MahaREAT Grants Interest To Homebuyer For Delayed Possession, Rejects Builder's Defense Of Late Approval Of Occupation Certificate

Maharashtra Real Estate Appellate Tribunal (MahaREAT/Tribunal) bench, comprising of Justice Shri Shriram R. Jagtap (Judicial Member) and Dr. K. Shivaji (Technical Member), has granted interest to homebuyer for delayed possession by rejecting the builder's contention of late approval of Occupation Certificate due to internal disputes between Maharashtra Housing and Development Authority (MHADA) and Municipal Corporation of Greater Mumbai (MCGM) regarding the issuance of approvals. For knowledge, an Occupation Certificate is a document issued by the local municipal authority, which serves as proof that a building has been constructed according to sanctioned plans and complies with all necessary safety norms and regulations. Background Fact Homebuyers purchased a flat in the Builder's Project Veena Serenity, situated in Chembur, Mumbai. The agreement for sale was executed on 22nd March 2015, with a total consideration of ₹1,31,93,985. Clause 30 of the agreement stipulated that the Builder would deliver possession of the flat to the homebuyer within 30 months from the agreement's date. However, despite the homebuyer having paid 90% of the total consideration, the Builder failed to meet the possession deadline. Due to the Builder's failure to deliver possession within the agreed timeframe, the Homebuyer filed a complaint in MahaRERA, seeking possession of the flat and compensation for the delay. In its order dated 26th October 2018, MahaRERA directed the Builder to pay interest to the homebuyer for the delay, starting from 1st August 2019 until October 2018. Additionally, MahaRERA advised the homebuyers to take possession of the flat after completing the full payment. Aggrieved by the MahaRERA's order, the Builder filed an appeal before MahaREAT. Contention of Builder The Builder contended that the agreement for sale includes provisions allowing for a reasonable extension of time for the delivery of possession, specifically accounting for factors beyond the Builder's control. Further, The delay in the construction of the project primarily arose due to factors outside the Builder's control, notably internal disputes between Maharashtra Housing and Development Authority (MHADA) and Municipal Corporation of Greater Mumbai (MCGM). Consequently, certain sanctions and approvals necessary for the project were delayed, despite the Builder having fulfilled all compliance requirements in a timely manner. REAT Verdict MahaREAT upheld the MahaRERA order dated 26th October 2018 and directed the builder to pay interest for the delay in the delivery of possession from 1st August 2018 until the date of taking possession of the subject flat. MahaREAT referred relevant part of Section 18 of The Real Estate (Regulation and Development) Act, 2016, which is read 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 may be, 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 this Act or the rules or regulations made thereunder or in accordance with the terms and conditions of the agreement for sale, he shall be liable to pay such compensation to the allottees, in the manner as provided under this Act. MahaREAT relied on the judgment of the Supreme Court in the case of M/s Newtech Promoters and Developers Pvt. Ltd vs. State of Uttar Pradesh & Ors., wherein it was held that if a builder fails to deliver possession of the apartment, plot, or building within the time stipulated under the terms of the agreement, then the homebuyer's right under the Act to seek refund and claim interest for delay is unconditional and absolute, regardless of unforeseen events or stay orders of the Court/Tribunal. Therefore, MahaREAT directed the builder to pay interest for the delay in the delivery of possession and held that homebuyers have an unconditional and absolute right to claim interest at the prescribed rate under Section...

MahaREAT Grants Interest To Homebuyer For Delayed Possession, Rejects Builder's Defense Of Late Approval Of Occupation Certificate

Aryan Raj

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