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.

The requirement of a pre-deposit in an RERA appeal cannot be waived : MREAT

By Adv Fiona Mehta

In the matter of Kashi Homes h/t. Ltd. vs Mahindrapal Singh (2022) (AT006000000021298), this application in the instant Appeal was filed seeking waiver of the condition of pre-deposit of the amount as per impugned order as mandated under Provision to Section 43(5) of RERA.

Facts of the Case: The Respondent (Allottee) purchased a unit in the Appellant’s (Promoter) ‘Sai Siddhi’ project in Khopoti. Respondent filed a complaint with the Authority claiming interest for the delay in possession, alleging that the promoter failed to hand over ownership on or before April 2, 2014, as promised. The Authority issued the contested order on February 20, 2019, requiring the promoter, among other things, to pay interest on the whole sum paid by the Allottee until the date of possession, beginning on April 3, 2014. The appeal is filed in response to the above-mentioned order.

What is the Provision of Section 43(5): Provision to Section 43(5) mandates that for entertaining the Appeal, promoter is obligated to deposit the amount as per impugned order as may be directed by the Tribunal.

Vide Application under consideration promoter has sought to entertain the Appeal to be decided on merits without insisting for the pre-deposit of the said amount.

On one hand, Promoter argued that notice for complaint dated 19th January 2019 was never served on Promoter, and the complaint was taken up for on the same date following the impugned order was passed on 22nd February 2019. On the other hand, learned Counsel for Allottee was adamant in opposing the request for a waiver of the pre-deposit and demanded that the Application be dismissed outright because the pre-deposit clauses are necessary.

After considering the Promoter’s arguments, it was clear that the sole ground for seeking a waiver of the pre-deposit as well as the ground for challenging the Appeal was denial of natural

justice, as no notice of hearing was served on the Appellant prior to the complaint being heard and the impugned order being issued. In this regard, it should be noted that the aforementioned ground relates to the merits of the case, which cannot be reviewed and decided until the appeal is heard.

If this is the case, determination of the grounds of challenge at the stage of the application for waiver or exemption of the pre-deposit would be equivalent to hearing the appeal without the pre-deposit. This is not permitted and would constitute a violation of RERA’s Provision to Section 43(5).

The foregoing viewpoint is backed up by landmark decisions of the Division Bench of the Hon’ble Punjab and Haryana High Court on the specific matter of RERA Section 43(5) compliance. Besides the categorical view as above, we are also guided by the view taken by the Hon’ble Bombay High Court in M/s Renaissance Infrastructure Vs Shri Parth B. Suchak & Anr. (2020)

Final Order: On compliance of mandatory provision to 43(5) of RERA, the submissions made by the Appellant with regard to propriety and legality of the impugned order was considered on merit only at the time of final hearing of the Appeal. At this stage no waiver was granted and Promoter shall have to deposit amount in compliance of provision to Section 43(5) of RERA.

Earnest money cannot be forfeited: MREAT

By Adv Fiona Mehta

In the matter of Rekha Navani vs Omkar Ventures Pvt. Ltd (2019) (AT006000000021465)

Facts of the Case: The dispute concerns the reservation of an apartment in Omkar Ventures’ project in Andheri, Mumbai. While booking the flat at an exhibition, the channel partner of Respondent promised that in case she is found ineligible for housing loan, the amount paid will be refunded. The Appellant received a letter of allotment from the Respondent on December 5, 2017, after which the Respondent sent demand notices for the remaining amount due on the property. Since the Appellant was unable to obtain a loan from a bank, she requested that the Respondent cancel the reservation and reimburse the entire money. Despite numerous follow-ups, the Respondent only repaid Rs.1 lakh, with the remaining Rs.6.95 lakhs forfeited.

As Respondent did not oblige, the Appellant filed a complaint (“Complaint”) with the Maharashtra Real Estate Regulatory Authority (“MHRERA”) against the Respondent, requesting a refund of the entire amount plus interest under Section 19(4) of the Real Estate (Regulation and Development) Act, 2016 (“RERA Act”). The Appellant specifically stated in

the lawsuit that Respondent could not forfeit any sum paid to it because no such clause was included in the assignment letter, and so she was entitled to a refund under Sections 18 and 19 of the RERA Act.

On the other hand, Respondent argued that even though Respondent was entitled to forfeit 10% amount of the consideration price of the booked flat as per the Clause 3(l)(ii) of the Allotment letter, Respondent forfeited 5% amount as Appellant had paid only 5% amount of the total consideration, After observing that, since no agreement for sale is executed, Section 18 would not apply to the matter to grant refund to Appellant the Authority disposed of the complaint vide impugned order by directing refund of amount, if any, to Appellant subject to terms and conditions of Allotment letter.

However, Respondent purposefully interpreted the Application Fee as total consideration for the flat in the allotment letter, and later interpreted the “EOI” and “Application Fee” together as earnest money in the allotment letter, making it difficult for the Appellant to understand the implications of such terminologies mentioned in the allotment letter/application form, and such arbitrary and one-sided implications have made the contractual obligations unfair and inequitable.

MahaRERA’s Judgement: MHRERA, disagreeing with the Appellant’s arguments, dismissed the case, stating that the Appellant was not entitled to any refund under Section 18 of the RERA Act because there was no agreement of sale between the parties. Appellant filed an appeal against MHRERA’s Order with MHREAT after being aggrieved.

Appeal: According to the Tribunal’s ruling on 29th June 2020, the terms listed in the application form and allotment letter sent to the homebuyer do not adhere to the regulations of the Real Estate (Regulation and Development) Act, 2016, and they are also ambiguous, one-sided, and inequitable.

MHREAT’s Judgement: The MHREAT while dealing with the issue that “Whether the Appellant is entitled for refund of the paid amount paid along with interest”, held that the terms prescribed by Respondent in its allotment letter and application form are not only in derogation of the provision of RERA Act and rules framed thereunder but are also one-sided, ambiguous and inequitable. The MHREAT further held that RERA Act is a welfare legislation enacted to safeguard the interest of the allottees, and as such Respondent cannot be allowed to act against the RERA Act by formulating formats which are one-sided, ambiguous and inequitable.

Final Judgement: The MHREAT vide its Judgment dated June 29, 2020 allowed an appeal setting aside an Order passed by the MHRERA, and directed Respondent to refund the forfeited amount to the Appellant. This ruling would force RERA authorities across the country to adhere to the RERA Act’s stipulations and reconsider their decision not to provide refunds.