Can a Builder take shelter of the latest completion certificate for the delay in giving possession to buyers?

Keval Sonecha – [2022] 139 taxmann.com 289 (Article)

Recently, the MAHA RERA Tribunal on 04th May 2022 in the case of Monika Agarwal, Rajesh Agarwal v. Forum Homes Private Limited (Appeal No. AT006000000052322) held that the completion date of projects, should not be extended on receipt of each completion certificate. Accordingly, the buyers will not keep waiting for the possession of an allotted unit. If such a scenario emerges, it will lead to a violation of Section 18 of the Act. The buyers will be entitled to a refund with interest at the prescribed rate. The details of the case are as under: –

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The Facts of the Case

• • An Allottee booked the flat in March 2015 and an allotment letter dated 31st March 2015 was issued with a promise for the delivery of possession by 31st December 2017.
  • The developer changed the allotment of the flat from 8C to 16C, on the same terms of the allotment letter.
  • Promoter has unilaterally revised the possession delivery date to December 31, 2019. As per the allotment letter, the agreed possession date is 36 months from the date of approval or on or before 31st December 2017, whichever is later.
  • Completion Certificate up to 16 floors was received on 20th September 2016. But the last approval is the Completion Certificate up to the full height of the building was granted on 24th May 2019 by SRA.
  • The promoter contended that the agreed delivery date of possession should be considered from 24th May 2019 i.e. 36 months based on the latest Completion certification granted up to the 20th floor. However, the allottee contended that the date of delivery of the possession shall be considered from 20th September 2016 i.e. Completion Certificate regularised up to the 16th floor. The MAHA RERA Authority gave a decision in favour of the Promoter. However, the MAHA RERA Tribunal gave a decision against the Promoter and held that: –
  • The Tribunal relied on Hon’ble Apex Court in FORTUNE INFRASTRUCTURE & ANR VERSUS TREVOR D’LIMA & ORS (2018) 5 SCC 442 as

“Moreover, a person cannot be made to wait indefinitely for the possession of the flats allotted to them and they are entitled to seek the refund of the amount paid by them, along with compensation. Although we are aware of the fact that when there was no delivery period stipulated in the agreement, a reasonable time has to be taken into consideration. In the facts and circumstances of this case, a period of 3 years would have been reasonable for completion of the contract”.

• • Therefore, 3 years is the deemed timeline for handing over the possession of the allotment letter is silent about the date of possession.
  • The allottee booked the said flat in March 2015 and the complaint was filed on 11th April 2019 on account of non-receipt of the possession. Therefore, possession of the flat was not delivered by the promoter even after adding 3 years of the reasonable period from the date of issuance of the allotment letter.
  • It has also been highlighted that the Promoter has violated the provisions of Section 13 of the Act as the agreement to sell is not executed and 92% of the consideration amount is received by the promoter.

Decision by Tribunal

• • The possession has not been delivered within the agreed time as mentioned in the letter of allotment and Section 18 of the Act provides an unconditional and unqualified right to complainants for refund. Therefore, under the various provisions of the Act, the allottee is entitled to a refund together with interest at the prescribed rate. The interest rate at the rate of the highest marginal cost of lending rate of State Bank of India plus 2%. It has also been held that the possession date unilaterally mentioned on the MAHA RERA website is not binding on allottees.
  • Section 13 of the Act stipulates that the promoter shall not accept an amount above 10% of the cost of the apartment as an advance payment without first entering into a written agreement for sale. The corresponding provision in The MOFA Act, also stipulates that a sale agreement should be executed before accepting payments above 20%. Even though the agreement for sale has not been executed still, the promoter has accepted approximately 92% of the consideration by the end of September 2017 of the total consideration. The agreement to sell is alleged to be getting delayed on account of the allottee, but without execution of an agreement of sale, the promoter has already raised demands & accepted deposits beyond 20% (it is even higher than the limit in The MOFA Act). Hence, the provisions of Section 13 of the RERA Act are violated.

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