Case Note & Summary
The case involves a Second Appeal filed by Era Realtors Private Limited (Appellant) against the judgment of the Maharashtra Real Estate Appellate Tribunal, Mumbai, dated 17 March 2023. The Appellant had undertaken a residential housing project under the Slum Rehabilitation Scheme on property in Malad, Mumbai. The Respondents, Prakash Shah and Niket Shah, booked two flats in the project for a total consideration of Rs.3,91,04,400 each. Letters of allotment were issued on 11 September 2013, with possession promised by 1 June 2017, with a six-month grace period. The Respondents paid part consideration of Rs.3,29,20,062 for each flat. However, possession was delayed. The Respondents filed a complaint before the Maharashtra Real Estate Regulatory Authority (MahaRERA), which on 25 November 2020 directed the Appellant to pay interest at SBI MCLR plus 2% from 1 January 2018 till possession. The Appellant appealed to the Appellate Tribunal, which partly allowed the appeal but maintained the interest direction. The Appellant then filed the present Second Appeal. The High Court considered the issues of whether the Appellate Tribunal was justified in directing interest and whether RERA applies to the project. The court held that the project was ongoing as no completion certificate was obtained before RERA came into force, and thus RERA provisions apply. The court also held that the Appellant was liable to pay interest for the delay as per Section 18 of RERA. The court dismissed the appeal, upholding the direction to pay interest at SBI MCLR plus 2% from 1 January 2018 till possession, and also upheld the costs of Rs.10,000.
Headnote
A) Real Estate - Interest on Delayed Possession - Section 18 of Real Estate (Regulation and Development) Act, 2016 - Promoter's Liability - The issue pertained to delay in handing over possession of flats in a slum rehabilitation project. The court held that the promoter is liable to pay interest to the allottee for the period of delay as per Section 18 of RERA, and the rate of interest is SBI MCLR plus 2% as prescribed under the Act. (Paras 1-20) B) Real Estate - Applicability of RERA to Ongoing Projects - Section 3 of Real Estate (Regulation and Development) Act, 2016 - Transitional Provisions - The court considered whether RERA applies to projects where completion certificate was obtained before the Act came into force. Held that RERA applies to projects for which completion certificate is not obtained before the Act's commencement, and the project in question was ongoing, hence RERA provisions apply. (Paras 10-15) C) Real Estate - Compensation for Delay - Section 18 of Real Estate (Regulation and Development) Act, 2016 - Allottee's Right - The court examined the allottee's right to compensation for delay in possession. Held that the allottee is entitled to interest from the date of default as per the agreement, and the promoter cannot avoid liability by citing force majeure or other excuses unless proven. (Paras 16-20)
Issue of Consideration
Whether the Appellate Tribunal was justified in directing the Appellant to pay interest on the amount paid by the allottees at SBI MCLR plus 2% from 1 January 2018 till possession, and whether the Appellant is entitled to any relief against such direction.
Final Decision
The High Court dismissed the Second Appeal, upholding the direction of the Appellate Tribunal to pay interest at SBI MCLR plus 2% from 1 January 2018 till the date of handing over possession of the subject apartments to the Respondents, and also upheld the costs of Rs.10,000.
Law Points
- Interest on delayed possession
- RERA Section 18
- Promoter's obligation to compensate allottee
- Slum Rehabilitation Scheme
- Applicability of RERA to ongoing projects
