[Opinion] Whether the concept of “Fit-out-possession” is recognised under RERA?

[2022] 140 taxmann.com 94 (Article)

Introduction

Recently Maha RERA on 30.06.2022 (Appeal No. AT0060000000J052727) in the case of Mysore Petro Chemicals Ltd v. Raghuleela Builders Pvt. Ltd. has held that RERA does not recognize the concept of fit-out possession. Therefore, even if other allottees have taken the fit-out possession of the flats that does not mean that the appellant must have taken fit-out possession of the flat. Disputes between promoter and MMRDA authorities for payment of charges cannot be the reason beyond the control of a developer. Accordingly, the promoter was held liable to pay Interest on payment of tax for the delay in giving possession to the allottee.

Facts of the case

1. The allottee has booked a unit in a Project based in Bandra, Mumbai. The unit comprises of Office, suite toilet with two car parking for total consideration of Rs. 12,93,60,000/-.
2. On 2nd July, 2015 developer executed an agreement for sale and thereby agreed to hand over the possession of the said Unit latest by 30th September 2015. Allottee has paid the entire consideration amount to the developer.
3. The developer has completed the construction but failed to obtain the occupancy certificate due to some dispute with MMRDA. Consequently, the developer failed to hand over possession of the Unit to the allottee. As a result, the allottee filed the complaint and sought relief: –

a. To direct the developer to obtain the occupancy certificate for the office Unit and hand over possession of the said Unit.
b. To direct the developer to pay interest and/ or compensation for the delayed period.

4. The RERA Authority heard the parties and passed the order directing the Promoter to hand over the possession of the unit at the earliest. However, the authority did not allow the payment of compensation based on contention placed by the Promoter. Therefore, the appeal was filed before MAHA RERA Tribunal.

The contention of the Developer/Promoter

The below contention was stated in an affidavit filed before the RERA Authority. The developer did not appear before MAHA RERA Tribunal and hence the decision of the Tribunal proceeded ex-parte

• • The Part occupancy certificate for the project was obtained on July 15, 2019, and fit-out possession was offered much before that to the complainant. However, it was not accepted by the complainant, though other allottees in the project had taken fit out possession.
  • The issuance of the full occupancy certificate was withheld due to certain penalties levied by the planning authority which was challenged by the Developer in the Hon’ble Bombay High Court and the same was upheld by the Hon’ble Bombay High Court, by setting aside the said demand of penalties.
  • In the separate petition, the Hon’ble Bombay High Court has also directed the planning authority to issue an occupancy certificate to the developer and a full occupancy certificate has been obtained by the Developer on July 15, 2019. Delay in issuing the occupancy certificate by the planning authority cannot be attributed to the developer as the delay was caused due to reasons beyond the control of the Developer.

The contention of the allottee

• • The matter was not heard based on pleadings of Allottee and arguments advanced but it was based on extraneous and unrelated queries raised by Authority on its motion being devoid of merits of the case.
  • The learned authority has failed to appreciate that the occupancy certificate dated 15.07.2019 shows that the developer had earlier obtained part occupancy certificates on various dates for different portions of the project. Therefore, it is clear that MMRDA had not refused to give an occupancy certificate to the developer and the delay in obtaining OC for the unit of the appellant was mainly due to the non-payment of charges to MMRDA.
  • Offer of Fit out possession is not giving possession as per Law. The Developer is bound by the contractual obligation to hand over the possession of the unit on the agreed date but failed to hand over the unit to Allottee till December 2019.

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