1. INTRODUCTION

Recently, the Maharashtra Real Estate Appellate Tribunal ("MREAT"), in two cross appeals1 filed by Deepak Bhandari & Ors ("Allottees") and Surana Construction & Ors ("Promoters") against each other has held that provisions of Section 18 of Real Estate (Regulation and Development) Act, 2016 ("Act") can be invoked in view of any oral or formal agreements executed by the promoter/developer such as booking letter/confirmation letter/letter of allotment, correspondence etc.

2. FACTS

Allottees booked 2 office premises bearing Nos 905A and 908A ("said Units") in the project namely "Tulsi Chambers" situated at Chembur, Mumbai ("said Project") launched by the Promoters for which Allottees paid substantial amounts out of total payable consideration. Pursuant thereto, Promoters issued allotment letters dated April 03, 2013 in favour of Allottees. Promoters also promised to handover possession of the said Units to the Allottees on or before December 2015.

Being dissatisfied by the fact that despite having received substantial amounts, Promoters neither executed registered agreements for sale nor handed over possession of said Units, Allottees filed complaint under Section 13 and Section 18 of the Act before the Real Estate Regulatory Authority ("Authority"). After hearing both parties, Hon'ble Authority passed an order ("Impugned Order") partly allowing the complaint and directing the Promoters to execute agreements for sale with the Allottees with respect to the said Units and denying the claim of the Allottees for interest under Section 18 of the Act by holding that there is no written contract signed by both the parties to show the agreed date of possession.

Being aggrieved by the said Impugned order, both the Allottees and Promoters filed the present appeals before Hon'ble MREAT interalia on the following grounds:

2.1 Allottees grounds

  1. Despite having received more than 20% amount of total consideration, Promoters failed to execute agreements for sale as per the provisions of Maharashtra Ownership of Flats Act, 1963 ("MOFA"). Even after registration of the said Project with Maharashtra Real Estate Regulatory Authority ("MahaRERA"), Promoters failed to execute agreements for sale as per Section 13 of the said act.
  2. Basis the agreement for sale executed by the Promoters with another allottee of the same floor wherein Promoters agreed to handover possession of the office premises by December 2015, it is clear that the Promoters, though they failed to execute agreement for sale, committed to handover possession of the said Units by December 2015.
  3. Relying on the judgement passed by Hon'ble Supreme Court ("SC") in M/s Fortune Infrastructure (Now known as M/s Hicon Infrastructure) & Anr. Vs. Trevor D'Lima & Ors.2 ("Fortune judgement") which holds that a promoter is expected to handover the possession within reasonable time and the period of three years is held to be the reasonable period, since in the present case, allotment letters were issued on April 03, 2013, therefore Promoters were supposed to handover possession of the said Units on or before April 02, 2016.

2.2 Promoter's grounds:

  1. Due to moratorium order passed by National Company Law Tribunal, Mumbai ("NCLT") agreements for sale could not be executed.
  2. After receiving compensation in the form of two car parking spaces worth INR.8,00,000/-, Allottees with ulterior motive filed the complaint to extract more money from the Promoters.
  3. Since the date of issuance of allotment letters, Allottees remained silent spectators and did not insist for execution of agreements for sale and that they booked the said Units for investment purpose only.
  4. There is no agreement between Allottees and the Promoters for payment of interest. Since there is no privity of contract between the parties, Allottees cannot claim any interest from the Promoters.
  5. . Said Project had faced numerous force majeure factors such as lackadaisical approach of government officials in granting environmental clearance certificate and according approvals to the plans and change in government policies.
  6. Since the Promoters had already offered refund of amounts paid by the Allottees with interest, Allottees were not entitled to interest on their investment on account of delay in possession.

2.3 MREAT Order:

Hon'ble MREAT, after hearing both parties, passed an order allowing the appeal filed by the Allottees and dismissed the appeal filed by the Promoters inter alia on the following grounds:

  1. Despite having received more than 20% amount of total consideration of the said Units, Promoters failed to execute agreements for sale as per provisions of MOFA. Even after registration of the said Project with MahaRERA, Promoters failed to execute agreements for sale. Section 4 of MOFA and Section 13 of Act cast an obligation on the Promoters not to accept a sum more than 20% (as per MOFA) and 10% (as per Act) of the cost of the units as an advance payments from the person without first entering into a written agreement for sale with such person and register agreement for sale.
  2. Basis the promise made by the Promoters to handover possession by December 2015 and execution of the agreement for sale by the Promoters with another allottee mentioning the date of possession as December 2015 (which is not disputed by the Promoters), MREAT held that it can be reasonably inferred that Promoters were supposed to handover the possession of said Units by December 2015.
  3. In the absence of formal agreement for sale executed by parties, date of delivery of possession can be ascertained from any other documents such as allotment letter, brochure, pamphlet, email communication etc. specifying the date of possession.
  4. Relying on the Fortune judgement, Hon'ble MREAT reiterated that since Promoters had issued allotment letters on April 03,2013 therefore Promoters were supposed to handover possession latest by April 03, 2016.
  5. As regards delay caused due to force majeure event, Hon'ble MREAT observed that every promoter having sufficient experience in the market is expected to be prepared beforehand for not only to deal with such eventuality, but also to act professionally by assessing the time by which the promoter/developer, after overcoming the likely mitigating factors, would be able to complete the project and give possession.
  6. Relying on the judgement passed by the SC in M/s Newtech Promoter and Developers Pvt. Ltd. Vs. State of Uttar Pradesh3 , Hon'ble MREAT observed that if the delay is not attributable to the allottees/home buyers, they are entitled to claim reliefs provided under Section 18 of the Act.
  7. View of the Hon'ble Authority that since there is no written contract signed by both parties to show the agreed date of possession and therefore there is no violation of Section 18 of the Act is contrary to the provision of Section 8 of MOFA and Section 18 of the Act which defeats the object of the Act.
  8. Hon'ble MREAT observed that Section 4 of MOFA and Section 13 of the Act cast obligation on promoter/developer to execute agreement for sale before receiving from allottees amount more than 20% and 100% respectively as stipulated therein.
  9. Hon'ble MREAT held that for mere non execution of agreements for sale, allottees are not precluded from invoking Section 18 of the Act. The provisions of Section 18 of the Act can equally be invoked in terms of oral or formal agreements executed by the promoter/developer such as booking letter/confirmation letter/letter of allotment, correspondence etc. capable of being construed as an agreement.
  10. Hon'ble MREAT accordingly directed the Promoters to pay interest to Allottees on the amount paid by them at the rate of State Bank of India marginal cost of lending rate plus 2% (simple interest) with effect from April 04, 2016 till handing over of possession of said Units to Allottees after adjusting the value of two car parking spaces i.e. INR 8,00,000/- against the accrued interest.

3 QUICK VIEW

This MREAT order would benefit numerous allottees who have booked the units in a project and the developers have either failed to mention the date of possession in the allotment letter or any other written communication or execute and register agreement for sale specifically mentioning the possession date. This order lays down that in the event promoter fails to execute an agreement for sale, then date of possession can be deciphered form any other document such as the allotment letter, brochure, pamphlet, email communication etc. and allottees can claim interest under Section 18 of the Act.

Footnotes

1. Order dated 6th July 2023 passed in Appeal No.AT006000000041895 and Appeal No.AT00600000004204

2. (2018) 5 SCC 4421

3. Civil Appeal Nos. 5745, 6749 and 6750 to 6757 of 2021.

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