Persistent Payment Defaults By Homebuyers Affect Project Execution,Stakeholder Interests: Maharashtra RERA

The Maharashtra Real Estate Regulatory Authority (MahaRERA) has recently held that repeated and prolonged payment defaults by homebuyers are contrary to their contractual and statutory obligations.

It observed that such defaults adversely affect project execution, financial planning, and a promoter's obligations towards other stakeholders and financial institutions.

Member Ravindra Deshpande made the observation while allowing two complaints filed by Transcon Sheth Creators Pvt. Ltd. The Authority directed Santosh Vijay Veer and Pankaj Choudhary and Jyoti Choudhary to pay outstanding sale consideration of ₹37.57 lakh and ₹1.25 crore respectively, together with interest at SBI's highest MCLR plus 2%.

The authority observed:

"The provisions of Section 19(6) of the said Act cast a statutory obligation upon every allottee to make necessary payments in the manner and within the time stipulated under the Agreement for Sale. The repeated and prolonged defaults committed by the Respondents are therefore contrary not only to the contractual obligations undertaken by them but also to the statutory framework governing real estate transactions under the said Act."

"The Maharashtra Real Estate Regulatory Authority has consistently held that while the provisions of the said Act are intended to protect the interests of allottees, the same equally require adherence to financial discipline and reciprocal contractual obligations by the allottees. Persistent payment defaults by allottees adversely affect project execution, financial planning and obligations of the promoter towards other stakeholders and financial institutions. In the present case, there is no material placed on record to establish any delay attributable to the Complainant promoter as the contractual possession date itself is 30.04.2027 and the project is stated to be substantially completed.", it added.

The common order arose from two complaints concerning flats booked in Transcon Sheth Creators Pvt. Ltd.'s MahaRERA-registered "Auris Illaria – Tower A" project in Mumbai.

The bookings were made on March 13, 2021. Agreements for Sale were executed on March 31, 2021. The flats were valued at ₹88 lakh and ₹1.97 crore.

MahaRERA noted that Santosh Vijay Veer paid ₹8,62,488 towards the consideration for Flat No. 4006. Pankaj and Jyoti Choudhary paid ₹19,30,797 towards the consideration for Flat No. 3609.

Transcon Sheth Creators Pvt. Ltd. contended that after making the initial payments, the purchasers defaulted on subsequent installments despite repeated reminders. The company sought recovery of the outstanding dues with interest. Alternatively, it sought cancellation of the Agreements for Sale and permission to deal with the flats.

Santosh Vijay Veer and Pankaj and Jyoti Choudhary did not appear before MahaRERA despite service of notices. The proceedings therefore continued ex parte against them.

In Santosh Vijay Veer's case, MahaRERA noted that he had first sought cancellation and refund, later sought time to make payments, and subsequently withdrew the cancellation request. Deshpande observed that this conduct "clearly establishes uncertainty and unwillingness on the part of the Respondent to honour the contractual obligations."

As regards Pankaj and Jyoti Choudhary, MahaRERA noted that cheques aggregating ₹25 lakh issued towards further payments were dishonoured. The defaults remained unregularised despite repeated opportunities.

The Authority held that there was no material on record to establish any breach by Transcon Sheth Creators Pvt. Ltd. in relation to the agreed possession timeline. It noted that the contractual possession date was April 30, 2027.

Holding that the defaults were substantial, continuous, and persistent, MahaRERA directed Santosh Vijay Veer to pay ₹37,57,512 and directed Pankaj and Jyoti Choudhary to jointly and severally pay ₹1,25,48,703, together with applicable interest.

The Authority further held that if the amounts are not paid within 30 days, Transcon Sheth Creators Pvt. Ltd. would be entitled to proceed with the cancellation of the allotments in accordance with the Agreements for Sale and applicable law.

For complainant (Transcon Sheth Creators Pvt. Ltd.): Advocate Sharanya Mahimtura.