MahaREAT Orders Builder To Compensate For Delayed Possession, Rejecting The Builder's Contention Of Late Issuance Of The NOC

Background Fact

The Builder (Appellant), with Vital Developers Pvt. Ltd.(Joint Venture), was constructing a Slum Rehabilitation Project in Kurla. In this project, a Homebuyer purchased a flat for a total cost of Rs. 1,09,53,504. On 05.09.15, the builder and the homebuyer entered into an agreement for sale, wherein the builder promised to hand over the possession of the flat on or before 30th June 2017. However, the builder failed to deliver possession of the flat even after the homebuyer paid a total of Rs. 83,21,119.

On 12.06.2020, the builder obtained the Occupancy Certificate for the project. However, even after obtaining the Occupancy Certificate, the building was still incomplete, with no water connection and no proper access to enter Wing A of the project.

The Homebuyer filed a complaint with MahaRERA aggrieved by the delay in possession. In its order dated 21st December 2020, MahaRERA directed the builder to pay interest to the homebuyer from 1st July 2017 for every month until the date of part occupancy certificate on the actual amount paid by the homebuyers.

The builder filed an appeal before the Tribunal against the MahaRERA order dated 21.12.20.

Contention of Parties

The builder contended that the delay in completing the project was caused by the policy paralysis of the competent authority and other government statutory authorities. Additionally, builder argued that the delay in possession resulted from the late issuance of the No Objection Certificate (NOC) by the Airport Authority, which was influenced by a court order following a Public Interest Litigation (No.86 of 2024) filed by Yashwant Shenoy in the Bombay High Court. This order directed the authorities, including the Airport Authority of India, to maintain the status quo and refrain from granting further NOCs to builders. Furthermore, the builder attributed the delay to a force majeure event, particularly the delay in obtaining the necessary No Objection Certificate from the concerned authorities. Lastly, the builder asserted that the project's completion was impeded by the default in payment by homebuyers, impacting the builder's ability to adhere to the project's timeline.

On the other hand, the Homebuyer contended that the builder was supposed to hand over possession of the flat to the homebuyer by 30th June 2017, and that the builder has failed and neglected to do so on the agreed date. Consequently, this action violates the provisions of Section 18 of the RERA Act, 2016, thus the builder should be made to pay interest for the delayed possession.

REAT Verdict

The Bench upheld the MahaRERA order dated December 21, 2021, while modifying the interest payment period to (July 1, 2017, to August 19, 2020).

Tribunal held that the materials and pleadings of the parties rejects the builder's contention that the project had been delayed due to the lackadaisical approach of the concerned authorities in granting the No Objection Certificate and issuing the commencement certificate.

The Tribunal found no substance in the builder's argument regarding the delay caused due to the Bombay High Court order in the PIL filed by Yashwant Shenoy. This is because the injunction against the Airport Authority of India, which prohibited the granting of further No Objection Certificates to developers, was in effect from 1st September 2016, until 5th and 6th April 2018. However, the High Court vacated this order on 5th and 6th April 2018, allowing the resumption of NOC issuance. Therefore, the Tribunal concluded that this legal injunction did not justify the prolonged delay beyond the vacating of the order.

The Tribunal held that the Homebuyer is not responsible for the delay in completing the project because there is no evidence to suggest that the Homebuyer defaulted in making payments on time. The builder did not communicate payment schedules to the allottee as per the agreement, and there is no complaint or notice from the builder regarding delayed payments. Therefore, the Tribunal concluded that the builder and joint venture partner are responsible for the delay in completing the project and not handing over possession to the allottee on the specified date.

In Conclusion, MahaREAT has ordered the builder to compensate for the delayed possession from July 1, 2017, to August 19, 2020, by rejecting the builder's contention that the delay was caused due to the late issuance of the No Objection Certificate (NOC) by the Airport Authority of India (AAI).

Case : Rajyog Enterprise Vs Babu Bhaskaran

Citation: Appeal No. AT006-53057 & 63852

Counsel for Petitioner: Adv. Mr. Krishna Agarwal

Counsel for Respondent: Adv. Mr. Dilip P. Devadiga

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