Court Dismisses Developer's Appeal, Affirms Purchaser's Right to Refund Under RERA Despite Grace Period Clauses
In a landmark judgment, the Bombay High Court has reaffirmed the rights of flat purchasers under the Real Estate (Regulation and Development) Act, 2016 (RERA), emphasizing that statutory rights for refunds and compensation cannot be overridden by grace period clauses in pre-RERA agreements. The judgment came in the case of Macrotech Developers Ltd. v. Suryakant Yashwant Jadhav and others, where the court dismissed the developer's appeal, thereby upholding the Maharashtra Real Estate Appellate Tribunal's decision to grant refunds to the respondents due to delayed possession.
Presided over by Justice Sharmila U. Deshmukh, the court examined whether the complaints filed under Section 18 of RERA were maintainable and if the grace period clauses in pre-RERA agreements were contrary to RERA provisions. The court concluded that the statutory rights under RERA for seeking refunds and compensation are activated when a developer fails to adhere to the agreed possession date, which in this case was set as 28th February 2018.
The court noted that while the agreements were executed under the Maharashtra Ownership Flats Act (MOFA) before RERA came into force, RERA's provisions still prevail, as the project was ongoing and registered under RERA. The court dismissed the argument that the grace period extended the final possession date beyond the statutory rights provided by RERA.
Justice Deshmukh highlighted that the flat purchasers were entitled to withdraw from the project under Section 18 of RERA, as the developer failed to hand over possession by the extended grace period. The court maintained that RERA does not permit the rewriting of contractual terms and emphasized the primacy of statutory rights over pre-existing contractual clauses.
The judgment also clarified that the concept of possession for fit-outs does not affect the statutory rights granted under RERA, and developers cannot defer the final possession date by utilizing grace period provisions in the agreement. The court ruled that the application under Section 18 of RERA was maintainable, and the respondents were entitled to the reliefs granted by the Tribunal.
With this decision, the Bombay High Court has reinforced the protective measures provided to flat purchasers under RERA, ensuring accountability and timely completion by developers, thereby safeguarding consumer interests.
Bottom line:-
Real Estate (Regulation and Development) Act, 2016 (RERA) - Flat purchaser's agreement - Applicability of Section 18 of RERA when possession is delayed - Grace period provisions in pre-RERA agreements do not override statutory rights under RERA for refund, interest, and compensation.
Statutory provision(s): Real Estate (Regulation and Development) Act, 2016, Section 18(1).
Macrotech Developers Ltd. v. Suryakant Yashwant Jadhav, (Bombay) : Law Finder Doc id # 2918731
