MahaRERA Orders Developer To Refund Money with 9% Interest since Project Stuck due to Defence Curbs
Maharashtra Real Estate Regulatory Authority (MahaRERA) has ordered the developer of a project to refund Rs47.46 lakh at 9% pa (per annum) interest to a home-buyer. The developer was also directed to pay Rs20,000 to the home-buyer towards cost of the complaint. Construction of the Kanjurmarg project was stopped since they could not obtain the naval NoC (no objection certificate) because of its proximity to a naval housing colony. 
 
MahaRERA member Bhalchandra Kapadnis issued the order after hearing the case based on a complaint by Snehalata Deokar who had booked an apartment in the 25-storey Avante project by Sanjeevani Vyapar LLP.
 
As per the project website, it was proposed to be developed under a joint venture between the Ashwin Sheth group and Emami group. 
 
Ms Deokar had booked the apartment (flat number 1201 in C wing) in 2015 by paying Rs47,26,785 out of the total cost of Rs1,53,41,500 and the developer had promised possession by December 2019. The developer had agreed to hand over possession by 31 December 2019. 
 
Ms Deokar’s lawyer, advocate Sameer Bhandari said that she now wished to withdraw from the project since the developer could not deliver possession as promised by December 2019.
 
Advocate Pragathi Malle, the counsel for Sanjeevani Vyapar LLP, argued that there is still time for the revised project completion date of 30 June 2022 and, hence, the complaint was not maintainable. She added that the Bombay High Court (HC), in its 27 February 2019 order in Tirandaz Shubha Niketan Cooperative Housing Society case, had said that the NoC from the naval department was not required for construction near the naval housing colony.
 
However, despite the Bombay HC ruling, the commencement certificate was not granted by the municipal corporation of greater Mumbai (MCGM). In 2019, the developer had challenged the MCGM letter refusing a commencement certificate (CC) in a writ petition which is still pending before the High Court.
 
The developer’s lawyer explained that her client had kept the complainant informed through emails with respect to the current status of the project including the status of the Naval NoC and commencement certificate. 
 
She claimed that the developer company was within its rights to forfeit the earnest money paid by the complainant if the sale of immovable property fell through due to the default of the purchaser and asked for the complaint to be dismissed.
 
MahaRERA member Mr Kapadnis held that the developer accepted almost 30% of the total cost of the apartment, in violation of both Maharashtra Ownership of Flats Act (MOFA) and Real Estate (Regulation and development) [RERA] Act which authorises the acceptance of not more than 20% and 10% of total cost of apartment, respectively, without first executing and registering the agreement for sale. 
 
Mr Kapadnis mentioned that the developer has mentioned 31 December 2019 as the proposed date of completion (on the project webpage) and it would be considered as the agreed date of possession. He said that “the revised date unilaterally declared by the developer while registering the project with MahaRERA is not a material date but the agreed date is important to compute the delay in the ratio laid down by Bombay HC in the Neelkamal realtors Pvt Ltd vs Union of India. Hence this case comes u/s 12 of RERA”.
 
He noted that the premises in which the complainant was residing has been demolished for redevelopment and the complainant had to shift to rental premises by paying a huge rent. 
 
He observed that “There is no dispute on the point that the planning authority MCGM has not granted the commencement certificate because the naval authority has not granted NOC for construction of the project... Without the commencement certificate, the respondents should not have launched the project and accepted the booking.” 
 
As per Section 4(2)(c) of RERA, at the time of registration of a project, the authenticated copies of the approvals and commencement certificate from the competent authority obtained in accordance with the law, as may be applicable for the respective project, are to be uploaded. In this case, the respondent launched the project without obtaining the commencement certificate. 
 
Mr Kapadnis said “Since the respondents have defaulted in obtaining the commencement certificate, the money deposited by the complainant cannot be treated as earnest money liable for forfeiture as contended by the respondent.” 
 
 
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    COMMENTS

    m.prabhu.shankar

    4 weeks ago

    Excellent Excellent

    Borrowers to Get Difference Between Compound and Simple Interest as Ex-gratia for Lockdown Period: FinMin
    The Indian government has decided to waive interest on interest on loans up to Rs2 crore during the six-month moratorium period. The categories of loans up to Rs2 crore include the medium, small and micro enterprises (MSME) loans, education loans, housing loans, consumer durable loans, credit card dues, auto loans, personal loans to professionals and consumption loans. All borrowers, whether or not they have availed the moratorium, are eligible to receive the difference between compound interest and simple interest on their loans. 
     
    The relief will be given to borrowers in the form of a grant of ex-gratia payment of the difference between compound interest and simple interest for six months from 1st March to 30 August 2020. This means, during this period borrowers will only pay simple interest on the loan and would receive refund for the excess compound interest payment paid, if any, during the six months. 
     
    However, to receive the ex-gratia interest payment, the loan account should be standard and not a non-performing asset (NPA) as on 29 February 2020, says a notification issued by the department of financial services (DFS) in the ministry of finance (FinMin).  
     
    "The rate of interest would be as prevailing on 29 February 2020 and in case the rate of interest has changed thereafter, it shall not be reckoned for the purpose of his computation. The payable ex-gratia amount shall have to be credited to the account of the borrower by the respective lending institutes as ex-gratia payment under the scheme," it added.
     
    The notification says, "The lending institutions shall credit the difference between compound interest and simple interest with regard to the eligible borrowers...irrespective of whether such borrowers have fully availed or partially availed or not availed of the moratorium on repayment of the respective loans as announced by the RBI..."
     
     
    All lenders, including all banks, all India financial institutions, non-banking finance companies (NBFCs), and housing finance companies (HFCs) are directed to implement the scheme. 
     
     
    Earlier, the union government, in an affidavit before the Supreme Court had said that the relief on the waiver of compound interest during the six-month moratorium period should be limited to the most vulnerable category of borrowers.
     
    The Centre had said it is impossible for the banks to bear the burden resulting from the waiver of compound interest without passing on the financial impact to the depositors or affecting their net worth adversely, which would not be in the larger public interest.
     
    After the recommendations of an expert committee, the Centre had altered its stand. Previously, the Reserve Bank of India (RBI) and the Centre had argued against waiver of interest on interest, as it would be against the interests of other stakeholders, especially depositors, and also unfair to those who have paid their dues.
     
    A bench comprising Justices Ashok Bhushan, RS Reddy and MR Shah had urged the Centre to have a re-look at its decision against the backdrop of financial hardship faced by many amid the ongoing Covid-19 pandemic, even though the top court had agreed to not waive interest altogether.
     
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    COMMENTS

    Rupesh Chatterjee

    1 month ago

    If this ex-gratia credit applies only to the interest on interest element, I find it difficult to understand, how does this benefit someone who has been paying their EMI on time.

    Isn't the interest element of the EMI computed only for the principal that is remaining after your last emi payment.

    EMI's do not carry any interest on interest component in it unless a default has been made and a new EMI gets calculated adding the interest on interest element for the moratorium period if availed.

    I think there will be more follow up to this decision from the FM office.

    sactel

    1 month ago

    Will the borrower have to initiate any formal process for availing the cashback or will it be done automatically by the bank ?

    Builders to be blacklisted for delay in construction: Haryana RERA
    Fed up with builders not completing projects on time, The Haryana Real Estate Regulatory Authority (HRERA) on Friday decided that the builders who delay their ongoing projects will be blacklisted and debarred from future projects.
     
    The authority has issued a notice to Empire Realtech Pvt Ltd to blacklist the builder along with associated firm CHD Developers and debar them from further registration for new projects till the ongoing projects are completed.
     
    A notice was also issued to complete the project and hand over possession to the allottees or face cancellation of registration.
     
    According to the orders, Empire Realtech had launched a project in 106 Golf Avenue, Sector 106, Gurugram, in 2011 and possession of the apartments was to be given by December 2016. But even after four years of delay, the buyers are running from pillar to post for to get possession of their apartments.
     
    The promoter intimated the buyers about the revised date for completion of the project to as June 30, 2021 but the project has still not been completed.
     
    The HRERA bench headed by K.K. Khandelwal in the presence of its members Samir Kumar and Subhash Chand Kush has issued notice to the erring construction firm, asking the reasons for the delay.
     
    "There are 642 units in the project out of which 600 units have been sold. Nearly Rs 500 crore have been collected from the allottees by 2016. The promoter has also taken loan of around Rs 150 crore out of which Rs 36 crore are still outstanding. Despite availability of funds, both from allottees as well as lenders, the project is far from complete," read the order.
     
    There are nine towers in the project and in only three towers around 80 per cent work has been completed. The construction is stuck up from October 2018 and the allottees have paid 90 per cent of the cost of the apartments.
     
    "It seems that the funds have been siphoned off by the promoter as even after receiving more than Rs 600 crore from the allottees and lending institutions, only Rs 168 crore have been incurred on the construction," the bench said.
     
    The authority has now decided to order a forensic audit of the project account.
     
    "The promoter has not even opened a separate RERA account for the project. Allottees' instalments were received in another account of the bank and all the money deposited by the buyers were taken away by the lender, whereas 70 per cent amount should have been deposited in a separate RERA account to be used only for construction work," the beach added.
     
    The promoter has been asked to submit a mitigation plan for completion of the project within a month in consultation with the association of allottees. The authority has also given an option to the association of buyers to take over the project for its completion.
     
    Disclaimer: Information, facts or opinions expressed in this news article are presented as sourced from IANS and do not reflect views of Moneylife and hence Moneylife is not responsible or liable for the same. As a source and news provider, IANS is responsible for accuracy, completeness, suitability and validity of any information in this article.
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