MahaREAT – Non-Execution Of Agreement For Sale Does Not Preclude Homebuyers From Seeking Relief Under Section 18

The Homebuyers filed appeal before the Tribunal after their complaints were dismissed by Authority on the grounds that Memorandum of Understanding (MoU) cannot be treated as an allotment letter or agreement for sale.

Section 18 stipulates the “rights and remedies available to homebuyers when a promoter fails to meet obligations”. It states, “If the builder fails to complete or is unable to provide possession of an apartment, plot, or building according to the terms specified in the agreement for sale, the homebuyer is entitled to receive interest from the builder for each month of delay until possession is handed over, at a rate determined by the prescribed regulations.”

Background Facts

Homebuyers (Appellants) booked two flats in the builder's (Respondent) project named "Rashmi's Star City-Phase IV" township, situated at Thane through MoU dated 05.09.2011. The total sales consideration of flats were Rs.14,00,000/- and 13,40,000/- respectively.

As per the MoU, the Builder was supposed to handover the possession of the flats within 40 months of signing of MoU (i.e. 15,12.2015). Further as per clause 13, allotment of flats was supposed to be decided through the lottery system at the plinth stage of the project.

However, even after receiving Rs.10,18,540/- for each flat, Builder failed to allot the specific flats by lottery to homebuyer. Therefore, Homebuyers filed complaint before the authority seeking allotment of flats, execution of agreement for sale and Interest for delayed possession.

On 30.01.2020, Authority through its order dismissed Homebuyers complaint holding that MoU can neither be treated as allotment of apartments nor agreement for sale in accordance with the provisions of RERA, 2016.

Therefore, being aggrieved by the Authority order, Homebuyers filed appeal before the Tribunal seeking to set aside the order.

Observation and Direction by Tribunal

The Tribunal observed that the builder did not allot the flats or execute the registered agreements for sale, despite receiving substantial payments from the homebuyers. Further, the builder failed to complete the construction and hand over possession of the flats by the date specified in the MoU. Therefore, this situation triggers the provisions of Section 18 of RERA, 2016.

Further, the Tribunal held that the builder violated Section 4 of the Maharashtra Ownership of Flats (Regulation of the Promotion of Construction, Sale, Management, and Transfer) Act, 1963 (MOFA), and Section 13 of RERA, 2016, which require the builder to execute an agreement for sale in favor of the homebuyer after receiving 20% or 10% of the total amount of the flat, respectively.

The Tribunal observed that the provisions of Section 18 of RERA, 2016 can be invoked based on either an oral or formal agreement executed by the builder. This includes documents such as a booking application form, formal letter, allotment letter, letter of intent, or memorandum of understanding, which can be construed as an agreement.

Therefore, the Tribunal set aside the Authority's order dated 30.01.2020 and directed the builder to execute and register the agreement for sale and pay interest to the homebuyers for the delay.

Case – Ashok Sayaji Dhatrak Versus Rashmi Realty Builders Pvt. Ltd & another A/W 1 another

Citation – Appeal No. AT00600000052520/20 in Complaint No. CC006000000079371 A/W 1 another

Date of Order – 23.09.2024