The case arises through an allotment letter dated 02.09.2014, where the appellant booked a flat in a project called "Sapphire-I," developed by the builder (Respondent). The builder had initially promised to deliver possession of the flat by December 31, 2016. However, when the builder failed to meet this deadline, the Appellant filed a complaint with the relevant authority.

After hearing the parties, the learned Authority passed an Order dated 06.02.2017 whereby the parties were directed to execute and register an agreement for sale as per the provisions of the Real Estate Regulatory Authority (RERA) before 31.02.2017.

Thereupon,  an agreement for sale dated 28.02.2018 came to be executed and registered between the Appellants and Promoter for a total consideration of Rs. 1,55,52,500. The possession date as per the said agreement for sale was 31.03.2019. The Appellants paid an amount of Rs. 1,09,58,110 to the respondent.

However, the Respondent failed to handover possession of the said flat as per the stipulated date in the said agreement for sale dated 28.02.2018. Aggrieved by the non-performance of the Sale Agreement, the Appellant filed a complaint before the relevant authority seeking compensation for the delay in handing over possession and requested a refund of the amount paid to the builder, along with compound interest as specified in the builder's demand letters.

The Respondent, by filing an affidavit in reply and written submissions, contended that possession of the said flat was to be handed over by the date stipulated in the said agreement for sale; however, the same was subject to obtaining an Occupation Certificate (OC). Furthermore, considering the project being the Slum Rehabilitation Authority (SRA), it was  the Respondent’s submission that he faced various challenges along with the COVID-19 pandemic and other unforeseen circumstances related to finance, which resulted in delay.

The Authority, through its order dated 08.04.2022, directed the builder to pay interest on the delayed possession. The Authority further directed that in view of the mitigating circumstances and to ensure that the said project is not jeopardised due to an outflow of finances, the amount payable may be paid after obtaining Occupation Certificate for the project or before June 30, 2023, whichever is earlier.

Therefore, being aggrieved by the authority order dated 08.04.2022, the Appellant filed an appeal before the Tribunal, seeking to set it aside.

The Tribunal observed that the amount paid by the Appellants for the subject flat was more than 20% of consideration of the said flat, which is in violation of Section 4 of Maharashtra Ownership of Flats Act (MOFA), which casts an obligation to not accept more than 20% of the sale price as an advance or deposit without signing a written sale agreement, which must be registered under the Registration Act, 1908; furthermore, it also defaulted Section 13 of RERA, which imposes similar obligations as Section 4 of MOFA.

The Tribunal noted that, as per Clause 16 of the sale agreement, the possession date was set as on or before March 31, 2019, along with the occupation certificate.

However, the Respondent failed to hand over possession of the flat to the Appellant by the agreed-upon date in the agreement. Therefore, the Tribunal held that the Appellant is entitled to relief in the form of interest under Section 18 of RERA, 2016.

The Tribunal pointed out that, in the order dated 08.04.2022, the Authority directed the builder to pay interest for the delay in handing over possession of the flat while granting them a grace period of 6 months. The Court highlighted that Clause 16 of the sale agreement clearly states that the Respondent must deliver possession of the flat on or before March 31, 2019, upon receiving the part Occupation Certificate or the Occupation Certificate. The clause does not mention any grace period. Thus, the court determined that ''Therefore, granting a grace period of 6 months by the Authority has no basis or without any reason.''

Setting aside the impugned order of 08.04.2022 passed by the authority, the court ordered, “The Promoter was directed to pay interest on the amount of Rs. 94,17,465/- paid by the Appellants towards part consideration of the subject flat at the rate of 2% above the State Bank of India highest Marginal cost Lending Rate from 01.04.2019 till the actual possession with occupation certificate is handed over by the Promoter to the Appellants. The amount of interest payable by the Promoter mentioned in (b) above shall be adjusted against outstanding balance payment, if any, to be made by the Appellants to the Promoter at the time of handing over the possession of the subject flat to the Appellants. The Promoter shall not create any third-party rights in the said flat. The Promoter is directed to hand over possession of the subject flat to the Appellants by completing the project and after obtaining occupation certificate.”

The court also ordered a copy of the order to be communicated to the Authority and respective parties as per Section 44(4) of RERA Act, 2016.

Case: Mahesh Kumar Lohia & Anr. v. ITMC Developers Pvt. Ltd., M. A. No. 720/2022 (Stay) in Appeal No. ATO06O0000093934/22

Advocate for Appellants: Adv. Mr. Mithil Sampat

Advocate for Respondent: None