Maharashtra Real Estate Regulatory Authority (MahaRERA) has directed the developer, Acme Housing India Pvt. Ltd., to compensate homebuyers by paying interest on the deferred ownership of units within the Alpinia project situated in Thane. This ruling involves a payment of 21 months' interest in line with section 18 of the RERA Act.
The directive by MahaRERA member Vijay Satbir Singh was prompted by a grievance filed by homebuyers Aniket and Rajashri Alashe. They initially booked an apartment in December 2014, with the expectation of receiving ownership by December 31, 2017, after having made a substantial payment of Rs 1 crore. However, the developer failed to transfer the property as stipulated in the registered sale and purchase agreement.
Thane Municipal Corporation's Role in Delay
Advocate K.R. Shekhawat, representing Acme Housing India Pvt. Ltd., challenged the demand for deferred ownership payments. He referenced clause 9.2 of the agreement, which permits homebuyers to cancel the agreement if ownership has not been transferred. Yet, he indicated that the buyers chose not to terminate the agreement. Shekhawat also argued that the clause allowed for an extension of ownership due to force majeure circumstances.
He asserted that a stay order from the Mumbai High Court prevented the Thane Municipal Corporation from issuing building permits and Occupancy Certificates (OC) for projects on Ghodbunder Road due to water supply issues raised in a Public Interest Litigation (PIL). Consequently, the Alpinia project experienced delays linked to this legal hold-up, given its proximity to Ghodbunder Road.
Moreover, Shekhawat highlighted external factors like the demonetization, RERA, and GST implementations as contributors to a financial crisis that affected funding and restricted hiring of labor for construction. He also mentioned a scarcity of essential construction materials such as sand, cement, and ready-mixed concrete from 2013 to 2014, exacerbated by a ban on sand mining as reasons for the hold-up in project completion.
Shekhawat pointed fingers at the Thane Municipal Corporation, mentioning that the OC was issued four months after the project was completed. He added that the ownership was only offered to homebuyers after the OC was granted, alleging that they turned to MahaRERA instead, which stymied any resolution post-OC.
Breach of Sale and Purchase Agreement
In response, attorney Tanuj Lodha, representing the homebuyers, filed a robust objection to the claims made by the developer, stating that significant investments had been accepted from buyers and that citing force majeure was unfounded. He contended that Acme Housing had breached the sale and purchase agreement, mentioning that the Maharashtra Real Estate Court of Appeal and Bombay High Court had established that developers are obliged to pay interest for delayed ownership as per section 18 of the RERA.
Developers Must Comprehend Market Risks
MahaRERA member Vijay Satbir Singh underscored that the sale agreement allowed a grace period until June 30, 2018, but by that time, ownership had still not been granted. He dismissed all claims about challenges like demonetization, RERA, GST, and others as excuses. Singh emphasized that it is crucial for developers to possess a comprehensive understanding of the real estate market's intricacies and potential risks before embarking on any project. The developer had failed to adequately inform the applicants regarding restrictions and delayed possession.
He highlighted that under the Maharashtra Ownership of Flats Act (MOFA), the maximum extension available to developers is six months, or until June 30, 2018. With RERA coming into effect on May 1, 2017, the developer became liable to pay interest on surpassed ownership timelines as per section 18 provisions.
Singh also noted that the buyers filed their lawsuit on June 20, 2020, after the OC was finally acquired by the developer and ownership of the apartment was offered on March 3, 2020. Given this circumstance, MahaRERA interprets the scenario to indicate that according to section 19 of RERA, the homebuyers are expected to take possession of the apartment within a two-month timeframe from OC issuance. However, he pointed out that the applicants had violated section 19(10) regulations, which prevented any increase in interest declarations post-March 3, 2020. The final ruling dictated that Acme Housing is mandated to compensate with an interest rate of 9.3 percent per month for the duration between July 1, 2018, and March 3, 2020.