By Staff Reporter:
The Maharashtra Real Estate Appellate Tribunal (MREAT) on January 24, 2025, issued a significant judgment concerning a case where a promoter failed to execute an agreement for sale despite receiving a substantial portion of the consideration amount from allottees. The tribunal ruled in favor of the allottees and directed the promoter to fulfill its obligations under the Real Estate (Regulation and Development) Act, 2016 (RERA Act).
Background of the Case
The case involved a group of allottees who had booked a flat in a real estate project and paid a significant portion of the consideration amount. However, despite multiple follow-ups, the promoter avoided entering into an agreement for sale on various pretexts. Additionally, the promoter failed to hand over possession of the flat within the stipulated timeline. Consequently, the allottees filed a complaint seeking the following reliefs:
- Direction to the promoter to execute an agreement for sale.
- Direction to the promoter to hand over possession of the flat.
- Compensation in the form of interest on the paid amount from June 2013 until the actual possession of the flat is handed over.
MREAT Judgment and Legal Interpretation
The tribunal, in its ruling, analyzed the obligations of the promoter under the RERA Act, 2016, and provisions of the Indian Contract Act, 1872. Clause (a) of Section 2 of the Contract Act defines a proposal, while Clause (b) of Section 2 defines a promise. The tribunal noted that the allotment letter dated May 12, 2010, satisfied the criteria of both clauses, thereby establishing a contractual obligation on the part of the promoter.
Promoter’s Responsibilities Under RERA
The tribunal emphasized that promoters must fix a possession date while executing agreements, taking into account both favorable and unfavorable circumstances that may impact the project’s completion. The promoter is expected to anticipate delays, comply with legal requirements such as obtaining the Occupation Certificate (OC), and deliver the flats accordingly. Despite declaring December 31, 2019, as the completion date while registering the project, the promoter obtained only a part OC on March 24, 2021. This failure to deliver possession on time and execute an agreement for sale violated the promoter’s obligations under RERA.
Application of the Limitation Act, 1963
The tribunal also referred to Article 54 of the Limitation Act, which specifies a three-year period for seeking specific performance of a contract. The limitation period begins either from the fixed date of performance or, if no date is specified, from the date when the plaintiff realizes that performance has been refused. In this case, the promoter’s repeated refusals to execute the agreement and deliver possession led the allottees to file a complaint, establishing their claim within the limitation period.
Based on the findings, the MREAT ruled in favor of the allottees and directed the promoter to:
- Immediately execute the agreement for sale with the allottees.
- Handover possession of the flat without further delay.
- Pay interest on the paid amount from June 2013 until the actual handover of possession.
The tribunal also criticized the MahaRERA Authority for extending the benefit of the moratorium period to the promoter without justification. It reiterated that the promoter must act professionally and ensure project completion within the committed timeline.
Implications of the Judgment
This ruling serves as a strong precedent in protecting homebuyers’ rights and reinforcing the obligations of real estate developers under RERA. It highlights the legal consequences of delaying agreements for sale and possession, ensuring that promoters adhere to their commitments. The case underscores the importance of timely execution of agreements and delivery of possession, thereby strengthening consumer protection in the real estate sector.
