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TMI Blog2024 (8) TMI 387X X X X Extracts X X X X X X X X Extracts X X X X ..... e Maharashtra Real Estate Regulation Authority, Mumbai ('MahaRERA'). The Appellant / Promoter is aggrieved by the MahaRERA Tribunal's decision in directing payment of interest to the Respondents from 1 July 2016 instead of 1 January 2020. The Appellant is also aggrieved by rejection of prayer for exclusion of COVID pandemic period from 25 March 2020 to 27 July 2021 and 27 July 2021 to 30 September 2021 for interest liability. 2. Briefly stated, facts of the case are that the Appellant / Promoter undertook construction of building by implementing Slum Rehabilitation Scheme on Plot No.21/5, 21/6 (pt), South Estate Scheme No.57, Rafi Ahmed Kidwai Marg, Wadala (West), Mumbai, under which it is expected to accommodate 182 eligible slum dwellers. It is Appellant's case that it has constructed the building made for rehabilitation of slum dwellers and Occupancy Certificate of that building was issued in the year 2013. That, the Appellant thereafter commenced construction of sale component building and clubhouse on the plot. 3. By registered Agreement for Sale executed with the Respondents, the Appellant agreed to sell, transfer and assign Flat No.901 admeasuring 68.41 sq.mtrs. carpet are ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ('Maharashtra Regulations') till handing over possession of the flat. Immediately after passing of order dated 27 July 2021, the Respondents filed Appeal No.AT0006000000053317 of 2021 before MahaRERA Appellate Tribunal to the limited extent of denial of interest from 1 July 2016. Subsequently, the Appellant also filed Appeal No. AT0006000000093905 of 2022 challenging the order dated 27 July 2021 to the extent of non-grant of exemption from payment of interest during the period of Covid-19 pandemic. Both the Appeals have been heard and decided by the MahaRERA Appellate Tribunal by common Judgment and Order dated 7 February 2023. The Appellant's Appeal No. AT0006000000093905 of 2022 is dismissed. Appeal No.AT0006000000053317 of 2021 filed by Respondents is allowed by modifying the order dated 27 July 2021 by directing Appellant to pay interest to Respondents from 1 July 2016 till handing over possession of the flat to them. The Appellant is further directed to adjust the interest amount payable to Respondents against the balance amount and other charges payable by them at the time of possession of the flat. The Appellant is also directed to pay costs of Rs.10,000/- to the Respondent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m the project. Once he/she does not exercise the option of exiting from the project, the flat purchaser is bound by the date indicated at the time of registration of the project. 9. Mr. Malpathak would further submit that construction of the building is completed and Occupancy Certificate has been received on 27 April 2022. That, immediately thereafter, the Appellant wrote to the Respondents to take over possession of the flat after paying the balance amount of consideration. That, the Respondents, however, refused to take possession of the flat referring to pendency of Appeal before the Tribunal. That, when the option was given by the Appellant by letter dated 6 May 2022 to pay the balance amount after deducting the amount of interest from 1 January 2020 to 29 April 2022, the Respondents showed willingness to pay CGST on only balance amount of Rs.23,08,000/- and not on the entire balance consideration of Rs.55,00,000/-. That, this conduct on the part of the Respondents is indicative of their disinclination to accept possession of the flat even after the same was offered to them. He would submit that interest liability of Appellant is therefore required to be frozen as on 29 April ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng over possession of the flat as it finally insisted vide letter dated 17 June 2022 that the offer of the Respondents for payment of balance consideration after adjustment of amount of interest was rejected. That, the Appellant also insisted for deducting the interest in respect of Covid-19 pandemic period from 25 March 2020 to 30 September 2021 and also demanded various other amounts. That, therefore, the amount of interest cannot be frozen as on 29 April 2022. 14. Mr. Khan would submit that the Respondent No.2 is a senior citizen and is required to reside on leave and license basis by incurring expenses towards license fees. Additionally, the Respondents are required to pay EMIs on the loan raised for payment of consideration to the Appellant. That, in such circumstances, the Appellant must be directed to hand over possession of the flat to the Respondents for which they have filed Interim Application No.15263/2023. 15. Rival contentions of the parties now fall for my consideration. 16. As observed above, Second Appeal No.688/2023 involves the issue of payment of interest during the period from 1 July 2016 to 31 December 2019 whereas Second Appeal No.689/2023 involves the iss ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hereunder, from the Respondent for the delay in completing the said project. 4. In the view of the above facts, the Respondent shall, therefore handover the possession of the apartment to the complainant before the period of December 31, 2019. The Complainant shall be at liberty to demand interest at an appropriate stage, as per the provisions of section 18 of the Real Estate (Regulation and: Development) Act, 2016 and the rules and regulations made hereunder from the Respondent for the delay in completing the said project. Further, since the Complainants have already paid 75% of the amount towards the consideration of the said apartment, the Respondent shall raise further demands only at the time of handing over possession of the said apartment. 5. Consequently, the matters are hereby disposed of." 19. Thus, order dated 4 July 2018 indicates that the Appellant invited the same by making a solemn commitment before the Authority that it would hand over possession of the flat by 31 December 2019. Though some degree of debate has taken place between the parties about the exact effect of statements made on behalf of the Respondents as recorded in para 3 of the order, in my view ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... detail of the projects launched by him, in the past five years, whether already completed or being developed, as the case may be, including the current status of the said projects, any delay in its completion, details of cases pending, details of type of land and payments pending; (c) an authenticated copy of the approvals and commencement certificate from the competent authority obtained in accordance with the laws as may be applicable for the real estate project mentioned in the application, and where the project is proposed to be developed in phases, an authenticated copy of the approvals and commencement certificate from the competent authority for each of such phases; (d) the sanctioned plan, layout plan and specifications of the proposed project or the phase thereof, and the whole project as sanctioned by the competent authority; (e) the plan of development works to be executed in the proposed project and the proposed facilities to be provided thereof including fire fighting facilities, drinking water facilities, emergency evacuation services, use of renewable energy; (f) the location details of the project, with clear demarcation of land dedicated for the project ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by such chartered accountant and it shall be verified during the audit that the amounts collected for a particular project have been utilised for that project and the withdrawal has been in compliance with the proportion to the percentage of completion of the project. Explanation.-For the purpose of this clause, the term "scheduled bank" means a bank included in the Second Scheduled to the Reserve Bank of India Act, 1934 (2 of 1934); (E) that he shall take all the pending approvals on time, from the competent authorities; (F) that he has furnished such other documents as may be prescribed by the rules or regulations made under this Act; and (m) such other information and documents as may be prescribed. (3) The Authority shall operationalise a web based online system for submitting applications for registration of projects within a period of one year from the date of its establishment. ( emphasis added ) Thus 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. 22. In exercise of power exercised under Section 84 of the RERA, Maharashtra Regulations have been ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ether 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 (supra). 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. In para 128 of the Judgment authored by Patil J, it is held as under: "128. Under the provisions of Section 18, the delay in handing over the possession would be counted from the date mentioned in the agreement for sale entered into by the promoter and the allottee prior to its registration under RERA. Under the provisions of RERA, the promoter is given a facility to revise the date of completion of project and declare the same under Section 4. The RERA does not contemplate rewriting of contract between the flat purchaser and the promoter. The promoter would tender an appl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ase, and for reasons to be recorded in writing, to extend the registration granted to a project for such time as it considers necessary, which shall, in aggregate, not exceed a period of one year." 26. Thereafter Ketkar J. decided the effect of enabling provision under Section 4(2)(l)(C) to revise the date of completion of project vis-a-vis the obligation of the promoter arising out of agreement executed with flat purchasers. He held in paras 304 and 305 in his Judgment as under : "304. Section 18 provides for refund of amount and compensation on account of - (a) failure of the promoter to complete or his inability to give possession of an apartment, plot or building either in accordance with the terms cf the agreement for sale or as the case may be, duly completed by the date specified therein, or (b) due to discontinuance of his business as a developer on account of revocation or suspension of the registration under the Act or for any other reason. The plain language of Section 18(1)(a) shows 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, du ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. 28. The next aspect is about the liability of the Appellant to pay interest after issuance of Occupancy Certificate on 27 April 2022. According to the Appellant, the Respondents were called upon to take possession of the flat by paying balance amount of consideration and charges by letter dated 29 April 2022 and therefore the liability to pay interest must be frozen as on 29 April 2022. Some correspondence has taken place between the parties between 29 April 2022 to 17 May 2022 which is relevant for the purpose of determining the issue at hand. The correspondence between the parties is as under: (i) By letter dated 29 April 2022, the Appellant informed the Respondents that the Occupancy Certificate was issued on 27 April 2022 and demanded an amount of Rs.62,21,561/- (Rs.55,00,000/- towards balance amount of consideration plus Rs.7,21,561/- towards other charges) with a further demand for payment of applicable taxes thereon. By th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me of the Appeal as stated aforesaid. Simultaneously without prejudice to what is stated aforesaid, we submit that the period of COVID-19 pandemic from 25.03.2020 to 30.09.2021 would be required to be excluded, while determining total amount of interests claim, as entire building activities in the state as well as the country during lockdown period was at stand still, and the said contention has been duly taken by us in our reply. We submit that you are required to pay the following amounts as stated in paragraph 8 hereunder and on payment of which you may obtain possession of the Flat and car parking space." (vi) This is how Appellant demanded the amount of Rs.67,14,563/- from Respondents as a pre-condition for handing over possession of the flat. The details of the said amount of Rs.67,14,563/- as indicated in para 8 of the letter are as under: Total consideration amount payable in respect of the said Flat and parking spaces Rs.2,02,40,000/- LESS : Amount Paid by you Rs.1,47,40,000/- PRINCIPAL SUM BALANCE PAYABLE - I Rs.55,00,000/- ADD : Deficit amount paid towards Service Tax and VAT (Total 4.5% on Rs.1,47,40,000/-) Rs.1,45,723 Interest for del ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rium during Covid-19 pandemic period. The Appellant was under obligation to hand over possession of the flat initially on 30 June 2016 and in any case as per its own commitment before the Authority by 31 December 2019. Therefore, Covid-19 pandemic lockdown declared subsequently cannot come to the aid of the Appellant for claiming any relief for payment of interest. The Appellate Tribunal has rightly considered and rejected the request of the Appellant for grant of benefit of moratorium during Covid-19 pandemic in para 28 of its Judgment. It must also be borne in mind that initially the Appellant has not challenged MahaRERA's Order before the Tribunal and filed the Appeal only when Respondents' appeal was taken up for hearing. Mr. Malpathak has submitted that initially Appellant filed cross objections in Respondents' appeal but later thought of filing a substantive appeal so as not to leave any technical objection. Be that as it may. Appellant violated its commitment made before the MahaRERA to complete construction and to deliver possession by 31 December 2019. It now cannot seek to take advantage of COVID 19 pandemic to escape the liability to pay interest. I therefore do not find ..... X X X X Extracts X X X X X X X X Extracts X X X X
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