News: Possession date in agreement binding on builder: MREAT-18-01-2021
The tribunal held that the promoters of Palava Lakeside in Kalyan failed to hand over possession of two flats by February 28, 2018, as mentioned in the agreements for sale (AFS) and thus allottees were entitled to withdraw and get refund with interest.
MUMBAI: 'Possession’ of flat doesn’t mean ‘fit out possession’ under RERA. Ruling on the sanctity of the ‘specified date’ of possession, Maharashtra Real Estate Appellate Tribunal asked a builder to refund with interest money paid by two buyers who withdrew from a project three months after delivery of their flats was due.
The tribunal held that the promoters of Palava Lakeside in Kalyan failed to hand over possession of two flats by February 28, 2018, as mentioned in the agreements for sale (AFS) and thus allottees were entitled to withdraw and get refund with interest.
“Section 18 of RERA is absolute on the point of ‘specified date’ mentioned in the agreement for giving possession” and not on any “grace period” mentioned in the agreement, said the tribunal in its judgment. It added that permitting possession beyond the specified date “would lead to disastrous consequences, rendering the agreed date of possession as specified in the AFS irrelevant”.
Two buyers had filed a complaint initially before MahaRERA. Their 2014 agreement promised possession for fit-outs by February 2017 and within a year the final possession with occupancy certificate but with a grace period of a year. Since the project was incomplete when the Real Estate (Regulation and Development) Act took effect on May1, 2017, the promoters registered the project under RERA.
In May 2018, with no possession given, the buyers decided to withdraw and demanded refund with interest and compensation. They invoked section 18(1) of RERA which provides for refund with interest and compensation for builder’s failure to hand over possession of flat by the date specified in the agreement.
In March 2019, MahaRERA held that section 18 was not attracted to their case as the promoter said that part OC was received for the project in May 2018, before the complaint was filed. The authority said that once the project was complete, section 18 would not apply.
MahaRERA also advised the buyers to take possession of flats when ready. Aggrieved, the buyers went in appeal before the appellate tribunal. On January 12, 2021, tribunal members Sumant Kolhe (judicial) and S S Sandhu, in concurrent but separately reasoned findings, held that the MahaRERA order was not sustainable under law.
Significantly, the tribunal said, “Possession as contemplated under section 18 of RERA is not ‘fit out possession’. There is no such concept under RERA or even Maharashtra Ownership of Flats Act. The builder denied any delay and argued that hence withdrawal from project could not be permitted.
Section 19(10) of RERA mandates offering physical possession with OC to a purchaser, who is then obliged to take delivery within two months. The tribunal noted that the builder offered possession with OC to the buyers, on June 21, 2018, hence there was a “delay in handing over possession”. Besides, said the tribunal, “Once it is evident that promoters failed to give possession by the ‘specified date as mentioned in the agreement’, promoters are not entitled for extension” on the basis of any clause of ‘grace period’ in the AFS.
The buyers had claimed the ‘fit-out and grace clauses’ in agreement were ‘one-sided’; the builder denied it. But the tribunal in its order said, “These clauses substantiate the charge of allottees that promoters got one-sided agreements executed.”
In his separate reasons, Sandhu also said that if MahaRERA’s order is accepted it would “lead to chaos and no allottee would be able to seek reliefs under section 18 (1) if possession is given… much beyond the date specified”. “Legislature never intended such consequences for allottees, while framing the social welfare legislation of RERA,” he said.
The tribunal directed refund of amounts paid by the buyers with interest of 2% more than the SBI rate, as provided under RERA. The buyers claimed Rs 25 lakh in compensation too. The tribunal didn’t grant it but gave them liberty to file an independent petition for compensation before an adjudicating officer under RERA.
