In a landmark judgment that reinforces the supremacy of the Real Estate (Regulation and Development) Act (RERA), the Maharashtra Real Estate Appellate Tribunal has struck down a promoter’s attempt to use an “automatic extension” clause to avoid liability for a six-year delay in possession. The Tribunal ruled that such contractual terms cannot override the statutory protections afforded to homebuyers under RERA.
The Case of Fali Erach Poncha vs. Theme Infraprojects
The dispute centered on Flat No. 702 in Building A-I of the project “Signature Residency” (MahaRERA Reg. No. P51700008025), located in Thane. The appellant, Mr. Fali Erach Poncha, had purchased the flat from Theme Infraprojects Private Limited (the Respondent) via an agreement dated March 27, 2014.
Mr. Poncha had paid the entire consideration of ₹62,00,000 by June 2013. According to the agreement, the builder was supposed to hand over possession on or before March 2017. However, the project remained incomplete years after the deadline.
The Builder’s “Automatic Extension” Trap
When the homebuyer sought a refund due to the delay, the promoter pointed to Clause 12 of their agreement. This clause claimed the promoter was entitled to an “automatic extension” of time if construction was stalled due to reasons like:
- Non-availability of building materials (steel, sand, cement).
- Delay in government approvals or utility connections.
- Court orders or changes in statutory rules.
The builder argued that since the homebuyer had signed the agreement, they had “consented” to wait indefinitely for these reasons. They also cited the COVID-19 pandemic and various court stay orders as force majeure (acts of God).
Tribunal Strikes Down One-Sided Clauses
The Appellate Tribunal, comprising Justice S. S. Shinde and Shrikant M. Deshpande, rejected these arguments. The Tribunal’s reasoning provides a vital shield for all homebuyers:
- RERA Overrides Contracts: The Tribunal noted that RERA is retroactive and applies to all ongoing projects. Contractual terms that contradict the spirit of the Act cannot be used to deprive a consumer of their rights.
- Strict Definition of Force Majeure: The Tribunal clarified that under Section 6 of RERA, force majeure only includes natural calamities like floods, cyclones, or war. Delays in obtaining NOCs or materials do not count as “acts of God”.
- Timeline Matters: The builder tried to blame a 2017 High Court stay and the 2020 pandemic for the delay. The Tribunal pointed out that the possession date (March 2017) had already passed before these events occurred, meaning the builder was already in default.
- No “Indefinite” Waiting: The judgment stated that merely signing an agreement does not mean a buyer has consented to wait forever for a home.
The Rescue: Refund and Interest Ordered
The Tribunal set aside an earlier MahaRERA order that had allowed the builder to delay the refund until the project’s completion. It ruled that Section 18 of RERA gives a homebuyer an unqualified right to a refund “on demand” if the builder fails to give possession on time.
The promoter was directed to:
- Refund the entire principal amount of ₹62,00,000.
- Pay interest at the rate of SBI MCLR + 2% from the date of payment until realization.
- Execute a Deed of Cancellation and assist the buyer in getting a refund for stamp duty and registration charges from government authorities.
Also Read: MahaRERA Appellate Tribunal Orders Developer to Refund Buyers, Rejects Cancellation Fee
