Two homebuyers booked flats on the sixth and seventh floors of a Mumbai housing project in 2013. They were assured that they would get possession for the flats by December 2014. But their dream of getting the flats remains elusive.The buyers claimed to have collectively paid Rs 1.16 crore for Flat Nos. 603 and 703 and subsequently approached MahaRERA seeking a refund, along with compensation of Rs 20 lakh each.The Maharashtra Real Estate Regulatory Authority has directed the developer to refund the amounts paid, along with applicable interest, after noting that the project remained incomplete and its registration had lapsed without an extension.
What the case is about
The two homebuyers received an allotment letter dated February 18, 2013. According to their complaint, the developer told them that construction up to the fifth floor was complete and that the sixth and seventh floors would be completed by 2014.One homebuyer said he paid Rs 50 lakh by cheque and Rs 6 lakh in cash for Flat No. 603. The other claimed to have paid Rs 50 lakh by cheque and Rs 10 lakh in cash for Flat No. 703. The developer acknowledged receiving the Rs 50 lakh cheque payments from both buyers.The payments were completed during 2013-14, after which the buyers repeatedly sought possession. They said the developer continued to tell them that approvals required for construction above the fifth floor had not yet been obtained.The buyers pointed out that the Commencement Certificate dated October 22, 2010, permitted construction only up to the fifth floor. Despite this, they said the developer sold the sixth- and seventh-floor flats during 2012-13, assuring them that the additional approvals would be secured and the project completed by 2014.They also relied on architect certificates dated July 29, 2017, and March 13, 2019, which showed no progress in construction of the upper floors.The developer, however, maintained that the buyers knew about the pending approvals when they booked the flats. It attributed the delay to disputes concerning municipal charges, the COVID-19 pandemic and the lockdown, according to an ET report.The developer described the complaint as forum shopping and disputed the amounts claimed.For Flat No. 603, it said only Rs 45,24,000 had been received and denied the additional Rs 10.76 lakh claimed by one homebuyer. For Flat No. 703, it acknowledged receiving Rs 50 lakh but said Rs 10 lakh had subsequently been refunded, leaving Rs 40 lakh.
Why did MahaRERA rule in favour of the homebuyers?
MahaRERA found that substantial amounts had been paid for both flats and that the project had lapsed on its portal without the developer seeking an extension.“The latest architect certificate dated 31.02.2019 uploaded on the portal substantiates that the project remains incomplete and the respondent thereafter has failed to update the progress of the project, which substantiated that the project remains incomplete and are at default,” the tribunal said according to ET.The developer had also failed to hand over possession with the requisite Occupation Certificate within the stipulated period.Rishabh Gandhi, Former Judge and Founder, Rishabh Gandhi and Advocates, told ET that the prolonged and continuing default was decisive.He said the combination of the lapsed project, incomplete construction, absence of an Occupation Certificate and the fact that the allotted flats were above the fifth floor strengthened the buyers’ case.Gandhi pointed to Section 18 of the Real Estate (Regulation and Development) Act, 2016. “Where the promoter fails to complete the project or give possession, an allottee who chooses to withdraw is entitled to refund with prescribed interest. MahaRERA rightly emphasised that a homebuyer cannot be made to wait indefinitely for the promoter to obtain approvals and complete the project.”The buyers also had allotment letters, payment records and legal notices dated 14.09.2020 formally recording their withdrawal. The MahaRERA portal showed that the project registration had lapsed.
Homebuyers to receive refund with interest
MahaRERA has directed the developer to refund the amounts established as having been paid towards the respective flats, together with applicable interest calculated from the respective payment dates. The developer has 60 days from the order to make the payment.It must also pay Rs 20,000 each to both the homebuyers as costs.The homebuyers claimed payments of Rs 56 lakh and Rs 60 lakh, respectively. However, the figures included cash payments of Rs 6 lakh and Rs 10 lakh, which were disputed.Gandhi said the order should therefore not be interpreted as automatically awarding Rs 56 lakh to Kutty and Rs 60 lakh. “MahaRERA has directed refund of the amounts paid towards the consideration of the respective flats, together with interest.”The final refund will depend on the amount that can ultimately be established as having been paid, particularly because the cash components were disputed.
Why property buyers should maintain a payment trail
Cash payments do not automatically defeat a buyer’s legal claim, but proving an undocumented payment can become difficult. Gandhi noted that both buyers claimed cash components without receipts, while the developer disputed those amounts.“ that problem is visible in this case: both purchasers alleged cash components – Rs 6 lakh and Rs 10 lakh – but there were no receipts for those payments, and the developer disputed the amounts.”A bank transfer, by comparison, creates a contemporaneous record of payment. Section 269ST of the Income-tax Act also restricts receipt of Rs 2 lakh or more in cash in the circumstances specified under the provision.
What to check before booking a property
A RERA registration number alone should not be the only check before buying a flat. Gandhi said buyers should examine the sanctioned plan, Commencement Certificate, approvals for the specific wing and floor, title and encumbrances, declared completion date, pending approvals and litigation, as well as quarterly project updates on the MahaRERA portal.
