In a landmark judgement, the Maharashtra Real Estate Appellate Tribunal (MahaREAT) has directed the promoters of Palava Lakeside to refund with interest (at interest of 2% more than the marginal cost of funds-based lending rate—MCLR—of State Bank of India) money paid by two home-buyers, who withdrew from the project three months after delivery of their flats was due.
Ruling on the sanctity of the ‘specified date’ of possession, the Tribunal held that the promoters of Palava Lakeside (Bellissimo Hi-Rise Builders Pvt Ltd, Bankim Ashok Doshi, Sushant Keru Hirue and Palava Dwellers Private Ltd) in Kalyan failed to hand over possession of two flats by 28 February 2018 as mentioned in the agreements for sale (AFS) and thus the allottees were entitled to withdraw and get refund with interest.
More importantly the Tribunal has explicitly stated ‘possession’ as contemplated in Section 18 of RERA is not ‘fit out possession’. There is no concept of ‘fit out possession’ under the Maharashtra Ownership of Flats Act (MOFA) or RERA (Real Estate Regulation and Development Act). There is no provision under RERA by which offer of ‘fit out possession’ can be given. The Tribunal has, thus, overturned the earlier order passed by MahaRERA.
The MahaREAT order says “Once, it is evident that promoters failed to give possession by the ‘specified date as mentioned in the agreement’, promoters are not entitled for extension of such specified date on the basis of any clause regarding grace period in the agreement for sale.”
The order further points out that “Section 18 of RERA is absolute on the point of ‘specified date’ mentioned in the agreement for giving possession and not at all the extended date on the basis of grace period.”
The order clarifies that permitting possession beyond the specified date “would lead to disastrous consequences, rendering the agreed date of possession as specified in the AFS irrelevant.”
The two home-buyers had filed a complaint before MahaRERA earlier. The home-buyers Suryakant Yashwant Jadhav and Suryakant Jadhav HUF had booked flat numbers 901-H and 902-H in Palava Lakeside A to H and paid 96% of the sale consideration.
As per their complaint, the AFS (signed in 2014) promised possession for fit-outs by February 2017 and within a year the final possession with occupancy certificate but with a grace period of a year.
The pthe tribunal held that thecomplete when the Real Estate (Regulation and Development) Act came into effect on 1 May 2017; hence the promoters registered it as an ongoing project under RERA.
In May 2018, with no possession given, the buyers decided to withdraw from the project and demanded refund with interest and compensation.
They filed a complaint with MahaRERA invoking section 18 (1) of RERA which provides for refund with interest and compensation for builder’s failure to hand over possession of flat by the date specified in the agreement.
In March 2019, MahaRERA held that Section 18 was not applicable to their case as the promoter said that part OC was received for the project in May 2018, before the complaint was filed. The Authority said that once the project was complete, Section 18 would not apply while advising the home-buyers to take possession of flats when ready.
The aggrieved home-buyers approached the MahaREAT against the impugned order passed by MahaRERA.
On 12 January 2021, Tribunal members Sumant Kolhe (judicial) and SS Sandhu, in concurrent but separately reasoned findings, held that the MahaRERA order was not sustainable under law.
In such circumstances, "failure to handover possession of the flat" as contemplated under Section 18 of RERA is "failure to handover physical possession of the flat with occupancy certificate.”
The counsel for the promoters denied any delay and said hence withdrawal from project could not be permitted. As per Section 19(10) of RERA, the developer has to hand over physical possession of the apartment with OC to a home-buyer, who is then obliged to take delivery within two months.
Noting that the builder offered possession with OC to the buyers on 21 June 2018, the tribunal said there was a “delay in handing over possession”.
The tribunal also added “Once it is evident that promoters failed to give possession by the ‘specified date as mentioned in the agreement’, promoters are not entitled for extension” on the basis of any clause of ‘grace period’ in the AFS.
The home-buyers had also claimed the ‘fit-out and grace clauses’ in agreement were ‘one-sided’ while the promoters denied it.
In its order, the tribunal said “These clauses substantiate the charge of allottees that promoters got one-sided agreements executed.”
SS Sandhu additionally reasoned that if MahaRERA’s order is accepted it would “lead to chaos and no allottee would be able to seek reliefs under section 18 (1) if possession is given… much beyond the date specified”.
He observed “Legislature never intended such consequences for allottees, while framing the social welfare legislation of RERA.”
The buyers had also claimed Rs25 lakh in compensation. Though the Tribunal did not grant it, it gave them the liberty to file an independent petition for compensation before an adjudicating officer under Section 71 and 72 of RERA.