The MahaREAT recently ruled that a builder can’t use the MHADA-MCGM planning authority dispute as an excuse for delaying possession of an apartment to homebuyers for over three years, especially since the agreed possession date had already expired before the dispute was resolved.
The Maharashtra RERA Appellate Tribunal (MahaRERA) pointed out that the MHADA-MCGM dispute existed before the possession date. The sale agreement was signed on March 22, 2015, stating that possession would be given 30 months later, on September 22, 2017. However, the MHADA-MCGM dispute was resolved in May 2018, and yet the builder obtained the full occupation certificate for the apartment only in April 2021.
Thus, on this ground, MahaREAT ruled that the homebuyers have the right to withdraw from the project and seek refund with interest.
What happened and when?
The relevant dates were:
- September 22, 2017: Possession date promised to the buyers according to the sale agreement.
- May 23, 2018 – The Maharashtra government issued a notification saying that MHADA will be the planning authority in respect of the areas of land of MHADA’s layouts under the jurisdiction of MCGM, thus ending the dispute.
- October 12, 2018: MHADA issued part occupation certificate for up to the 12th floors.
- April 5, 2021: Full occupation certificate obtained from MHADA.
Also read: Possession delay: MahaREAT asked homebuyer to pay Rs 13 lakh interest to builder despite 2.5 years delay in delivery of Rs 1.65 crore apartment
So the dispute started because the builder had promised possession by September 22, 2017, but failed to hand over the flat on time. It was only in March 2018, the builder offered only a “fit-out possession”, which meant that the homebuyer was left without a valid Occupation Certificate for his 14th-floor flat. For this reason the homebuyer rejected it and took legal action. The builder blamed delays on a dispute between MHADA and MCGM over planning authority approvals.
Why did the homebuyers win this case?
Heena Chheda, Economic Laws Practice, said to ET Wealth Online: The Maharashtra Real Estate Appellate Tribunal’s (MahaREAT) rulings in this case send a clear, buyer‑friendly signal under the Real Estate (Regulation and Development) Act, 2016 (RERA).
In this case the MahaREAT Tribunal held that the builder could not blame a dispute between Maharashtra Housing and Area Development Authority (MHADA) and Municipal Corporation of Greater Mumbai (MCGM), for delays in getting an Occupation Certificate, to justify its failure to hand over possession of the flat on time.
According to Chheda, the MahaREAT Tribunal applied Section 18 of RERA, and ruled that once the agreed possession date is crossed, the buyer gains a statutory right to interest for the period of delay.
Chheda says: “Day‑to‑day approval and coordination problems between government bodies are part of the developer’s own business and project‑management risk and cannot be used to avoid paying interest for delayed possession.”
Chheda also says that this judgement confirms that bureaucratic or ‘systemic’ issues including disputes between public authorities do not legally excuse delay in handing over flats, and that, once delay is established, the buyer’s entitlement to interest under Section 18 is statutory and effectively unconditional.
More details on what led to this dispute between the homebuyers and the builder
The homebuyer who filed this case was from Bandra (East) and on March 22, 2015, he bought apartment no. 1403 on the 14th floor by signing a sale agreement with a builder based out of Borivali (West). The total cost for this apartment was Rs 1.5875 crore. Since the builder had a 10:80:10 subvention scheme and pre-EMI, the homebuyer availed it and paid the amounts according to the scheme’s schedule.
The homebuyer made the first payment on November 20, 2014, while the last payment was made on February 28, 2018. The homebuyer paid a total of Rs 1.4313 crore and about Rs 15.61 lakh balance was left to be paid. Apart from that, the homebuyer also paid statutory dues like stamp duty, service tax, MVAT, and registration charges.
The dispute started on March 26, 2018, when the builder offered the homebuyers a fit-out possession, without giving any occupation certificate and on this basis demanded payment of the balance amount (Rs 15.61 lakh).
The builder contended that MHADA had given it a part occupation certificate in 2018 till the 12th floor for reasons best known to them, and therefore, he could not offer full possession to the homebuyers including the ones who filed this case since their unit was on the 14th floor.
The homebuyers felt aggrieved and refused to take possession and instead filed a case in MahaRERA. MahaRERA in its order in 2018 directed the builder to refund Rs 1.4313 crore with interest only from September 23, 2017 till April 4, 2021 and allowed deduction of the Covid-19 moratorium period.
In the meantime, on April 5, 2021 the builder got the full occupation certificate from MHADA and offered full possession to the homebuyers provided they paid the balance amount.
The homebuyers, still feeling aggrieved, filed an appeal in MahaREAT against the MahaRERA order and sought interest from the dates of respective payments and refund of the statutory payments.
The builder submitted his written contentions before MahaREAT, but did not come to the hearing.
The builder contended that they took the land belonging to MHADA for development and got the NOC on June 17, 2014 and by January 2018, the builder was ready. However, due to a dispute between MHADA and MCGM over who will issue approvals as the planning authority, there was a delay in getting the occupation certificate. Subsequently, on May 23, 2018, the Maharashtra government clarified that MHADA shall be the planning authority and all approvals shall be given by it.
So the builder contended that he had nothing to do with the delay and should get the balance amount of Rs 15.61 lakh as per the agreement for sale.
Regarding the payment of pre-EMI as per the Tripartite agreement, the builder contended that as per the tri-partite agreement under the subvention scheme, it was clearly stated that he agreed to pay pre-EMI for a period of 24 months or intimation of fit-out possession, whichever is earlier, and therefore his liability to pay pre-EMI ended on July 26, 2017.
On May 6, 2026, the homebuyers partly won the case in MahaREAT as the authority allowed the interest to be calculated from the date of respective payments. MahaREAT told the builder to refund Rs 1.4313 crore with interest at the rate of 2% above the State Bank of India’s highest MCLR, from the dates of respective payments of the amount.
Also read: Homebuyers win MahaREAT case despite unregistered sale agreement; to get Rs 23 lakh with interest from builders for delay in possession
(Calculation: If we conservatively estimate SBI’s highest MCLR rate at that time as 9%, then the interest comes:
- Principal paid: Rs 1,43,13,215
- Most payments were made between November 2014 and March 2017. So, the weighted average payment date is roughly around mid-2016. From mid-2016 to May 2026, it is about 10 years.
- Estimated simple interest: Rs 1,43,13,215 × 11% (9%+2%) × 10 years = Rs 1.57 crore (1,57,44,500). So the homebuyer can get Rs 1.43 crore plus Rs 1.57 crore= Rs 3 crore. )
About the homebuyer wanting to get back the government taxes, MahaRERA said that they should request a refund from the appropriate authorities by providing the cancellation deed.
In this context, the MahaREAT authority instructed the builder to execute a cancellation deed within two months. This way the homebuyer can reach out to the GST, Income Tax Department and state registry to get back the respective taxes after submitting the cancellation deed. MahaREAT also told the builder that if he failed to execute the cancellation deed, then he will have to refund the statutory taxes paid by the homebuyer himself.
Keep reading to know why the homebuyers won the case.
Also read: Booked flat for Rs 24 lakh in 2010, paid Rs 40 lakh over time, still no possession in 2026; homebuyers awarded full refund and Rs 2.5 lakh compensation each
MahaREAT order and discussion
A summary of the MahaREAT order:
Builder failed to handover possession within the date mentioned in sale agreement
The MahaREAT authority said that the due date of possession of the flat was September 22, 2017. However, the builder obtained an occupation certificate for the flat only on April 5, 2021.
MahaREAT said: “This sufficiently demonstrates that the promoter has failed to hand over possession of the subject flat in accordance with the due date of possession as per the agreement for sale.”
MahaREAT also rejected the builder’s contention about the MHADA and MCGM dispute and said that this argument does not work as the due date for possession of the flat was September 22, 2017, much before the dispute arose between MHADA and MCGM.
Also read: Booked flats in 2005, still awaiting possession: Builder ordered to pay 10.05% interest to homebuyers for nearly 20-year delay
Without homebuyers’ consent, project’s due date cannot be extended
The MahaREAT authority also rejected the builder’s contention that since the due date of the project’s completion was extended till December 1, 2021 and he got the full occupation certificate on April 5, 2021, there was no delay.
MahaREAT said: “We do not accept these contentions. The date of possession as mentioned in the agreement for sale is sacrosanct and the promoter (builder) is obligated to hand over possession of the said flat by the due date mentioned in the agreement for sale.”
MahaREAT also said that any extension to the project completion date has no bearing on the possession date as mentioned in the agreement for sale.
MahaREAT further said that the possession date can only be amended by the mutual consent of the parties to the agreement, However, the builder did not produce any document on record to suggest that the homebuyer had agreed to an extension of the project with December 1, 2021 as the new date of possession.
Builder cited Clause 30 for reasons beyond his control
MahaREAT said that the factors outlined in Clause 30 of the agreement for sale are generic and didn’t relate specifically to this project.
MahaREAT also observed that by signing the sale agreement with Clause 30, the homebuyers cannot be said to have consented to an indefinite wait for completion and possession under the reasons specified in Clause 30 (non-availability of steel, cement and other building materials, water, electric supply; war, civil commotion, Act of God, force majeure and reasons beyond the control of the promoter).
Delay due to dispute between MHADA and MCGM cannot be termed as force majeure
The MahaREAT authority said that Section 6 of RERA Act clearly clarifies that” force majeure” shall mean a case of war, flood, drought, fire, cyclone, earthquake or any other calamity caused by nature, affecting the regular development of real estate projects.
However, none of the grounds as demonstrated by the builder fall within the scope of explanation to Section 6 of RERA Act, 2016 which could have justified the delay.
Therefore, MahaREAT said that the delay in granting permissions/ sanctions/ NOCs by various competent authorities, etc. as contended by the builder cannot be construed as “force majeure.’
