MahaREAT: Mere Non-Execution Of Agreement For Sale Does Not Bar Homebuyers From Invoking Section 18 Of RERA

Background Fact

The builder was constructing a project named Kakad Paradise under the Affordable Housing Scheme. Homebuyers expressed their interest in June 2015 to buy flats in the project. Subsequently, the homebuyers booked the flat whose cost was Rs. 52,01,000. After that, builder issued a Letter of Intent dated 7.01.2016 to the homebuyers. Further, builder while issuing Letter of Intent verbally assured homebuyer that he will hand over the possession of the flat by December 2018.

Following this, the homebuyers paid Rs. 16,20,869/- to the builder from time to time, which is more than 20% of the sale price.Despite paying 20% of the total sale money, the builder failed and neglected to enter into an agreement for sale. Instead, the builder demanded further payment of an amount for executing an agreement for sale from the allottees.

However, the homebuyers failed to make the demanded payment to the builder. By letters dated 10.09.2018 and 28.09.2018, the builder terminated the transaction, cancelled the Letter of Intent, and forfeited the amount paid by the homebuyers.

Aggrieved by the conduct of the builder, the homebuyer filed a complaint before MahaRERA seeking withdrawal from the project with a refund and interest.

In its order dated 04.03.2020, MahaRERA directed the builder to execute an agreement for sale within a period of one month. Aggrieved by the order of MahaRERA, the builder filed an appeal before MahaREAT.

Contention of the Builder

The builder contended that in the absence of a registered agreement for sale, the plea of homebuyers seeking relief under Section 18 of the RERA Act, 2016, is invalid. Therefore, the allottees are not entitled to the relief of a refund of the amount with interest.

REAT Order

The Tribunal directed the builder to pay a refund with interest to the homebuyer and held that the mere non-execution of the Agreement for Sale does not bar homebuyers from invoking Section 18 of RERA.

The Tribunal observed that there is no material to show that the builder had verbally assured the homebuyers that he would hand over possession of the subject flat by December 2018. Additionally, there is no agreement for sale executed by the parties. Thus, in the absence of a formal agreement executed by the parties, the date of possession can be deciphered from any documents such as allotment letters, brochures, pamphlets, email communications, Letters of Intent, etc.

The Tribunal relied on the Supreme Court Judgment in the case of M/s Fortune Infrastructure & Anr. Vs. Trevor D'Lima & Ors., wherein it was held that when the date of possession is not mentioned in the agreement, the builder is expected to hand over possession of the unit within a reasonable time, and a period of three years was held to be reasonable.

The Tribunal further held that, Mere non-mentioning date of possession or non-execution of agreement for sale cannot be allowed to operate in favour of builder who, like appellant, is not responsive to the cause of allottees and is violation of the provisions of Section 11(3) of RERA Act, 2016. Therefore, the Tribunal held that the Homebuyer is entitled to a refund of the amount of Rs. 16,20,869/- from the builder, along with interest.

Case: Kakad Housing Corporation VS Rajkumari Singh and another

Citation: Appeal No. AT006000000052572 of 2020 In Complaint no. CC006000000089924

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