The Maharashtra Real Estate Appellate Tribunal (MREAT) has directed the developer of ONE BKC, an office building in Mumbai’s Bandra Kurla Complex, to pay interest for allegedly delaying the delivery of office space by 50 months to a customer.
MREAT directed Raghuleela Builders to pay interest at State Bank of India’s highest Marginal Cost of Lending Rate plus 2 percent on the amount paid by the buyer, Mysore Petro Chemicals, from October 2015 to November 2019.
The developer was to give possession of the office space to the buyer in September 2015 but delivered it in December 2019 because it could not get an occupation certificate (OC) owing to a dispute with the Mumbai Metropolitan Region Development Authority (MMRDA), the tribunal said.
The tribunal said a dispute between Raghuleela Builders developer and MMRDA does not fall within the ambit of a reason beyond the control of the developer.
By no stretch of the imagination can it be said that the delay in procuring the OC was not attributable to the developer, the order said.
The buyer booked the office space of 326.09 sq mtr (3,510 sq ft) together with a utility area on the 10th floor of ONE BKC and two car parking slots for a total consideration of Rs. 12,93,60,000.
On July 2, 2015, the developer executed an agreement for sale and undertook to hand over possession of the office unit by September 30, 2015.
BKC is considered one of the costliest commercial business districts in the country where the per square foot price of the property is anywhere between Rs 15,000 and Rs 50,000 and even more in exceptional cases, according to local brokers.
According to the tribunal’s order, the buyer paid the entire amount to the developer which, although it seemed to have completed the construction of the office unit, failed to obtain the occupancy certificate due to a dispute with the MMRDA.
The buyer approached the Maharashtra Real Estate Authority, seeking an order that the developer pay interest on the amount paid by it and hand over the office unit with an occupancy certificate.
Not satisfied with the Authority’s order, Mysore Petro Chemicals approached the appellate tribunal.
The developer contended that although the project was completed in 2015 and a part occupancy certificate for it was obtained on May 29, 2015, the full occupancy certificate was withheld by MMRDA due to some penalties levied by the planning authority which were challenged by the developer in Bombay High Court; the court set aside the penalties. The developer contended that it had offered fit-out possession to the buyer which the latter did not accept.
The tribunal said in its order dated June 30, 2022: "RERA does not recognise the concept of fit-out possession. Continuous failure to obtain occupancy certificate is a breach of the obligations imposed on the developer under the MOFA and amounts to a continuing wrong" MOFA is short for Maharashtra Ownership of Flats Act.
Sudhir Singh, a representative of Mysore Petro Chemicals, said the developer was in the midst of insolvency proceedings at the National Company Law Tribunal (NCLT).
“We have now communicated about the order to the Interim Resolution Professional (IRP) appointed by the NCLT with our claims. We are awaiting a response, and based on that we will decide our future course of action," Singh said.
A query emailed to the IRP of Raghuleela Builders had elicited no response.
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