Maharashtra Real Estate Regulatory Authority (MahaRERA) recently passed an order directing a developer to pay interest since September 2006 (when the project ought to have been completed) on the total amount paid by a home-buyer for a flat in a high-rise at Kurla for failure to mention the date of possession in a 2003 agreement for sale.
The developer, Nirmal Lifestyle Ltd, has been ordered to pay simple interest at 9% per annum for the past 14 years.
The order says that interest has to be paid on the total consideration of about Rs28.13 lakh that was paid from 2006 till the date of handing over of possession. The developer was represented by advocate Atharva Dandekar and advocate Vaishali Mohite, who said that the apartment would be completed by December 2021.
The complainants—Vivek and Yojana Shinde—had booked the flat (A wing- 501) in Nirmal Lifestyle Blu Diamond One Edition. The couple was represented by advocate Anil D'Souza who contended there was a delay in possession and said that the Shindes were entitled to interest on the investment made till they were given possession under Section 18 of the Real Estate (Regulation and Development) Act, or RERA.
The developer executed the agreement for sale in the complainants’ favour on 5 March 2003 but did not mention the date of possession in it. However, in the letter addressed to the bank, the developer mentioned that possession for the flat would be handed over in March 2006.
They said they had paid the full sum and expected possession by 2006. When RERA was implemented, the builder set December 2021 as the possession date.
Nirmal Lifestyle’s counsel argued that the developer was not responsible for the delay as the land was declared a private forest from 2006 and construction stopped till a 2014 judgment of the Supreme Court clarified the issue and the 'private forest' tag was removed. The developer's reply stated that, since March 2020 a nation-wide lock-down to tackle the COVID-19 pandemic caused "massive shortage of labour and building material and hence work could not be restarted."
BD Kapadnis, member MahaRERA, said in his order that even after the Act came into force, the builder did not rectify the sale agreement by mentioning a possession date, violating Section 13(2) of the RERA Act. The agreement was executed under Maharashtra Ownership of Flats Act (MOFA) and its Section 4(1A) (a)(ii) lays down that, the agreement shall contain the date by which possession of the flat is to be handed over to the purchaser. Despite all these provisions the developer did not mention the date of possession.
MahaRERA pointed out that the Supreme Court (SC) had held that when an agreement does not mention the possession date, "the reasonable period of possession is only three years."
Section 18 of the RERA Act provides that if the promoter fails to hand over the possession of the flat or complete it as specified in the agreement on the date of possession mentioned in the agreement, then the allottee is entitled to claim interest on his investment for delayed possession until the possession is handed over.
As per MahaRERA order, Nirmal Lifestyle was liable to hand over the possession of the apartment by 5 March 2006. This date cannot be extended beyond six months as per Section 8(b) of MOFA even if the reasons delaying completion of the project were beyond the developer’s control. Hence, the liability to pay interest starts from 5 September 2006. The prescribed rate of interest is 2% above SBI’s highest MCLR which is currently 7% per annum.
MahaRERA also said that the complainants were also entitled to get Rs20,000 towards cost of their complaint from the builder. The order added that the developer has to hand over the possession of the apartment with all agreed amenities and completion certificate and occupation certificate to the complainants at the earliest but not later than December 2021.
Advocate D’Souza, counsel for the home-buyers, expressed his satisfaction for the order saying “Once again MahaRERA has shone like a beacon of hope for aggrieved home-buyers. Imagine the anguish, on one hand high EMIs and on the other obscenely high rents of Mumbai. MahaRERA always carefully evaluates the situation on facts of the case and points of law, and strikes a judicious balance.”
Nirmal Lifestyles has said it would file an appeal.