MREAT slams MahaRERA reading of Section 18, grants interest

The Maharashtra Real Estate Appellate Tribunal has in two orders for two different pr ojects slammed MahaRERA’s interpretation of relief under Section 18 of RERA and its orders denying interest on delayed possession to concerned home buyers.

In the first case, home buyer Dinesh Kumar Gupta of L&T’s Emerald Isle project in Powai had filed an appeal against MahaRERA order. Gupta and his family had booked flat no 707 in T7 tower of Emerald Isle for total consideration of ₹5.02 crore and an agreement for sale registered in January 2016 cited possession by March 2017 with a grace period of six months.

However, the developer gave possession on June 15, 2018 after obtaining Occupancy certificate on April 27, 2018. The home buyer sought interest on the delayed possession in a case before MahaRERA. The developer argued that the home buyer had taken possession without any protest or demur and sought to justify the delay on account of regulatory and other issues which fall within the terms cited in clauses of the agreement.

After hearing both parties, MahaRERA chairperson Ajoy Mehta declined to grant interest on delayed possession under Section 18 in an order dated June 2, 2021 on the ground primarily that Section 18 ceases to operate and would not apply once the project is complete or possession is given.

Section 18(1)(a) of the RERA states that if the Promoter fails to complete or is unable to give possession of an apartment, plot, or building, in accordance with the terms of the agreement for sale or as the case may be, duly completed by the date specified therein, he shall be liable to refund the amount received by him if the allottee wants to withdraw from the project of paid interest for every month of delay till hand over of the possession.

“Simple present tense used in the starting line of Section 18 clearly indicated that the provision shall apply only till the project is incomplete or the promoter is unable to give possession, Once the project construction is complete or possession is given as the case may be, the said provision ceases to operate,” Mehta had observed in his order.

Citing two Supreme Courts orders, and one High Court order, Tribunal’s judicial member Shriram Jagtap and administrative member SS Sandhu said it is clear from the view taken by the SC that the right to interest under Section 18 is “indefeasible” regardless factors beyond control of the Promoter that may have caused delay in possession.

“In the present case, it is undoubtedly established that the possession is handed over beyond the date specified in the agreement. Therefore, the Promoter is liable to pay interest for delayed possession. Hence, the Authority is wrong in denying the interest to Allottees based on the erroneous view taken as observed hereinabove. We therefore hold that the impugned Order suffering from serious infirmities in applying the law correctly cannot be sustained,” the bench observed in its February 6 order, granting interest from March 2017 till June 15, 2018.

In another order in an appeal filed by home buyer Anju Singh against Wadhwa Group Holdings Pvt Ltd in connection with a flat booked in The Nest at DN Nagar in Andheri issued on the same day, the same bench used even stronger language to criticize the interpretation of Section 18 used by MahaRERA.

Outrightly rejecting the contentions of the promoter for agreeing to pay interest after cancelling a letter of allotment, and paying only the principal amount, the bench observed, “We are of the considered view that the approach adopted by the Authority is not only contrary to provisions of Section 18(1) but also to the object and purpose of the RERA. The authority being the creature of legislation of RERA is expected to ensure compliance with the provisions of RERA in their true letter and spirit to secure the interest of Allottee. This kind of approach as adopted by the Authority has unnecessarily generated further litigations. Such an impugned Order therefore cannot be sustained and hence calls for interference.” The tribunal awarded the interest to Singh.

Singh had paid a sum of ₹1.32 crore till January 2013 for a flat costing rs 3.29 crore and was issued a letter of allotment in April 2013 which mentioned no possession date. No agreement was executed under Maharashtra Ownership of Flats Act (MOFA) despite accepting more than 20% of the amount. On finding extremely slow progress in the completion of the project, Singh and the developer met and decided to cancel the transaction and through an email in June 2018, the developer agreed to refund ₹20 lakh every month with 10.5% interest. In July 2018, the developer cancelled the allotment and refunded the principal amount of ₹1.31 crore between August 2018 and February 2019. However, no interest was paid, and hence Singh complained to MahaRERA.

Advocates Anil DSouza and Kunal Maskar appeared for the appellants in the first case, while advocate Tanuj Lodha appeared for the appellant in the second case.