Maintaining that Maharashtra Real Estate Regulation Authority (MahaRERA)’s decision favoured defaulting promoters at the cost of thousands of flatbuyers, an allottee last week moved the Bombay High Court challenging the authority’s May 18 order. The MahaRERA had on May 18 extended the period of validity of registration of all construction projects where completion dates were to expire on or after March 15.
The extension was done by invoking the Force Majeure clause stating that Covid-19 pandemic is a calamity caused by nature and is adversely affecting regular development of real estate projects. Force Majeure is a contractual remedy available to an affected party under a contract for seeking relief in view of unforeseeable circumstances.
On April 2, the MahaRERA had extended the validity for registering projects by three months but on May 18, the further extension was announced for another three months.
The Public Interest Litigation (PIL) filed before the High Court last week said that the decision was taken arbitrarily and would lead to hardships and losses to allottees who have invested in real estate projects and are waiting for years to get possession.
Petitioner Sagar Sarjerao Nikam, an allottee of a flat in a housing project in Andheri, moved the HC through advocates Manish Gala and Anand Pai stating that the authority’s decision allowed errant promoters to pass on losses caused due to their excessive defaults to the genuinely affected allottees for no fault. Nikam said that the order illegally granted extensions and relaxations to the errant promoters and deprived purchasers of their statutory rights of being heard under the RERA law.
Nikam, a 37-year-old petitioner, had purchased a flat in Andheri on January 12, 2017 and had paid nearly 95 per cent of the total amount to the promoter. He further said that promoter promised to deliver possession by December, 2017 but failed to do so as occupation certificate (OC) was rejected due to promoter’s default. The petitioner and his family, awaiting redressal of their complaint, have been staying on leave and license basis with financial difficulties. He said he filed the PIL on behalf of many such aggrieved buyers.
The plea stated that the decision created an ‘unintelligible class of promoters’ and overlooked cases wherein the promoters have completed development work but failed to procure OC or permissions were revoked due to defaults in construction.
In view of this, the plea stated that through the May 18 order, payment of compensation in case of failure to deliver the property has also been exempted in blanket manner, even for those cases that had lapsed before March 15 and it was completely arbitrary and violative of the mandate of the RERA law.
The PIL sought direction from the HC that the May 18 order treating Force Majeure span as a ‘moratorium period’ for the purpose of calculating interest under RERA law, be declared illegal and unilateral and be quashed and set aside. A moratorium period is a time during the loan term when the borrower is not required to make any repayment. Pending hearing, the plea sought an interim relief for staying the operation of MahaRERA orders.
While a bench led by Chief Justice Dipankar Datta could not hear the case due to paucity of time on June 16, it is likely to be heard on Tuesday, June 23.
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