MahaRERA: Failure of completion of a flat project will lead to money refunded plus interest to buyers

RERA

RERABy Fiona Mehta

 

In the matter of Mr. Vikas Gupta and Neena Gupta v. M/s. Wheelabrator Alloy Castings Ltd and M/s. Runwal Real Estates Pvt. Ltd (CC006000000197002) under the MahaRERA Authority on 17th January 2022, the complainants had filed this complaint seeking directions  from MahaRERA to the respondent to refund the amount with interest and  handover possession under the provisions of section 18 of the Real Estate  (Regulation & Development) Act, 2016 in  respect of the booking of a flat in the  respondent’s registered project known as “Runwal Forests Tower 5-8” in Mumbai.

During the hearing on September 2, 2021, the respondents were fined Rs. 10,000/- for failing to file their replies on MahaRERA’s record. The respondents, on the other hand, filed a review application to have the order set aside, which the MahaRERA granted after hearing the parties on October 5, 2021.

 

Facts:

The complainants had reserved the aforementioned flat in the project registered by the landowner, respondent No. 1, for which a letter of allotment dated 18th October 2015 was properly issued to the complainants upon payment of the booking price of Rs. 59,91,565/-. Respondent No. 1 specified August 2019 as the date of possession in the stated assignment letter. Following that, on August 19, 2016, an agreement for sale was signed and registered, and the date of possession was altered to February 2020. The complainants alleged that they had paid a significant portion of the compensation.

Furthermore, the proposed completion date for Tower 8 has been pushed back several times till October 31, 2021. The complainants were then informed, via an e-mail dated 8th April 2021, that the project was completed up to 40 levels. The complainants then asked to be removed from the project. Furthermore, work on the flat sold to the complainants under the agreement for sale has yet to begin. As a result, the complainants are seeking a return of the monies spent to date, plus interest, as well as amounts paid for Stamp Duty and Registration, GST, VAT, Service Tax, and other taxes.

The MahaRERA has reviewed both parties’ submissions as well as the public record. The complainants, who are allottees of this project, have approached MahaRERA with this complaint, requesting a refund as well as interest for the delayed possession under section 18 of the RERA. The complainants further claimed that section 12 of the RERA had been also violated.

The respondent promoter refuted the complainants’ claim by filing written representations on record with MahaRERA, claiming that the delay in this project was caused by the competent authorities issuing Stop Work Notices due to a lack of Naval NOC, and that this was beyond its control. In light of the Hon’ble Punjab and Haryana High Court’s decision in the case of Janta Land Developers, the respondent has also rejected the complainants’ claims by raising the question of MahaRERA’s single bench’s jurisdiction to decide this complaint on its own.

 

Judgement/Held:

Given the facts and circumstances of this matter, the MahaRERA believes there is substance to the grounds for delay provided by the respondent, and that the delay was beyond the respondent’s control. As a result, the respondent is entitled to request MahaRERA’s assistance in completing this project. However, the respondent has now committed to finish the project and hand over control of the property to the complainants by acquiring the occupancy certificate on or before June 30, 2022.

Given these facts, the present complaint is dismissed with a directive to the respondent promoter to complete the project, obtain an occupancy certificate, and hand over possession of the said flat to the complainant on or before June 30, 2022, failing which, the complainants’ money will be refunded, plus interest, at the rate of SBI’s Highest Marginal Cost of Funds Based Lending Rate (MCLR) plus 2%, as prescribed under the provisions of the SBI Act.

MAHAREAT: Obtaining OC/completion of construction at any time will not render the Section 18 inapplicable

By Fiona Mehta

In light of the Hon’ble High Court’s judgement dated 15th April 2020, the promoter has filed Miscellaneous Application (M.A.) 108 of 2020 to collect the outstanding sum owed by the Appellants, plus interest. It is also requested that the aforementioned Application be considered concurrently with the appeal under review (AT006000000010885).

 

Facts of the case: Appellants (hereinafter referred to as Allottees) claim to have originally booked the flat on September/October, 2009 in the project of Respondent known as Indiabulls Greens-1, at Panvel, District Raigad. According to Allottees, promoter promised to give possession within a period of 3 years i.e. October, 2012. subsequently registered agreement for sale dated 20 August 2011 was executed by the parties as per clause 9 of which possession was agreed to be given within 60 months with grace period of 9 months and with entitlement to further reasonable extension in period of possession subject to mitigating events listed under the said clause claiming inter alia that Allottees have paid 100% amount as per demands raised by promoter and alleging further that amenities and facilities as promised in brochure/advertisements etc., as obtained from Times of India were not provided in the almost completed project in 2012,Allottees filed complaint with the Authority seeking inter alia possession of the flat and interest for delay in possession.

In the complaint hearing, the Promoter contested the grounds presented by the Allottees and sought the Authority to issue an order to give over possession by December 2018 as specified in a prior complaint in the same project. The promoter further argued that because the occupancy certificate (OC) was obtained prior to the filing of the lawsuit and possession had already been offered to Allottees in accordance with it, the provisions of section 18 for interest payment would not apply. The promoter also stated that it will not charge for services or amenities that will not be available when possession is handed over.

After examining the parties’ views, the Authority concluded in the impugned order dated 24 October 2018 that Section 18 would not apply after the project was completed or possession was delivered, and declined to award interest to Allottees for the delay in possession. As a result, the Authority recommended Allottees to take possession with instructions to the promoter not to charge for any amenities/ facilities that were not delivered at the time of possession until such time as they were. The stated order is being contested by Allottees in this appeal.

Following the foregoing order, Allottees desperately sought to make the amount asked by Promoter under protest for taking possession, as evidenced by comments made by Allottees via multiple emails. It appears that Promoter declined to accept the offer and did not hand over possession until the Hon’ble Bombay High Court ordered it to be handed over in the second appeal filed by Promoter, vide order dated 09th January 2020, subject to keeping all contentions of the parties open with regard to claims of both parties regarding outstanding amount. This application is being submitted in accordance with the above-mentioned instructions.

 

Order: The Tribunal has repeatedly concluded that getting OC/construction completion at any moment does not make Section 18 inapplicable. If an OC is obtained after the parties have agreed on a date, such an OC, as is the situation in this case, cannot negate the effect of the provisions of Section 18. As a result, if OC is not obtained and/or ownership is not transferred before the agreed-upon date, the provisions of Section 18 will be invoked, making Allottees entitled to the reliefs granted thereunder. As a result, the contested order, which is contradictory to the law, deserves to be set aside and requires intervention.

Promoter/Respondent is directed to pay Allottees interest on the total amount excluding stamp duty and registration charges, if any, within 30 days from the date of this order, w.e.f. 21st May 2017 until the date of handing over possession, at 2% above the highest SBI MCLR prevailing on the date of the impugned order.

Bombay High Court: ordered the builder to deposit 100% of the interest due to flat buyers

By Fiona Mehta

 

As a condition of hearing its appeal, the Bombay high court upheld an order of the RERA (Real Estate Regulation and Development Act) appellate tribunal (MAHAREAT) directing a builder to deposit 100% of the interest due to buyers for delays in handing over flats at a project called Wintergreen in Borivali in May 2022.

However, the HC, accepts an undertaking by the builder, CCI Projects Pvt Ltd, and gave it 5 months to deposit over Rs 19 crore before the Tribunal, of which Rs 5.5 crore is to be paid in 4 weeks.

The developer said it will deposit Rs 33 lakh, or 30% of the Rs 1.1 crore ‘penalty’ due to flat buyers, in 4 weeks. It will also provide more than Rs 10 lakh to expenses as directed. In their May 6 judgement, Justices Revati Mohite Dere and Madhav Jamdar stated that failure to fulfil deadlines will result in the rejection of any pending appeal before the panel.

CCI Projects’ counsels had challenged the tribunal’s orders under the RERA Act requiring it to deposit a 100 percent deposit “without recording any reasons.” According to the counsels, Section 43 (5) of the RERA Act provides the tribunal power to request a deposit of at least 30% of the amount, and “the appellate tribunal has directed deposit of considerably lesser amount in numerous other situations.”

The HC also heard from Central government’s counsel and the apartment buyers’ attorney where they pointed out that the Act only requires a minimum 30% deposit of the imposed ‘penalty,’ not any additional amounts. She stated that a pre-deposit of the total sum is mandatory before an appeal is considered.

The project is finished, according to the builder’s counsel, and the flats have been handed over to the buyers. According to him, the MahaRERA order is merely for compensation for delays, and hence, flat buyers’ concerns should have been dismissed.

 

Flat buyers filed 173 complaints, of which 69 have been resolved, 83 are awaiting hearing before the Authority, and 19 are awaiting conciliation. There were 112 appeals before the tribunal, 42 of which were settled, and 53 of which were granted a pre-deposit order.

The builder’s counsel then requested further time, claiming that the builder is willing to make the deposit in five months and has agreed to pay the interest deposit in five months, as well as not to create third-party rights in four shops at Arcade, Rivali Park in Borivali, valued at around Rs 12 crore.

The HC ordered that if the builder and flat buyers do not reach a settlement within five months, the builder is free to seek a revision of the ruling.

Section 43(5) of the Act envisages the filing of an appeal before the appellate tribunal against the order of an authority or the adjudicating officer by any person aggrieved and where the promoter intends to appeal against an order of authority or adjudicating officer against imposition of penalty, the promoter has to deposit at least 30 per cent of the penalty amount or such higher amount as may be directed by the appellate tribunal.

If the appeal is against any other order involving the return of funds to the allottee, the promoter must deposit with the appellate tribunal the total amount to be paid to the allottee, including any interest and compensation owed to him, if any, or both, as the case may be, before the appeal is filed.

MahaREAT rejects application for amendment of MahaRERA order when the applicant is late for application.

By Fiona Mehta

 

In the matter of Shridhar Krishna Mani & Another vs. Lucina Land Developers Limited (AT006000000010885), Appellants are seeking amendment in Prayer Clause of Memorandum of Appeal by contending that Respondent obtained part occupation certificate without completing pending works (‘amenities’) promised in the brochure and offered possession of the flat to Appellants. Therefore, in the complaint, Appellant had sought specific direction from the Authority to Respondent to complete pending works.

As a result, the Appellants requested similar direction in the prayer clause (a) in this case. Respondent, on the other hand, made it apparent in written representations that it would/could not supply the amenities promised at the time of the flat’s sale. Respondent’s final plan plainly shows that no space is left for community amenities, notwithstanding Respondent’s assurance in the brochure.

In such circumstances, Appellants considering permanent losses made specific submissions in written argument. Therefore, it is just and necessary to consider the prayer clause (g) in Appeal and Appellants be allowed to amend the prayers.

On the one hand, Appellant’s Advocate claims that Respondent has broken Section 12 of the Act by failing to provide the amenities and facilities promised in the brochure and ads published in the major publications. Appellants are seeking compensation from Respondent under the proposed amendment for failing to provide amenities as indicated in the brochure and marketing. The proposed revision will not alter the nature of the reliefs, which are consistent with the Appellants’ pleadings.

On the other hand, Respondent’s Advocate states that a bare perusal of the Application for Amendment would show that it is not an Amendment Application. There is no reference of schedule of the amendment in the application.

Learned Advocate has drawn attention to paragraphs 3, 4, 7(j), 7(p), 7(nn), 7(ss), 7(ww), and 7(aaa) of Respondent’s affidavit in reply dated 9th February 2019 and poignantly submitted that Respondent has specifically mentioned in the affidavit-in-reply that Respondent has provided amenities to Appellants, as agreed in the agreement for sale. It means that Respondent’s affidavit-in-reply fabricated Appellants’ claim that Appellants learned for the first time from Respondent’s written representations that Respondent will not provide amenities as depicted in the brochure. Furthermore, the appellants failed to use their entitlement at an earlier stage and instead submitted the current application after the case was closed for judgement.

Final order: After analyzing the parties’ competing arguments and the totality of the facts and circumstances of the case, it can be concluded that, for the new cause of action that has emerged, Appellants can raise this issue before the proper venue in line with the RERA 2016. As a result, the Application for Amendment of the Appeal Memo is not only late, but it would also alter the essence and character of the Appeal. As a result, the considered opinion that the Application lacks merit and is liable to be rejected.

MahaREAT: Allottees are entitled to claim refund with interest and withdraw from the project when Promoters failed to handover possession with OC.

By Fiona Mehta

 

In the matter of Mr. Suryakant Yahswant Jadhav and Suryakant Jadhav HUF vs. Bellissimo Hi-Rise Builders Pvt. Ltd. And others. (Appeal No. AT006000000021407 and AT006000000021408) before the MahaREAT, where both the parties have executed and registered agreements for sale separately for two flats on 17th May, 2014 and on 16th May, 2014, Promoters agreed to handover possession of the flats on or before 28th February, 2017. Allottees have paid about 95 to 96% of price of each of the flats. Promoters failed to handover possession of the flats as per agreed date. Project was incomplete on 1st May, 2017 i.e., the date on which the RERA came into force, promoters registered the project under RERA.

Therefore, Allottees decided to withdraw from the project and demanded refund with interest and compensation as per Section 18 of RERA. Promoters did not pay any heed. Allottees filed separate complaints (Complaint No. CC006000000056404 and Complaint No. CC006000000056405) for each flat before MahaRERA.

MahaRERA conducted enquiry and heard Allottees and Promoters. MahaRERA disposed of both the Complaints by common order dated 6th March, 2019 and held that Section 18 of RERA does not apply to the present dispute. MahaRERA advised Allottees to take possession of their respective flats which is ready for occupation. Aggravated by this, the Allottees have fled two separate appeals challenging the order.

According to the Allottees Counsel, allottees have the right to make a compensation claim with the Adjudicating Officer under RERA Sections 71 and 72. The impugned order is not legally enforceable for the reasons outlined above. As a result, Allottees are entitled to a refund plus interest because the Promoters failed to deliver possession of the flats on the agreed-upon date in the sale agreements.

In view of above submissions, it is submitted by Allottees that for the reasons of delay in possession along with failure to provide amenities as promised and failure to provide flats as booked. Allottees are entitled to seek refund with interest and compensation and therefore the impugned order is liable to be set-aside.

Order: In view of the delay in possession as observed above, Allottees are entitled to withdraw from the project under Section 18(1) of RERA which the Authority has failed to consider and recognize. It is not possible to accept the observations made by the Authority in para 3 of the impugned order holding that Section 18(1) would not apply once the construction is complete or possession is handed over, as the case may be.

Having regard to the above observations, it is found that Promoters have not been able to hand over possession on the agreed date i.e., 28.02.2018 as per clause 11.1 of the AFS. Therefore, Allottees are entitled to withdraw from the project and consequently eligible for reliefs as provided under Section 18(1) of RERA. In the result, the impugned order cannot be sustained and deserves to be set aside.

Final Order: Appeal No. 4T006000000021407 and Appeal No. 4T006000000021408 are allowed by MahaREAT. Promoters shall refund the amount received from Allottees in respect of both the flats along with interest.

MahaREAT: Acceptance of possession will nullify the complaint.

By Fiona Mehta

 

In the matter of Asha Ashok Katariya vs. M/s Jawala Real Estate Pvt. Ltd. (Appeal No. AT005000000053030), where MahaRERA rejects application for amendment and disposing of the complaint in consequence of rejection of amendment application.

Facts of the matter: Complainant booked a flat in promoter’s project “Lodha Marquise-B” in Lower Parel, Mumbai. Allotment letter was issued in 2013. Later on 28th August 2013, agreement for sale was executed between the parties. According to complainant agreed date of fit out possession was 31st December 2017 and with one year grace period promoter agreed to deliver possession. As possession could not delivered in time, allottee filed complaint before MahaRERA seeking several reliefs such as refund of entire amount with interest under Section 18 of the RERA Act, 2016, compensation for mental agony, and compensation under Section 12 for providing false information.

As possession was offered and accepted during the pendency of complaint, complainant filed an application for amendment seeking change in the relief of refund as for possession and interest on delayed possession. Authority rejected the application for amendment on the ground that provisions of Code of Civil Procedure can be considered as guidelines and amendment sought is against the settled proposition of law. It was observed that Section 38 of RERA and Regulation 42 of MahaRERA General Regulations 2017 do not permit such amendment.

Second ground on which application came to be rejected is that cause of action does not survive as possession has been taken by complainant and reliefs of refund and possession being contrary to each other cannot be granted in view of settled propositions.

It is an admitted fact that possession was offered by promoter during the pendency of complaint and then accepted by allottee. As can be seen from possession letter dated 28th October 2020 complainant had reserved her right at the time of taking possession and specifically endorsed on possession letter that acceptance of possession was “without prejudice”.

It can be revealed from the record that on 28th October 2020 itself complainant filed an additional affidavit before the Authority mentioning events which transpired leading to possession. On 5th November 2020 she moved an application for amendment. It is surprising to note that in the entire order there is no whisper regarding additional affidavit filed by complainant or endorsement “without prejudice” on possession letter. Authority completely ignored the very edifice of amendment application while rejecting the same.

Order: In the case on hand, it can be seen that while passing order on application for amendment, Authority reached to the conclusion that in view of rejection of amendment application cause of action does not survive and disposed of the complaint. It clearly demonstrates that complainant was not given an opportunity of hearing before disposing of complaint. This in our view amounts to violation of principles of natural justice as contemplated under Section 38(2) of the Act of 2016 thereby rendering the impugned order unsustainable in law.

MahaRERA: Builder fined Rs. 1000 per day for sale of flats without project registration

RERA

RERABy Adv Fiona Mehta

In a recent case, the Maharashtra Real Estate Regulatory Authority (MahaRERA) has issued
penalties for a residential project in Panvel that was not registered. MahaRERA imposed a
punishment under 63 of the RERA Act of Rs. 1000 per day, which must be paid to the
regulatory authority on a daily basis until the project is given a registration number.
Chandrakant Kamble, the case's complainant, had booked a property in a project called 'Mytri Infrahousing Private Limited' in Devad, Panvel, with numerous others. He reserved a flat in 2015 and paid Rs 7.5 lakh out of a total of Rs 15 lakh. The builder, on the other hand, made no mention of a completion or possession date. The project's construction started in 2013. The Project is not yet registered under RERA nor has the OC been received. The Complainant seeks reliefs in terms of directing the Respondent to register the project with RERA, he seeks reliefs under Section 3 and Section 7 of the Act. He further seeks possession of the flat together with interest and compensation for delay and also seeks directives to restrain the Respondent from creating third Party rights.

Advocate Aditya Pratap, representing the complainant, contended that the developer's
project was still in progress under section 3(1) of the RERA Act. The Builder was required to
register the project under section 4 of the RERA Act since the project had received a
commencement certificate but not a completion certificate when the RERA Act took effect.
He further claimed that despite not possessing RERA registrations, the builder continued to
seek bookings. Furthermore, under section 18 of the RERA Act, the complainants have the
right to request delayed interest payment. This, however, would only be possible if the
project was RERA-registered. The lawyer requested that orders be issued under section 59
of the RERA Act, and that the builder be sanctioned for his actions.
It is hereby observed that since the said Project is an on-going project, the same needs to be registered within a period of 30 days from the date of this Order. Further, the Respondent shall not advertise, market, book or create third party rights by offer for sale, enter into agreement for sale any apartment in the said Project, without obtaining the MahaRERA registration number for the said Project failing which the Respondents shall be levied a penalty under section 63 of the said Act of Rs.1,000/- per day and the same shall be paid to MahaRERA on daily basis.
MahaRERA additionally restrained the builder from advertising, marketing and
booking flats for sale without obtaining RERA registration and has slapped an
additional penalty of Rs. 1 lakh for violation of rules under Section 59 of RERA Act.

RERA opens window for adversarial litigation

Books

BooksBy Adv Fiona Mehta

In the matter of Vayuputra Realty Pvt Ltd vs. MahaRERA (2022), there is a considerable amount of completely unnecessary controversy about the form of proceedings before the Chairperson of the Maharashtra Real Estate Regulatory Authority, Mumbai, MahaRERA. The Respondents to these petitions, specifically Respondents Nos. 2–4 (“the DB Group”), have requested that a residential project known as Turf View be “deregistered.” The Petitioners purchased residential properties sold by the DB Group in Turf View.

By email dated January 31, 2022, the DB Group applied to MahaRERA for an appropriate order of ‘deregistration.’ The application is not filed as a formal adversarial proceeding. Perhaps it should, given each of the five petitioners opposes DB Group’s deregistration application vigorously. The point, as the High Court understand it from Mr. Dhond and Mr. Seksaria, is that the RERA Act has no concept of deregistration. This is the issue that needs to be resolved.

Whereas, it is therefore necessary to alter the Practice of giving the nomenclature, “suo motu” to the regulatory matters adversarial in nature and accordingly the following directions are issued in Order 29 of 2022 RERA: -.

  1. a) Regulatory matters that that take the form of adversarial litigation shall be filed in the manner as detailed out in Annexure- A’
  2. b) The statement of facts contained in any filing shall be supported by a duly notarized affidavit which affidavit shall be in Form-I annexed hereto.
  3. c) The letter notifying defects if any in the filing of the regulatory matters shall be in Form -lI annexed hereto.

MahaRERA will accept hard copies in the manner mentioned above until a digital module is made available for the purpose of filing such regulatory concerns.

These guidelines do not apply to complaints submitted under the Act’s Section 31.

The practice of using the appellation “suo moto” for regulatory cases that are not adversarial in nature will continue. The preceding instructions will take effect immediately.