Bhimani Legal Consultant

Expert in RERA & Consumer
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