Status as on- 03/07/2021
Introduction
The delayed possession of apartments or plots purchased by the homebuyers has emerged as one of the most critical concerns in India’s Real Estate business. In recent years, home buyers have often approached Courts and Tribunals with complaints about promoters and developers failing to deliver flats in the scheduled timeline. In this Article we will examine a MAHA-RERA case to see can homebuyers get compensation for delayed or no-possessions.
Case Referred: Renaissance Infrastructure vs. Parth B. Suchak
Background
According to the agreement of sale (“the agreement”) dated December 10, 2009, the Complainant purchased six pieces of land from the Respondent Promoter, along with a warehouse structure. According to the agreement, Promoter was required to provide the Complainant or allottee ownership of the suit property by March 9, 2010. It is worth noting that Complainant and Promoter were initially partners, and upon Complainant’s departure from the partnership, his portion was paid by delivering the suit property, according to the sale agreement. Later, the Promoter failed to comply with the terms of the agreement and was unable to hand over control of the suit property on time, even after a six-month extension. According to the provisions of the agreement, if possession is not handed over on time, the Promoter is obligated to pay or compensate the Complainant/allottee for loss of rent, i.e., Rs. 10/- per sq. ft. each month. As a result, the allottee filed a complaint with the Maharashtra RERA Authority over the delay in possession of the suit property.
RERA Order
The adjudicating authority ruled in favour of the allottee and ordered the Promoter to pay the Allottee/Complainant. The adjudicating officer determined the total compensation amount to be Rs. 5.04 Crores up to June 30, 2018, i.e., till the time of filing the complaint, including a six-month extension from the stipulated date of possession of the suit property.
RERA Appellate Authority Order
As a result, the Promoter appealed this judgement before the RERA Appellate Body. However, the appellate authority maintained the order made by the Maharashtra RERA Authority in orders dated January 9, 2020 and January 24, 2020. The appeal authority determined that the Promoter/Appellant in this case was a promoter and so was required to deposit 50% of the compensation sum under Section 43(5) of the Act. As a result, the relevant appeal was dismissed, and the promoter was ordered to pay the aforementioned compensation sum to the allottee.
Bombay High Court
- The Hon’ble Court recognized that the Appellant was a Promoter since he was involved in the development of a real estate project and the sale of plots and apartments. The Court also noted that the agreement entered into between the parties to the dispute explicitly stated the transfer of suit property and therefore constituted a “agreement for sale.”
- The Court said that because the Appellant was a promoter, he was required to follow the proviso to Section 43(5) of the Act and pay 50 percent of the compensation as a condition antecedent to initiating an appeal. As a result, the Hon’ble Bombay High Court found no flaws or illegalities in the challenged decisions issued by the adjudicating authority and affirmed them.
- The Court thus dismissed both appeals and ordered the promoter to pay half of the compensation as directed by the adjudicating authority within the stipulated time of four weeks, and further instructed that no sale of the suit property would take place until compensation was paid, and failure to comply with the order would authorize the concerned tehsildar to commence sale of the suit property.
Conclusion
Prior to 2016, the lack of a particular law controlling the Real Estate sector in India rendered home buyers powerless and severely disabled in such circumstances of delayed or non-possession of flats even after paying the entire consideration as per the terms of the development agreement. However, the passage of the Real Estate (Regulation and Development) Act, 2016, as well as the judiciary’s harsh stance against such builders, has aided in the shaping of the law and legal ramifications connected to delayed possession of flats by promoters/builders in India.
Disclaimer – The above article is based on the personal interpretation of the related orders and laws. The readers are expected to take expert opinion before relying upon the article. For more information, please contact us at rera@centrik.in
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