Can’t give flat on time, pay interest on amount paid: MahaRERA to builder

Samuel Andrews had paid for a flat in Empress Height, now known as The Height, at Andheri

In a path-breaking order, the MahaRERA, despite pendency of proceedings before the National Company Law Tribunal (NCLT), directed award of interest on delayed possession of a flat to its buyer, in a project on Marol-Maroshi Road, Andheri.

"Samual Andrews (the complainant) had paid 100 per cent for flat No. 606 on the 6th floor of B Wing (725 sq. ft. - carpet) along with a car park space in Empress Height, now known as The Height. It was originally being constructed by the KSL & Industries Ltd. on land belonging to the BEST Undertaking. As per the Articles of Agreement dated January 20, 2016, the possession of the flat was to be given to the complainant on or before December 31, 2017. Since possession got delayed, the complaint was filed before MahaRERA seeking interest on delayed possession," said Advocate Godfrey Pimenta, who represented the complainant.

Pimenta added that they later learnt that KSL had entered an agreement on June 23, 2016 with Dhruvi Properties Pvt. Ltd., to complete the project. "Subsequently the original agreement was modified. Dhruvi claimed that it is merely a contractor and also stated that proceedings were pending against KSL before the NCLT Ahmedabad Bench. Thereafter, the complainant was granted liberty by the chairperson, MahaRERA on April 27, 2021, to implead with the Interim Insolvency Resolution Professional appointed by NCLT, Ahmedabad Bench," Pimenta said.

"During the hearing it was learnt that Dhruvi which has registered the project with MahaRERA, had no rights to develop the property as revealed by a RTI reply. The Interim Insolvency Resolution Professional (IIRP) had stated that as a resolution proceeding is on, all other proceedings shall be barred, and therefore we made him too a party to the MahaRERA case. Since the liability of the developer has been crystallised, the complainant has been advised to file his claim for interest on delayed possession before NCLT," said Pimenta.

Also read: Experts want free legal aid for litigants approaching MahaRERA

The other side

In their argument, the respondents stated, "The present complaint is not maintainable as NCLT proceedings have been initiated against the Respondent No.1 (KSL & Industries Limited) and an Interim IRP has been appointed by the NCLT, Ahmedabad by order dated September 6, 2019. The agreement was between the complainant and Respondent No.1 and there is no contract or agreement with the Respondent No.2 (M/s Dhruvi Properties Pvt Ltd). The complainant can claim right, if any, only against Respondent No.1 which is a subject matter of NCLT proceedings."

MahaRERA observation

Ajoy Mehta, MahaRERA chairman, before passing his order on September 14, stated, "The agreement was between the Respondent No.1 and the complainant prior to the RERA coming into force (in 2017). The project when registered with MahaRERA, had the proposed completion date mentioned on its webpage as December 31, 2019. In complaints where the agreement for sale (AFS) has been executed in on-going projects before the commencement of RERA, the date of possession as mentioned in the AFS should be sacrosanct, and not as declared by the promoter on MahaRERA webpage. In this regard, note that the purpose of the said Act is to implement such agreements for sale in ongoing projects and not to re-write those agreements and change the date of possession. Thus, there is a delay in handover of possession by the Respondent No.1 and a clear violation of Section 18 of the Act. Hence the liability to pay interest to the complainant for the delay caused on the amounts paid by him till the actual handover of possession with occupation certificate arises."

"However, since an IIRP has been appointed in the NCLT proceedings at Ahmedabad against the Respondent No.1, it will definitely have an effect in the present case in terms of execution of the liability towards the complainant. Also, the IIRP has stated that as a resolution proceeding is on, all other proceedings are barred. But this Authority has only adjudicated the issue of entitlement of claim for interest for delay in handover of possession at this juncture," Mehta observed.

Another litigant says

In February 2010, Thambi Johnson had also booked a flat of 625 sq. ft. carpet area in Empress Heights, in his wife's name. "Without intimation, the builder changed the total floor plan, layout and my allotted flat number at least 4 times," said Johnson. He also said without informing them, the initial developer transferred the development rights to Dhruvi Properties. "We have paid them a total of Rs 34,45,139 till now, which they acknowledged," said Thambi.

He approached MahaRERA in August 2019. Maha RERA in its order dated February 20, 2020, directed the builder to allot the flat to Johnson again. "In response, the builder vide its letter dated March 19, 2020 stated, ‘All the flats were sold out and only investors flats were available.' I have neither got a refund nor my flat. The builder is not complying with the Maha RERA directive," said Johnson.