Developer liable for interest on delayed possession despite claiming no consideration received under Section 18

The Bombay HC dismissed appeals challenging a RERA tribunal's order regarding delayed possession of flats. The court examined a Deed of Assignment where the original developer had authorized the appellant to receive balance consideration from flat purchasers and issue NOCs. Despite the appellant's contention that it received no consideration from respondents, the HC found the appellant liable under Section 18 of RERA for interest on delayed possession. The appellant refused to return amounts paid by respondents with interest. The HC found no perversity in the tribunal's findings and concluded no substantial question of law arose, dismissing the appeals as devoid of merit.

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Issues Involved:

1. Validity of the Deed of Assignment and the obligations of the appellant under the Real Estate (Regulation and Development) Act, 2016 (RERA).
2. Entitlement of respondents to interest for delayed possession under Section 18 of RERA.
3. Applicability and interpretation of RERA provisions regarding ongoing projects and promoter obligations.
4. The impact of the appellant's termination of the Deed of Assignment on its obligations.
5. Consideration of submissions made by the appellant before the Tribunal.

Detailed Analysis:

1. Validity of the Deed of Assignment and Obligations under RERA:

The appellant argued that the Deed of Assignment was not enforceable due to the lack of prior written consent from two-thirds of the allottees and prior written approval of the authority as required under Section 15 of RERA. However, the court rejected this argument, noting that the appellant had already made a commitment to complete the project by 31st December 2018, as reflected in the registration details on MahaRERA's website. The appellant's claim that the Deed of Assignment was not binding was considered baseless, as the appellant had stepped into the shoes of the original developer, M/s. Rebuilt Developers, and was thus bound by the obligations under RERA.

2. Entitlement to Interest for Delayed Possession:

The Tribunal directed the appellant to pay interest at 10.05% per annum for the delay in handing over possession, effective from 1st January 2018. The appellant contended that it had not received any consideration from the respondents and thus was not liable. However, the court found that the appellant, as the assignee, had accepted all encumbrances and obligations, including the interest, rights, and titles created in favor of the flat purchasers. The court held that the appellant was liable to pay interest for the delayed possession under Section 18 of RERA, as the rights and obligations were transferred to the appellant through the Deed of Assignment.

3. Applicability and Interpretation of RERA Provisions:

The court emphasized that under Section 3 of RERA, ongoing projects without a completion certificate must be registered, and the promoter must comply with all pending obligations. The appellant had registered the project, thereby accepting the statutory obligations to complete the pending work and hand over possession. The court rejected the appellant's argument that the provisions of RERA were not retrospective, noting that the reliefs granted were not with retrospective effect, and the appellant was bound to comply with the obligations under RERA.

4. Impact of Termination of the Deed of Assignment:

The appellant claimed that it had terminated the Deed of Assignment and thus could not be held liable for interest payments. The court dismissed this argument, stating that the termination letter was issued after the Tribunal's order and could not negate the statutory obligations under RERA. The court held that rights had already accrued in favor of the allottees, and the appellant could not escape its obligations by terminating the Deed of Assignment.

5. Consideration of Submissions by the Tribunal:

The appellant argued that the Tribunal did not consider its submissions. The court found that the Tribunal had summarized and addressed all the submissions made by the appellant. The appellant had not sought any clarification or modification from the Tribunal, and thus, the court found no merit in this argument.

Conclusion:

The court upheld the Tribunal's decision, dismissing the appeals and ordering the appellant to pay costs. The appellant was found liable to fulfill its obligations under RERA, including the payment of interest for delayed possession, as the assignee of the original developer's rights and obligations. The court emphasized the protective nature of RERA as a social welfare legislation aimed at safeguarding the interests of flat purchasers.

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