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Real estate project completion date unilaterally changed by developer not binding on home buyers, says Maharashtra Real Estate Tribunal

Developer’s effort to wriggle out the situation saying no agreement for sale had not been entered into, did not pass muster with MREAT, which said the allotment letter contains important ingredients of such agreement for sale.

Representational image.

Representational image.

The Maharashtra Real Estate Appellate Tribunal (MREAT), while hearing an appeal for refund of booking amount for a flat booked in Vasai near Mumbai, has said that the project completion date unilaterally changed by the developer without consent of homebuyers is not binding on the homebuyers.

The tribunal said that the changed completion date mentioned on the website of Maharashtra Real Estate Regulatory Authority (MahaRERA) cannot be taken as the agreed possession delivery date.

The case

Two homebuyers, Chandrika Chowatia and Kanan Chowatia, booked flat no. 502 in ‘A’ wing of Anand Kirti Tower, situated at Virar (West) in Thane district near Mumbai, for a total consideration of Rs 22.75 lakh. Allotment letter dated February 10, 2013, was issued by the developer on receipt of the full and final payment of Rs 22.75 lakh.

According to the allotment letter, possession of the flat was to be handed over in 18-24 months from the date of commencement of work. The promoter received commencement certificate dated April 15, 2014. Thereby, possession of the flat was agreed to be delivered by April 14, 2016.

Close

However, while registering the project with MahaRERA, the developer revised the possession date to December 31, 2020.

However, when the flat was not delivered in time, and the promoter expressed his inability to commit to any time frame for project completion, the complainants cancelled the booking and demanded refund of the entire amount along with compensation as per the Act.

The developer allegedly agreed to refund the amount paid by the home buyers. However, he has refunded only a part of the amount till date.

Home buyers approach MahaRERA

The home buyers filed a complaint before MahaRERA seeking refund of the remaining amount paid, together with interest and cost under the provisions of the RERA Act.

Appearing before MahaRERA, the developer resisted the complaint, saying the complainants had failed to come forward to execute and register the agreement for sale despite reminders and the causes for delay of project completion being explained to them.

After hearing both sides, MahaRERA passed an order in 2020, that since no agreement for sale had been executed and registered between the parties, provisions of Section 18 of the RERA Act do not apply to the present case. Refund shall be done as per the terms and conditions of the allotment letter or as agreed between the parties, MahaRERA said.

Home buyers approach tribunal

Aggrieved by the order, the home buyers approached the tribunal seeking various reliefs, including to direct the developer to refund the amount paid, together with interest and compensation.

The home buyers contended that after taking more than 10 percent of the amount, the onus to execute an agreement for sale is on the developer as per the provisions of Section 13(1) of the Act.

The buyers further contended that project completion date in the instant case has been revised to December 2020 beyond the agreed date for delivery of possession adding that developer has already agreed for refund making them eligible for refund.

Accordingly, the home buyers contended that they have the right to withdraw from the project and receive full refund, together with interest and compensation. The impugned order is illegal, arbitrary, without application of mind, bad in law and void in contravention to the provisions of law and the Act, submitted the home buyers to MREAT.

Developer's argument at the tribunal

The developer, on the other hand, argued that home buyers have already accepted Rs 10 lakh as part-payment of the refund.

Therefore, accepting part-consideratlon and accepting cancellation of booking, the home buyers had waived off their rights as allottees in the project, and so, were not liable to make any further claims under the RERA Act.

The developer further contended that home buyers had failed to enter into the agreement for sale despite several requests and follow-ups, and that the project construction was delayed on account of several genuine reasons beyond his control.

The home buyers were kept informed about all these delays well in advance, he said. The MahaRERA had granted extension to the project completion date, which was then reflected on the MahaRERA website, the developer said.

The developer added that the home buyers requested him in August 2018 to cancel their booking of the flat, which was accepted and clearly mentioned in the appeal memo. The developer never forced the home buyers to withdraw from the project, he submitted at the MREAT.

Tribunal's judgment

The tribunal in its judgment said that sections of the RERA Act will be relevant in entertaining the complaints of the home buyers.

The judgment reads, "(The) allotment letter already issued in the present case reflects agreed positions between the parties and contains important ingredients of the agreement for sale. Accordingly, an allotment letter will not dilute the settled terms between the parties of purchaser, seller of property and price agreed upon in schedule including details of the property. Thereby, provisions of the Act including that of sections 12 and 18 will continue to be applicable for entertaining complaints and also for the purpose of adjudication of the instant case."

The tribunal added that while registering the project with MahaRERA, the promoter had initially proposed March 31, 2017 as project completion date, which was later revised to December 31, 2020, and placed on the website.

Moreover, the delivery date mentioned on MahaRERA's website was revised unilaterally without consent of the home buyers.

Therefore, it is not binding on the home buyers. Accordingly, the project completion date mentioned on the website of MahaRERA cannot be taken as the agreed possession delivery date, the judgment said.

The tribunal’s judgment of August 25, 2022, has directed the developer to refund the remaining amount to the home buyers, together with interest from the date of receipt of respective payments @2 percent per annum above the State Bank of India’s highest marginal cost of lending rate (MCLR) within one month of this order.
Mehul R Thakkar
first published: Aug 26, 2022 07:54 pm
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