By Devika Mehra and Anmol Sethi
The Hon’ble Maharashtra Real Estate Appellate Tribunal (hereinafter referred to as “MREAT”) in a landmark judgment of Dilip J Mehta vs. Akshar Developers & Ors.1 directed the promoter to pay interest on account of delayed delivery of possession and in absence of existence of units already booked, deliver the possession of alternative units of equal area at agreed price of total consideration as per the allotment letter after adjusting the payments already made. In this big relief for homebuyers, it was clarified that through the present order that the promoter/developer cannot amend or alter the sanctioned plan or layout or usage of the project without the written consent of 2/3rd of the allottees which is prerequisite in terms of Section 14 of the Real Estate (Regulation and Development) Act.
A. Factual Matrix:-
1. The Complainant booked 2 units admeasuring about 4090 sq. ft. each (“Units”) for a total consideration of Rs.59,30,500/- for each unit in Akshar Decorum Business Park (“Project”). The Allotment Letter dated August 9, 2006 was issued and the Complainant paid a sum of Rs.2,04,500 towards each unit, totalling up to Rs.4,09,000/-. According to the Allotment Letter, it was agreed to handover the possession of the said units to the Complainant by March, 2009.
2. Due to change in layout/plan of the project, further extension of possession delivery date and failure to deliver possession of the said units on agreed delivery date, the complainant filed a complaint dated November 01, 2018 before Maharashtra Real Estate Regulatory Authority (“Authority/MRERA”) seeking various reliefs inter alia to direct the Respondents to execute the agreement for sale, deliver possession of units and pay interest for delay in delivery of possession.
3. The Respondents failed to appear in the complaint/proceeding pending before the Authority and vide impugned order dated August 22, 2019, the complaint was dismissed for want of merits.
4. Aggrieved by the impugned order, the Complainant filed an appeal before Hon’ble Maharashtra Real Estate Appellate Tribunal (“MREAT”), challenging the impugned order on the following grounds:-
a. There is unsatisfactory progress in construction and the promoters have not provided updates on construction progress despite various requests.
b. The Promoters have violated Section 132 of the Real Estate (Regulation and Development) Act (“Act”) by failing to show their bonafides to enter into agreement for sale despite booking and payments, even after follow ups.
c. The Promoters failed to deliver the possession of the units by March 2009 and the delay is by more than 11 years and in view of the same, the promoters are liable to pay interest under Section 183 of the Act, for delay in delivery of possession.
d. The Promoters have violated Section 124 of the Act by not performing their promised obligations, by giving false promises and assurances by showing and representing rosy pictures of the project but in fact when the site was visited, the project was still under construction.
e. Promoter unilaterally and without even the knowledge of the Complainant, without complying with the mandatory requirements of full disclosures and without prior consent of Complainant, changed the project usage from warehousing to commercial as well as extended the project completion timeline. Hence, Promoter breached the provisions of Section 145 of the Act.
B. KEY FINDINGS OF HON’BLE MREAT WHILE GRANTING THE REWARD:-
1. The Hon’ble MREAT held that there is no violation of Section 13 of the Act as there is no bar in executing agreement for sale even if payment is less than the prescribed threshold and executing agreement to sale at the earliest will always enhance certainty and predictability in terms of better commitments from both sides.
2. The Hon’ble MREAT, however, held that the Promoter has violated Section 12 of the Act on the ground that the Plan/layout promised at the time of issuance of Allotment Letter stands changed on account of altercations by the Promoter, without consent of the Complainant and the same is contrary to the information provided and promised in the Allotment Letter. Since the changes done by the Promoter were not in consonance with the provisions as stipulated in Section 12 of the Act, the Promoter is in gross violation of Section 12 of the Act.
3. The Hon’ble MREAT further held that the promoter has violated Section 14 of the Real Estate Act while observing that Section 14 of the Act clearly mandates for previous consent of the concerned Allottee complainant before undertaking any change in the agreed plan and in case of any change in the layout and specification of the buildings or common areas, prior written consent of at least 2/3rd of the Allottees is prerequisite.
a. In the present case, it was alleged that changes were undertaken unilaterally without even the knowledge of the complainant allottee. The promoters argued that the complainant has expressed waiver for changes in the project and relied upon the judgment wherein it is held that waiver is the abandonment of a right that normally everybody is at liberty to waive.6
b. The Hon’ble MREAT opined that the consent provided by virtue of the Allotment Letter is apparent only for change in plan and not for any change in end usage of the project altogether. With respect to the present case, changes undertaken were not only in the plan and layout but also in the project usage itself which altered the very nature of the project.
c. The Hon’ble MREAT observed that the consent provided therein, is in the nature of general and of blanket consent, secured upfront in the beginning itself without even sharing the information for proposed changes as well as without full disclosures of underlying exact and specific expected changes.
d. Hon’ble MREAT also observed that whereas, Section 14 of the Act warrants and mandates previous consent of the allottee before undertaking any change in the plan, at the same time, for any change in the layout also requires and mandates for prior written consent of 2/3rd of the allottees.
4. The Hon’ble MREAT held that the complainant is entitled for interest on account of delayed possession under section 18 of the Act and that the promoters are liable to deliver possession of alternative units of commensurate area at already agreed price/total consideration mentioned in the allotment letter on the following grounds:-
a. While observing the Section 18 of the Act, the Hon’ble MREAT held that the agreement for sale need not be in writing and any other document containing requisite contents of the agreement will suffice.7
b. The Hon’ble MREAT observed that in the present case, there was existence of a detailed allotment letter which was agreed by both sides and contents of which reflected agreed position between the parties and which were akin to an agreement for sale. It was observed that the intentions of the parties matter more and not the nomenclature of the transaction instruments.
c. The Hon’ble MREAT appreciated the fact that even a MOU may be considered as valid instrument for the purpose of provisions of Section 18 of the act. It was held that a written agreement for sale is not prerequisite for the allotee’s right to accrue.8
d. The Hon’ble MREAT further held that there is a huge delay in delivery of possession coupled with contraventions in Section 18 of the Act, the Complainant is entitled for interest on account of delayed possession under Section 18 of the Act from agreed date of possession i.e. April 01, 2009 till the actual delivery date of possession.
Apart from the above stated findings, it can be concluded that blanket consent or authority obtained by the promoter without giving disclosures and information at the time of booking or executing agreement for sale would not amount to consent given by the Allottee under Section 14 of the Act. It has been clarified by way of the present judgment that the promoter/developer cannot amend or alter the sanctioned plan or layout or usage of the project without the consent of 2/3rd of the allottees.
1 Order dated 19.10.2022 in Appeal No. AT006000000041924
2 No deposit or advance to be taken by promoter without first entering into agreement for sale
3 Return of Amount and Compensation
4 Obligations of promoter regarding veracity of the advertisement or prospectus
5 Adherence to sanctioned plans and project specifications by the promoter
6 Waman Sriniwas Kini vs. Ratilal Bhagwandas & Co. (1959) Suo(2) SCR 21
7 Bombay Dyeing & manufacturing company Limited [Second Appeal (ST) No. 4996/2020 dt. August 30, 2021]
8 R.R. Pagariya & Ors. Vs Rashmi Reality Builders Pvt. Ltd. Appeal no. AT 00523 dated 20th August 2021