Case Note & Summary
The case involves an appeal filed by Sanvo Resorts Pvt. Ltd. & Ors. (the promoter/developer) under Section 58 of the Real Estate (Regulation and Development) Act, 2016 (RERA Act) challenging the order of the Maharashtra Real Estate Appellate Tribunal dated 2nd March 2022, as rectified on 13th April 2022. The promoter had executed a registered agreement for sale of a flat with the allottees (Mrs. Shital Nilesh Deshmukh & Anr.) on 27th November 2015, agreeing to hand over possession by December 2017. The agreement contained a force majeure clause allowing reasonable extension of time for events beyond the promoter's control, including non-availability of materials, war, civil commotion, change in law, strikes, acts of God, restraint orders, or delay in obtaining occupancy certificate. The agreement also provided for an additional extension of up to 9 months. The promoter failed to deliver possession even after the extended period. The allottees filed a complaint with the Regulatory Authority under RERA, which granted interest under Section 18 of the RERA Act. The promoter appealed to the Appellate Tribunal, which confirmed the order. The promoter then filed a second appeal before the High Court. The sole question framed by the High Court was whether the Appellate Tribunal was justified in confirming the order granting interest under Section 18. The promoter argued that the delay was due to force majeure events, including a restraint order from the Bombay High Court and delay in obtaining the occupancy certificate, and that the agreement allowed extension for such events. The allottees contended that Section 18 of RERA Act imposes a statutory obligation on the promoter to pay interest for delay, which cannot be contracted out. The High Court analyzed Section 18 and held that it is a statutory provision that overrides any contrary contractual terms. The Court noted that the RERA Act is a special statute enacted to protect the interests of allottees and to ensure timely completion of projects. The force majeure clause in the agreement cannot defeat the statutory right of the allottee to receive interest under Section 18. The Court further observed that the promoter's obligation under Section 18 is absolute and does not depend on the cause of delay. Therefore, the Appellate Tribunal was justified in confirming the order granting interest. The appeal was dismissed.
Headnote
A) Real Estate Law - Force Majeure - Section 18 of Real Estate (Regulation and Development) Act, 2016 - Interest for Delayed Possession - The issue was whether a promoter can avoid liability to pay interest under Section 18 of RERA Act by relying on a force majeure clause in the agreement. The Court held that the statutory obligation under Section 18 is independent of contractual terms and cannot be overridden by a force majeure clause. The promoter is liable to pay interest for delay in possession even if the delay is attributable to events beyond its control. (Paras 1-10) B) Real Estate Law - Interpretation of Statutes - Section 18 of Real Estate (Regulation and Development) Act, 2016 - Promoter's Obligation - The Court interpreted Section 18 of RERA Act and held that it imposes an absolute obligation on the promoter to pay interest for delay in possession, irrespective of the cause of delay. The provision does not carve out any exception for force majeure events. (Paras 5-8) C) Real Estate Law - Contract vs Statute - Section 18 of Real Estate (Regulation and Development) Act, 2016 - Overriding Effect - The Court held that the provisions of RERA Act, being a special statute, override any contrary terms in the agreement between the promoter and allottee. A force majeure clause in the agreement cannot defeat the statutory right of the allottee to receive interest under Section 18. (Paras 7-9)
Issue of Consideration
Whether the Appellate Tribunal was justified in confirming the order of the Regulatory Authority granting interest under Section 18 of the RERA Act to the Respondent allottee?
Final Decision
Appeal dismissed. The order of the Appellate Tribunal confirming the grant of interest under Section 18 of the RERA Act is upheld.
Law Points
- Force majeure clause in agreement cannot override statutory right under Section 18 of RERA Act
- Promoter liable to pay interest for delay in possession even if delay due to force majeure events
- Section 18 of RERA Act is a statutory obligation independent of contractual terms
