'Economic distress' held as lame excuse to delay handing over possession of flat

MahaRERA recently asked a developer to pay interest to homebuyers for not being able to start work on a project despite the developer informing the regulatory body about his economic distress. He had told MahaRERA he could not sell flats in the market and generate funds to start working on the project, to which he was admonished for having limited knowledge on the industry.

He was told the nation's economy has shown consistent growth over the past many years without any major incidents of recession or inflation. Therefore, his reasons to falter were not taken into consideration.

Home buyer Ulanda Fernandes approached MahaRERA against Neelkamal Realtors, seeking directions from the authority to be paid interest for the delayed period of possession with respect to a flat booked in DB Ozone project, Mira Road.

As per the registered agreement for sale, dated February 2010, executed between them, the respondent was liable to handover possession of the flat to the complainant on December 2014, with grace period of 12 months i.e. December 2015. However, the respondent has not been able to do so yet.

The developer told MahaRERA that the project could not be completed due to various reasons, one of them being economic crises. They said the flats could not be sold in the market and hence they could not generate the required funds for construction. He also cited other reasons for non completion of the project on time, including undue delay in availability of sand; quarrying of stone was simultaneously banned in the entire state by the Environment Ministry.

He also said he had given a revised possession date to MahaRERA, which was December 2019. He agreed to refund the amount paid by the complainant till date with interest too and requested the regulatory body to dismiss the complaint.

Dr Vijay Satbir Singh, MahaRERA member, who was hearing the case, said, "The respondent's arguments that the project got delayed due to economic downturn does not come under the clause of force majeure. As a promoter having sound knowledge of the real estate sector, the respondent was fully aware of the market risks when he launched the project and signed the agreement with the home buyers. Moreover, the nation's economy as a whole has shown consistent growth over the last so many years without any major incidents of recession or inflation."

MahaRERA held the reasons cited by the respondent for delay in completion of the project as inadequate. Since the promoter failed to handover possession of the said flat to the complainant on the agreed date of possession mentioned in the agreement for sale, the complainant is entitled to relief.

And finally the developer was ordered to pay interest to the complainant from January 2016 till the actual date of possession with occupancy certificate at the rate of Marginal Cost Lending Rate, plus two per cent, as per the provisions of the RERA Act.