MahaRERA Slaps One Lakh Penalty on Developer Niraj Kakad Constructions for Mental Harassment of Homebuyer
Moneylife Digital Team 16 October 2020
MahaRERA has awarded Rs one lakh as compensation to a homebuyer for delayed possession and mental harassment. The developer Niraj Kakad Constructions will have to pay this penalty to the homebuyer for mental harassment and not being able to deliver possession for over six years after payment of the first installment. The developer has also been directed to refund Rs1.52 crore with 10.40% per annum (p.a) interest from the date of payment (2014 onwards).
 
The senior citizen homebuyer, Sachhanand Tejwani had booked flat number 601 in Devi Kakad Solitaire project near Sindhi Society in Chembur in his daughter Sneha’s name. He paid 85% of the total flat cost of Rs 1.65 crore in tranches since 2014. The agreement for sale was signed in June 2016 with the promise of giving possession on or before 30 August 2017 with a rider for a 6 months grace period.
 
As per Mr Tejwani, when he approached the developer for possession in September 2017, he found only eight slabs out of 15 had been completed, and the work had stopped due to technical issues and lack of further permissions from the Municipal Corporation of Greater Mumbai. The developer promised to deliver possession but Mr Tejwani discovered that that the owners of the land, on which this redevelopment project stands, had terminated the 2013 development agreement with the developer and arbitration proceedings were on. 
 
Mr Tejwani demanded a refund of his money, but the developer did not agree, hence Mr Tejwani filed a complaint with MahaRERA in 2019. 
The counsel for Niraj Kakad Constructions argued that the complaint be dismissed as MahaRERA had extended the completion timelines to 26 June 2020 and hence the complaint was premature. The lawyer admitted that the arbitrator had given his ruling on 26 April 2019 and the developer had challenged the ruling. 
 
The lawyer claimed that Niraj Kakad Constructions was unable to complete the project due to illegal termination of the development agreement on 1 December 2016. The lawyer further provided various other reasons (demonetization, imposition of GST, overall slowdown in the real estate sector) for the inordinate delay in the project completion.
 
MahaRERA member held that Mr Tejwani was entitled to withdraw from the project and get their money refunded with interest. He pointed out that the developer had a period of about 21 months till February 2018 to deliver the project and 85% of the flat cost had already been received by the firm.
 
Mr Kulkarni noted that the property card showed that the land belonged to Sindhi Immigrant Cooperative Housing Society, and the IOD (intimation of disapproval) was issued in the name of the society secretary. He said the clause E in the agreement stated that Tulsibai Jagasia, and two members of her family held the leasehold right of the property. They signed a development agreement with Niraj Kakad Constructions in August 2013, obtained the IOD in December 2010 and revised IOD and CC were obtained by the society in November 2013. On 1 December 2016, Jagasias terminated the development agreement on the ground that the developer violated the agreement by selling flats including the flat of Tejwanis behind their back, according to the order. 
 
The order says “The notice issued by Jagasia family shows that respondent entered into an agreement with the complainant without complying with terms of development agreement. Thus it was the respondent who was at fault in not complying with terms of development agreement. Respondent cannot take benefit of the wrong committed by him”. 
 
Mr Kulkarni overruled the generic argument that the project was delayed due to demonetization, GST, slowdown in the market. 
 
The housing regulator said “However, respondent had received as much as 85 per cent of the consideration amount from the complainant. Now we are in the year 2020. Respondent is still not in a position to hand over possession.
 
There are no justifying reasons for the delay and the respondent must blame himself for the arbitration award which went against him” while awarding the refund subject to the final High Court orders in the arbitration case. 
 
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