Complaint Filed Before Possession Deadline Alone Can't Bar Relief To Homebuyer: Maharashtra REAT

The Maharashtra Real Estate Appellate Tribunal (MahaREAT), on 9 October, held that a homebuyer's complaint cannot be rejected as premature merely because the contractual possession deadline had not expired when the complaint was filed, particularly when the developer subsequently failed to hand over possession.

A Bench comprising Chairperson Justice S.S. Shinde and Administrative Member Dr. Rajagopal Devara set aside the Maharashtra Real Estate Regulatory Authority's (MahaRERA) order rejecting the homebuyer's complaint as premature and partly allowed his appeal. They observed:

“We are of the view that the simple fact that the complaint was instituted before the expiry of the contractual date of possession cannot be the sole determinant of the Appellant's entitlement to relief in the present Appeal.”

Vikram Kapoor purchased a flat in the One Park Avenue – Avenue 1 project at Patlipada, Ghodbunder Road, Thane, from Man Realty Limited for Rs. 1.97 crore under an Agreement for Sale dated 1 February 2018. The agreement stipulated 31 December 2021 as the possession deadline.

Kapoor obtained a housing loan of Rs. 1.73 crore from HDFC Bank under a subvention scheme. Under a tripartite agreement dated 27 January 2018, Man Realty agreed to pay the loan interest until it handed over possession of the flat.

However, on 9 February 2021, HDFC Bank informed Kapoor that it would deduct an EMI of Rs. 95,319 from his account. Alleging construction delays and Man Realty's failure to honour its interest-payment obligations, Kapoor approached MahaRERA under Section 18 of the Real Estate (Regulation and Development) Act, 2016, seeking cancellation of the agreement and a refund with interest.

On 2 September 2021, MahaRERA dismissed the complaint as premature because the contractual possession deadline had not expired. Kapoor challenged the order before MahaREAT.

Man Realty argued that no cause of action had arisen when Kapoor filed the complaint. It also relied on extensions granted to the project's completion deadline due to COVID-19-related disruptions. HDFC Bank opposed the relief sought against it, while Purva Oak Private Limited, which subsequently took over the project, denied liability for the previous developer's obligations.

The Tribunal examined whether MahaRERA could reject the complaint solely because Kapoor had filed it before the contractual possession deadline, despite the subsequent failure to deliver the flat. It noted that although Kapoor filed the complaint before 31 December 2021, the deadline had expired during the proceedings and the flat remained undelivered.

It held that an appeal continues the original proceedings and that the Tribunal must consider subsequent developments that materially affect the parties' rights and obligations when determining entitlement to relief under Section 18.

Further, the Bench rejected Man Realty's reliance on extensions to the project's registered completion date, observing that “the extension of the project completion date under RERA registration does not rewrite or alter the contractual obligations under the Agreement for Sale.”

Although the project's registered completion date had been extended to 30 April 2027, it held that the extension did not absolve the promoter of its contractual and statutory obligations towards Kapoor.

On Purva Oak's liability, the Members noted that MahaRERA had approved the transfer of the project to the company on 13 August 2024. They held that under Section 15 of RERA, the incoming promoter had to discharge the previous developer's outstanding contractual and statutory obligations.

Accordingly, the MahaREAT partly allowed the appeal and directed Purva Oak to refund Rs. 1,85,99,612 (less Rs. 14,10,604 paid in taxes) with SBI's highest MCLR + 2% interest within 30 days. It also ordered the execution of a cancellation deed within 45 days to facilitate the tax refund from authorities, alongside Rs. 25,000 in litigation costs.

Appearances for appellant (Vikram Kapoor): Advocate Manish Gala.

Appearances for respondent No. 1 (Man Realty Limited): Advocate Dharam Jumani.

Appearances for respondent No. 2 (HDFC Bank Limited): Advocate Nisha Mehra.

Appearances for respondent No. 3 (Purva Oak Private Limited): Advocates Abir Patel and Kartik Joshi.