MahaREAT Upholds Homebuyers' Right to Interest for Delayed Possession
In a landmark ruling, the Maharashtra Real Estate Appellate Tribunal (MahaREAT) has reaffirmed the statutory protections available to homebuyers under the Real Estate (Regulation and Development) Act, 2016 (RERA). The Tribunal held that an allottee’s right to claim interest for delayed possession is indefeasible and cannot be defeated by the promoter’s unilateral conduct, including the revision of possession timelines, execution of standard-form undertakings, or continued payments by allottees.
The Tribunal, comprising Shri Shriram R. Jagtap (Member-J) and Dr. Rajagopal Devara (Member-A), dismissed a batch of appeals filed by CCI Projects Private Limited challenging orders passed by MahaRERA granting interest to allottees for delayed possession. The promoter had failed to hand over possession within the agreed timelines, and the impugned orders did not warrant interference.
The dispute arose from the “Wintergreen” project, a residential development forming part of the larger “Rivali Park” project at Borivali, Mumbai. Allottees had booked flats and entered into agreements for sale with the promoter, which specifically stipulated the date by which possession was to be handed over. It was undisputed that the allottees had made substantial payments in terms of the agreements. However, the promoter failed to adhere to the committed timelines and did not hand over possession on the agreed dates.
The promoter sought to justify the delay on multiple grounds, including financial stress, liquidity issues faced by its financier Indiabulls, alleged changes in Development Control Regulations, scarcity of construction materials such as sand, and the impact of the Covid-19 pandemic. It was further contended that the possession timelines mentioned in the agreements were subject to reasonable extension in light of such mitigating circumstances and that the promoter had communicated revised possession dates to the allottees from time to time. The promoter argued that since the allottees did not protest and continued to make payments even after such communications, they had acquiesced in the delay and waived their right to claim interest under Section 18 of RERA.
Rejecting these submissions, the Tribunal held that the dates of possession mentioned in agreements for sale are mutually agreed and sacrosanct and cannot be unilaterally altered by the promoter through letters or communications. There was nothing on record to show that the allottees had expressly and consciously consented in writing to revised possession dates. Mere silence or continued payment of instalments in accordance with the agreement does not amount to waiver or abandonment of rights. The Tribunal emphasized that waiver must be an intentional act with full knowledge of rights and cannot be inferred from conduct that is consistent with performance of contractual obligations.
The Tribunal further held that the right to claim interest under Section 18 of RERA is a statutory right and is indefeasible. It cannot be defeated merely because allottees accepted revised timelines without protest or continued in the project. Relying on precedent, including the decision in Newtech Promoter and Developers Pvt. Ltd. v. State of Uttar Pradesh, the Tribunal reiterated that where delay in possession is not attributable to the allottee, the promoter is under an obligation to pay interest regardless of alleged unforeseen events or internal financial constraints.
On the promoter’s reliance on Section 55 of the Indian Contract Act, 1872, the Tribunal held that the provision would have no application in view of the overriding effect of Section 89 of the RERA Act. It clarified that once delay is established, the statutory entitlement under Section 18 prevails and cannot be curtailed by invoking general principles of contract law. The Tribunal also rejected the argument that the presence of an arbitration clause ousted the jurisdiction of the RERA authorities, holding that remedies under RERA are in addition to other remedies and the Authority’s jurisdiction remains intact notwithstanding such clauses.
Dealing with the promoter’s contention that certain allottees had executed possession letters and undertakings indicating full and final settlement, the Tribunal held that such documents were not binding in the absence of proof of actual settlement in accordance with law. These documents were standard-form documents prepared by the promoter and executed by allottees who were in a weaker bargaining position at the time of taking possession. The Tribunal noted that inequality of bargaining power vitiates such documents and prevents them from being used to defeat statutory rights.
The Tribunal also rejected the reliance placed on Covid-19 and other alleged force majeure circumstances, noting that the agreed dates of possession had already expired prior to the onset of the pandemic. The promoter could not rely on subsequent events to justify earlier delays. Similarly, financial hardship or funding constraints faced by the promoter were held to be irrelevant insofar as the statutory obligation to compensate allottees is concerned.
In conclusion, the Tribunal held that the promoter had failed to establish any ground warranting interference with the orders passed by MahaRERA. It answered all issues against the promoter and held that the allottees were entitled to interest for delayed possession. The appeals were accordingly dismissed.
