Within three months, two orders came in connection with seeking compensation for delayed hand over of property even after taking possession of the flats; while one dealt a blow to the litigants, second brought cheer to flat buyers
Emerald Isle Powai, the project by L&T Realty
Two different interpretations and orders of the same Section of the RERA had baffled litigants and legal brains over the past few months, and now they have realised that one of them, passed by the former MahaRERA chief, was a misinterpretation of the law.
In November 2020, former MahaRERA chief Gautam Chatterjee in his order in the Ashley Serrao vs Propel Developers Pvt Ltd matter, stated, “Flat buyers can’t seek compensation u/s 18 (return of amount and compensation) of RERA for a delay after project is ready”.
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Chatterjee's order stated, "Simple present tense used in the starting line of Section 18 clearly indicates that the provision shall apply only till the project is incomplete or the promoter is unable to give possession. Once the project is complete or possession is given, the provision ceases to operate."
Ramesh Prabhu, chartered accountant and MahaSEWA founder
However, on January 18, 2021, an order in the case of six flat buyers vs L&T Realty's Emerald Isle Powai project, passed by MahaRERA member B D Kapadnis, granted compensation to six litigants for delayed handover of the property from the developer, even after taking possession of their flats.
"Section 18 of the RERA provides that if the promoter fails to complete or is unable to give the possession in accordance with the terms of agreement for sale or as the case may be, duly completed by the date specified therein then, where an allottee does not intend to withdraw from the project he shall be paid by the promoter interest for every month of delay till handing over the possession at such rate as may be prescribed," read Kapadnis's order.
Both orders were passed under the same Section of the Real Estate (Regulation and Development) Act (RERA) -- Section 18.
Even the Maharashtra Real Estate Appellate Tribunal had, on earlier litigations, upheld the compensation for delayed possession even after the completion of the project under Section 18, legal experts pointed out.
Advocate Anil D’souza, who was representing the litigants in both these cases, told mid-day, “In November 2020, an order from MahaRERA in the Ashley Serrao vs Propel Developers case went against the flat purchaser even though there was an unprecedented delay in handing over of the possession of the flat as per the date in the agreement. The flat purchaser was not allowed to seek interest on the amount paid.”
"This present [January 18] order, of several litigants v/s Larsen & Toubro, clearly reiterates the sacredness of the possession date as enshrined in the sales agreement signed between the flat purchaser and the developer."
"When a flat purchaser fulfils his part of all the obligations as per the agreement and makes timely payments to the developer/promoter, and the developer even accepts each and every payment, but without delivering on his promise. Hence here in the order, MahaRERA member Kapadnis has outlined the developer’s responsibility, too, in completing the project in time and handing over the possession of the fat to the allottee or else pay interest for delayed possession. It’s a highly detailed order which also highlights other facets of the Act, besides upholding the interest that the aggrieved fat purchaser seeks," said D’souza, who is also the secretary Bar Association of MahaRERA and Appellate Tribunal.
“It is orders such as these that reinforces the common man’s faith in the judiciary and encourages the aggrieved to come forward and seek justice. Besides being an able and responsible regulator of the industry, MahaRERA has once again proved that it is an institution that stands as a beacon of justice and equality, and is gaining the confidence of the people with such clear and distinct landmark orders,” he added.
Chartered Accountant Ramesh Prabhu, who is founder-chairman of Maharashtra Societies Welfare Association (MahaSEWA), said, “Section 18 of the RERA clearly states that if the possession of flat is not given within the stipulated date as per the agreement, the flat purchaser is entitled to receive the interest/compensation of the delayed possession period, even after he has taken physical possession of the property at a later date.”
Prabhu added, “The interpretation of Section 18 by then Chatterjee won't stand the test of the law if the same is challenged before the appellate. The November 2020 order passed by Chatterjee is self-explanatory and clearly showcases that the chairman had not applied his mind while deciding the said case under Section 18, thereby causing unwanted ambiguity in the minds of the litigants.”
Similar views were expressed by senior Advocate Godfrey Pimenta, who also practices in RERA. “Even if the Occupancy Certificate is received for a project, the flat purchasers can still file a complaint under Section 18 of the RERA for claiming compensation for delayed possession. This view has been upheld even by the MahaRERA Appellate Tribunal. And it is unfortunate the then RERA chairman had not interpreted Section 18 correctly,” he said.
Litigants vs L&T case
The six litigants in the latest case had booked their respective flats at Emerald Isle Powai, developed by L&T Realty, and they were to get possession by March 31, 2017, with a grace period of six months. However, the L&T handed over the possession of the flats between June and November 2018. Therefore, the flat buyers claimed interest on their consideration amount for delayed possession.
Respondent’s argument
The respondents, L&T Realty, pleaded not guilty and through its lawyers made submission in four out of six complaints on the following grounds -- tree completion certificate was required for obtaining the OC/Completion Certificate. It was applied on February 7, 2017, and received on April 27, 2017. The Environment Clearance Certificate was applied for on June 30, 2016, but the committee authorised to grant the same was dissolved and they had to apply afresh on November 9, 2016, before the Environment Assessment Committee in New Delhi and certificate obtained on August 25, 2017. Municipal Corporation of Greater Mumbai abruptly issued a stop work notice at the site on June 21, 2017, in the context of Urban Land Ceiling and Regulation Act, 1976, which was challenged before the Bombay High Court, which granted stay on June 29, 2017. The corporation withdrew their stop work notice on July 29, 2017. Also, they cited that the petitioners (flat buyers) had delayed payments as per the agreement and that instead they were liable to pay the interest as per the clause, and that the OC was applied on January 22, 2018 and received it on April 27, 2018. The complainants have accepted the possession of the flats without any protest. Therefore, as per Section 55 of the Indian Contract Act, the allottees cannot claim compensation.
The order
Member II, MahaRERA, B D Kapadnis, after hearing both sides, ordered that the respondents shall pay simple interest of 9 per cent per annum to the complainants on the amount of consideration paid by them on or before September 30, 2017, from October 1, 2017, and subsequent payment of considerations from the dates of their payments till the expiry of the respondent’s liability. Also, the respondent was directed to pay R20,000 to each complainant towards the cost of the complaint.
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