ARTICLE
3 January 2023

Purchasers Can Claim Refund If Promoter Misses To Handover Possession By Agreeed Date: MREAT

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Recently, vide its order, Hon'ble Maharashtra Real Estate Appellate Tribunal ("MREAT") in the case of Bijon Dhirendra Tatukdar & Anr. ("Complainants / Allottees") Vs. Dhruva Woolen Mills Pvt. Ltd. ("Promoter") & Ors.
India Real Estate and Construction

1. INTRODUCTION

Recently, vide its order, Hon'ble Maharashtra Real Estate Appellate Tribunal ("MREAT") in the case of Bijon Dhirendra Tatukdar & Anr. ("Complainants / Allottees") Vs. Dhruva Woolen Mills Pvt. Ltd. ("Promoter") & Ors.1 has held that it is the right of the Allottees to take refund of their own amount as provided under Section 18 once the Promoter fails to handover possession by the agreed date and directed the Promoter to refund amount paid by the Allottees with interest at the rate of highest MCLR of SBI plus 2% from the date of receipt of payment till the date of actual realisation of amount.

2. FACTS

The Complainants booked Flat No. T-8204 in the building 'Athena' in the project 'Eirene' being undertaken by the Promoter for a total consideration of INR.1.05 crores out of which, under scheme of 9:91, the Allottees paid an amount of INR. 9.44 lakhs (9%) excluding taxes and the remaining amount (91%) was payable at the time of possession. Though the e-mail communications dated April 15, 2019 exchanged between the parties indicated date of possession as June 2020 including six months' grace period, no such date was mentioned in the letter of allotment issued on June 19, 2019 ("LOA").

Since the Promoter could not handover possession by June 2020, the Allottees served notice to the Promoter on August 24, 2020 to handover possession within 15 days failing which to refund the monies paid with interest and thereafter the demand for refund was also reiterated vide legal notice dated January 21, 2021. Thereafter, the Promoter informed the Allottees about receipt of Occupation Certificate dated February 09, 2021 ("OC") and sought the Allottees to take possession by paying balance amount as agreed vide letter dated February 26, 2021.

As the demand for refund with interest was declined by the Promoter, denying any default or delay on its part, the Allottees filed the complaint seeking refund of the amount under Section 18 of the Real Estate (Regulation and Development) Act, 2016 ("Act") for delay in possession. After hearing both the parties, the Maharashtra Real Estate Regulatory Authority ("Authority") vide order dated September 07, 2021 ("Impugned Order") dismissed the complaint on the ground that, since the project was complete with an OC on the date of filing of the complaint, no case of violation of Section 18 of the Act was made out on the date of filing the complaint.

The Complainants filed an appeal before Hon'ble MREAT challenging the Impugned Order inter alia on the following grounds:

  1. Various affidavits filed by the Promoter in the complaint and in the appeal, the Promoter had clearly stated that the date promised to the Allottees for possession was undisputedly and admittedly December 2019.
  2. Once the agreed date of possession was expired, the Allottees were entitled to enforce their right under Section 18(1) of the Act notwithstanding any purported grace period. Accordingly, once the Promoter had failed to handover possession by December 2019 the Allottees had unqualified right to seek refund of the amount paid with interest at the prescribed rate.
  3. The Promoter cannot take the benefit of relaxation in completion period in view of Covid 19 as it was not applicable to the present case as the agreed date of possession i.e. December 2019 was much prior to the onset of the pandemic or any lockdown orders.
  4. Even assuming that the Promoter was entitled to six months' grace period, the Promoter was liable to handover possession by June 2020. However, as the OC was obtained only on February 09, 2021, it was amply clear that the Promoter failed to handover possession even by the extended date.
  5. The Complaint was rejected primarily on the ground that the said project was complete with OC on the date of filing complaint. However this was incorrect as only part OC was obtained on February 09, 2021 even though the entire project was still incomplete. Also, on account of delay in possession much before the receipt of part OC, the Allottees had sought refund with interest from the Promoter as on August 24, 2020 and the said demand was reiterated vide their advocate's letter.
  6. Findings of the Authority in paragraph 12 of the Impugned Order that as per inbuilt period of limitation under Section 18 of the Act, the grievance of delayed possession must be raised before or on the date of possession and not thereafter is ex-facie contrary to the provisions of the Act.

The Promoter resisted the appeal inter alia on the following grounds:

  1. In view of Covid 19, the Authority vide order dated May 18, 2020 suo moto extended that possession timelines by six months for all projects having possession dates on or after March 15, 2020 resulting in extension of date of possession to December 2020 from the agreed date of June 2020.
  2. On December 02, 2020, the Allottees were informed that 97% work was complete and the Promoter was in the process to handover possession by March, 2021. On January 07, 2021, the Promoter had applied for OC and same was issued on February 09, 2021 and the Allottees were intimated accordingly to pay balance amount as agreed.
  3. The complaint filed by the Allottees as a belated afterthought after 43 days of obtaining the OC was contrary to the view held in order dated November 12, 2020 by the Authority in Ashley Neil Serrao and Anr. Vs. Propel Developers Pvt. Ltd,2 that the complaint filed after receiving the OC and offering of possession was not maintainable. If invocation and applicability of Section 18 was kept open and without limitation the parties who had duty to speak but slept over their rights will openly misuse the same to defeat the law itself.
  4. The Complainants themselves had acknowledged vide their e-mail dated April 15, 2019 in reply to the Promoters e-mail of the same date that the possession date was June 2020 including the grace period of six months.
  5. The Allottees had concealed the fact that on January 13, 2020 the Promoter had uploaded the revised Form 'B' stating clearly therein June 2020 as the completion date for 'Athena' building. Though the same was visible in public at large since January 2020, even then the Allottees raised no grievance and filed complaint 15 months thereafter.
  6. The Allottees availed 9:91 scheme and secured booking by paying only 9% amount. On receipt of the OC, and when the time came to pay the balance consideration of 9l% after intimation of the receipt of the OC, the Allottees backtracked from their commitment and instead, to cover their default, filed the complaint before the Authority.
  7. Reasons for delay had not been examined by the Authority while considering and disposing of the complaint. Therefore, in case delay is to be considered at the appellate stage, the matter may be remanded and referred to the Authority for examining justifiability of delay on account of notified force majeure of Covid 19 in order to not deprive the Promoter of the right of first appeal.

3. ISSUES

  1. Whether the agreed date of possession was June 2020 including grace period of 6 months?
  2. Whether the Allottees were entitled to relief of refund with interest under Section 18 of the Act?

4. Whether the agreed date of possession was June 2020 including grace period of 6 months?

Answering the question in the affirmative, Hon'ble MREAT held that the agreed date of possession was June 2020 which included the grace period of 6 months on the following grounds:

  1. Hon'ble MREAT observed that even though the transaction took place two years after the Act came into force, no possession date was indicated by the Promoter in the LOA and the reliance of the Promoter on the email communication exchanged between the parties on April 15, 2019 to lay a claim of possession date of December 2019 with 6 months grace period i.e. by June 2020, was nothing but an afterthought. Hon'ble MREAT further observed that even prior to issuing formal LOA on receiving payment, the Promoter straightaway asked vide e-mail dated May 20, 2019 the Allottees to pay certain amounts for execution of Agreement for Sale ("AFS") and that too without sharing the draft AFS which invariably would have indicated the proposed date of possession agreeable to both the parties.
  2. Hon'ble MREAT further observed that in the absence of any document to validate the date, the Allottees cannot be blamed entirely for claiming December 2019 as the said date was in the public domain as officially declared by the Promoter itself in the Form 'B' when the letter of allotment was issued by the Promoter in June, 2019.
  3. As regards the contention of the Promoter that, while relying upon the said Form 'B' the Allottees had suppressed revised Form 'B' submitted by the Promoter on January 13, 2020 declaring date of possession as December 2019 with 6 months grace period which was in public domain since January 2020, Hon'ble MREAT held that after entering into transaction with the Allottees, the Promoter not only cannot effect the change of possession date without the consent of the Allottees but also has the responsibility to intimate the same to each and every allottee particularly when for some valid reasons such change was made behind their back.
  4. Hon'ble MREAT accepted the contention of the Promoter that the parties had tacitly agreed to possession date of December 2019 with grace period of 6 months and thus the Promoter was liable to handover possession by June 2020 and that the Allottees cannot be allowed to go back from the date they had understood and tacitly accepted before going further in the transaction. Accordingly, Hon'ble MREAT held that the agreed date of possession was June 2020 which included the grace period of 6 months.

5. Whether the Allottees were entitled to relief of refund with interest under Section 18 of the Act?

Answering the question in the affirmative, Hon'ble MREAT held that once it was made out that there was delay in possession, the Allottees are entitled to refund with interest under Section 18 on the following grounds:

  1. Relying on the judgement passed by the Hon'ble Supreme Court in M/s. Newtech Promoter and Developers Pvt. Ltd V/s. State of Uttar Pradesh3 ("Newtech"), Hon'ble MREAT held that the contention of the Promoter that the possession date had been extended suo moto by MahaRERA to December 2020 in view of Covid 19 was not sustainable. Hon'ble MREAT observed that in case of failure to give possession within stipulated time, regardless of unforeseen events or stay order of the court/tribunal, which was in either way not attributable to the Allottees, the Promoter was liable to refund the amount on demand with interest. Hon'ble MREAT held that regardless of Covid 19, the Promoter was liable to handover possession by June, 2020 as agreed as delay in completion on account of corona cannot at all be ascribed to the Allottees. Hon'ble MREAT noted that even assuming that the revised date of possession on account of Covid 19 was December 2020, the fact remains, as also observed by the Authority in Impugned Order that the project was incomplete on the said date also and the OC was obtained only on February 09, 2021.
  2. As regards the Promoter's contention that once the OC was obtained or possession was offered, the Section 18 would not apply, Hon'ble MREAT observed that this tribunal has consistently held the said contention to be contrary to the letter and spirit of the Act.
  3. While reproducing the observation of the Authority from the Impugned Order, Hon'ble MREAT observed that the overemphasis of the Authority on the fact that the Allottees took no steps to take refund or kept silent waiting for the opportunity to withdraw till the Promoter completed its obligations and obtained the OC was completely misplaced and erroneous. Hon'ble MREAT further observed that the Authority failed to take note of the fact that the Allottees who are senior citizens vide letter dated August 24, 2020 i.e. within reasonable period after expiry of date of possession of June 2020 requested the Promoter for refund of the amount in case the Promoter failed to handover possession within 15 days and thereafter vide advocate notice dated January 21, 2021 sought refund with interest clearly proves that demand for refund vide was made much before the date of obtaining the OC and thus, the Allottees did not remain silent or waived or acquiesced their rights under Section 18 till the time the OC was received.
  4. Hon'ble MREAT held that the question of waiting does not arise as after the possession date was over and the Allottees had already sought refund, they are neither expected nor concerned to know when the OC would be received, the OC is immaterial to the Allottees who in any case had decided to take refund without waiting for the OC.
  5. Hon'ble MREAT noted the observation of the Authority that Section 18 has an inbuilt limitation and it envisages that any grievances on account of delay in possession must be raised either before or on date of possession and grievances raised later for delay in possession would be estopped under Section 18. Hon'ble MREAT observed that if the complaint is not filed exactly on the end date for possession, the aforesaid view provides a ready opportunity to the unscrupulous Promoters to capitalise on the same even in case of a small delay to defeat the very purpose for which the Act is enacted.
  6. After perusing Section 18 of the Act, Hon'ble MREAT held that it neither expressly nor impliedly envisages Allottee to take resort to Section 18 as opined by the Authority. It simply recognises the Allottees' right to refund on delay in possession without stipulating any time limit for taking steps to seek reliefs as provided thereunder. Also, it nowhere contemplates that the Allottees must straightaway approach the Authority to raise their grievance on a particular time as sought to be suggested by the Authority without any basis therefore.
  7. In view of the facts of the case, Hon'ble MREAT observed that the Promoter deliberately chose to ignore the requests for refund and instead waited for the OC to be received to defeat the right of the Allottees to refund taking shelter of the erroneous view held in the past by the Authority that on obtaining the OC, Section 18 would not apply.
  8. Hon'ble MREAT, referring to the judgement passed by the Hon'ble Supreme Court in Imperia Structures Ltd. Vs. Anil Patni4 held that there are no shackles or limitation on exercise of their right by the Allottees to seek refund once there is delay in possession particularly when the same is not attributable to the Allottees as prescribed particularly in paragraph 25 of the Newtech. In view thereof, the Authority was not justified in circumscribing or limiting the scope of valuable rights of the Allottees enshrined in Section 18 by taking view contrary to the position of law laid down by the Hon'ble Supreme Court.

6. INDUSLAW VIEW

This is a significant order for all the Allottees/Purchasers who have been assured a date of possession either in the letter of allotment or agreement for sale which has been breached by the Promoter. Once the possession date is missed by the Promoter, an Allottee can, after giving notice of withdrawing from the project by asking for refund of monies paid with interest, file a Complaint under Section 18 of the Act irrespective of the fact that the OC has been obtained by the Promoter. This order implies that if the OC is obtained after the date of possession that is agreed between the parties, then the Allottee will have an unqualified right to seek for refund of the amounts paid along with interest as per Section 18 of the Act. This order entails that though adverse impact of force majeure of Covid 19 in delaying the completion of the project is not to be underestimated, the delay in completion on account of Covid 19 cannot be attributed to the Allottees.

Footnotes

1 Order dated November 11, 2022 in Appeal No. AT006000000053405

2 Complaint No. 78977

3 Civil Appeal Nos. 5745, 6749 and 6750 to 6757 of 2021 - 2022 (1) R.C.R. (Civil) 357

4 (2020) 10 SCC 783

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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