2024 (8) TMI 387 - HC - Indian Laws

Developer cannot override original possession deadline through later RERA registration under Section 4(2)(l)(C)

Bombay HC dismissed developer's appeals challenging MahaRERA tribunal's order directing payment of interest from July 2016. Court held that developer's ... Payment of interest during the period from 1 July 2016 to 31 December 2019 - rejection of prayer of Appellant for exclusion of Covid-19 lockdown period for payment of interest. Payment of interest from 1 July 2016 - HELD THAT:- It is undisputed position that the possession has not been handed over by 31 December 2019 and therefore it is quite unnecessary to decide the exact effect of the statements made by the Respondents before the MahaRERA on 4 July 2018. Therefore, Appellant cannot rely upon order dated 4 July 2018 for the purpose of escaping the liability to pay interest for the period prior to 31 December 2019. Whether indication of fresh date of completion of project while registering ongoing project under Section 4(2) (l)(C) of RERA read with Rule 4(2) of Maharashtra Regulations would amount to alteration of agreement between the parties vis-aà-vis Promoter’s liability to pay interest under Section 18? - HELD THAT:- Under Section 4(2)(l)(C) of RERA, the promoter is required to make a declaration about the time period within which he undertakes to complete the project - under the provisions of Section 4(2)(l)(C) of RERA read with Rule 4(2) of Maharashtra Regulations, it is incumbent for a promoter to make declaration of the period within which he undertakes to complete the pending project. It is Appellant’s case that since it has declared 31 December 2019 as the date for completion of the project, the said date must be taken into consideration for the purpose of determination of interest under the provisions of Section 18 of the Act. The issue as to whether the provisions of Section 4(2)(l)(C), of RERA Act enables the promoter to give fresh timeline in violation of the time period stipulated in the agreement came up before the Division Bench of this Court in Neelkamal Realtors [2017 (12) TMI 1580 - BOMBAY HIGH COURT]. In that case, constitutional validity of certain provisions of RERA were challenged. The two learned Judges of the Division Bench have rendered separate Judgments with same conclusion in Neelkamal Realtors. Justice Naresh Patil (as he then was) in his Judgment has held in para 128 that RERA does not contemplate rewriting of contract between the flat purchaser and the promoter. Mere indication of date 31 December 2019 by the Appellant while registering the project under the provisions of Section 4(2)(l)(C) of RERA and Regulation 4(2) of Maharashtra Regulations does not affect the obligations on his part arising out of agreement executed with the Respondents. Under that agreement, the Appellant undertook to hand over possession of the flat to the Respondents on 30 June 2016. Therefore, the Tribunal has rightly directed the Appellant to pay interest to the Respondents from 1 July 2016. I do not find any serious error being committed by the Tribunal in directing payment of interest by taking into consideration the timeline specified in the agreement and by ignoring the timeline declared at the time of registration of the project. Liability of the Appellant to pay interest after issuance of Occupancy Certificate on 27 April 2022 - HELD THAT:- The conduct on the part of the Appellant exhibited vide letter dated 17 May 2022 in not adjusting the amount of interest payable from 1 January 2020 and in demanding interest from the Respondents is totally unreasonable and exhibits disinclination to hand over possession of the flat to the Respondents. The Appellant is responsible for non-handing over of possession of the flat even after issuance of Occupancy Certificate and must be made liable to pay interest till possession of the flat is delivered. In fact during the course of hearing of the present Appeals, the dispute was referred to mediation which unfortunately failed - The conduct exhibited by the Appellant leaves no manner of doubt that it is solely responsible for non-handing over of possession of the flat to the Respondents after issuance of Occupancy Certificate. Therefore, no solace can be provided to the Appellant in respect of liability to bear interest after issuance of Occupancy Certificate. No substantial question of law is involved in the Appeals filed by the Appellant - appeals dismissed. Issues Involved:1. Payment of interest from 1 July 2016 to 31 December 2019.2. Exclusion of the COVID-19 pandemic period for interest liability.Issue-Wise Detailed Analysis:1. Payment of Interest from 1 July 2016 to 31 December 2019:The primary contention revolves around whether the promoter (Appellant) should pay interest to the flat purchasers (Respondents) from 1 July 2016. The Appellant argued that the interest should only be calculated from 1 January 2020, based on an order dated 4 July 2018 by MahaRERA, where the Respondents had agreed to take possession by 31 December 2019 without claiming interest. However, the Tribunal emphasized that the possession was not handed over by 31 December 2019, making the debate over the 4 July 2018 order academic. The Tribunal held that the date of completion mentioned in the project registration under Section 4(2)(l)(C) of RERA does not alter the original agreement terms. The Tribunal cited the judgment in Neelkamal Realtors Suburban Pvt. Ltd. Vs. Union of India, which clarified that RERA does not rewrite contracts between promoters and flat purchasers. Thus, the Tribunal directed the Appellant to pay interest from 1 July 2016, as the original agreement specified possession by 30 June 2016.2. Exclusion of the COVID-19 Pandemic Period for Interest Liability:The Appellant sought exemption from paying interest during the COVID-19 lockdown period, citing Order No. 21 of 2022 and a Circular dated 6 August 2021. However, the Tribunal dismissed this appeal, noting that the Appellant had committed to handing over possession by 31 December 2019, well before the pandemic. The Tribunal found that the Appellant's failure to meet this deadline precluded them from claiming relief based on the pandemic. The Tribunal further noted that the Appellant had not initially challenged the MahaRERA's order but only filed an appeal after the Respondents' appeal was heard. The Tribunal concluded that the Appellant could not use the pandemic as an excuse to avoid interest liability.Additional Observations:The Tribunal also addressed the Appellant's conduct post-issuance of the Occupancy Certificate on 27 April 2022. The Appellant's insistence on additional payments and refusal to adjust the interest payable as per the MahaRERA's order was deemed unreasonable. The Tribunal held that the Appellant's actions indicated a disinclination to hand over possession, thereby justifying continued interest liability until possession is delivered.Conclusion:The Tribunal found no substantial question of law in the Appellant's appeals and rejected them. The Appellant was directed to immediately hand over possession of the flat to the Respondents to stop the accruing interest liability. The Respondents were allowed to withdraw the amount deposited by the Appellant in the RERA Appellate Tribunal, along with accrued interest. The Tribunal emphasized that the amount of interest payable now exceeds the balance amount, taxes, and charges payable by the Respondents, necessitating the immediate handover of possession.