In a significant ruling that reinforces homebuyer protections under the Real Estate (Regulation and Development) Act, 2016 (RERA), the Maharashtra Real Estate Regulatory Authority (MahaRERA) has explicitly declared that “fit-out possession” – where developers hand over unfinished flats for interior work without full completion – is legally invalid without an Occupancy Certificate (OC). This observation came in a recent order (Complaint No. CC006000000192715, pronounced on December 8, 2025) by Member Mahesh Pathak, in a case involving allottees Sameer Khan and Falaknaz Shabbir Shaikh versus promoter Salim Mehmood Khan and his firm, Reliable Realtouch. The decision not only holds the promoter liable for delays but also sets a precedent for ongoing projects, emphasizing that lawful possession requires all statutory approvals.
The Case Background: A Delayed Project in Vasai
The complainants, Sameer Khan and Falaknaz Shabbir Shaikh, booked Flat No. F-602 in the “RG-A, B, E, F” project (MahaRERA Registration No. P99000003885) located in Vasai, Palghar. The registered Agreement for Sale (AFS) was executed on July 1, 2016, for a total consideration of ₹18,90,000. The promoter committed to handing over possession by May 31, 2018, as per Clause 29 of the AFS and a confirmation letter to ICICI Bank, from which the buyers availed a 90% home loan.
Despite full payments (including VAT, Service Tax, legal charges, stamp duty, and registration), the project remained incomplete well beyond the deadline. The complainants filed the online complaint on July 14, 2024, under Section 31 of RERA, seeking interest and compensation for the delay under Section 18. They alleged illegal offers of possession in Wings A, B, and E without OC, unsafe site conditions (e.g., open lift shafts, tanker-supplied water, non-fire compliance), and unauthorized project extensions without allottee consent.
An amendment on April 15, 2025, added the co-allottee (Shaikh) and the firm Reliable Realtouch as a respondent, which was allowed unopposed on June 25, 2025.
Promoter’s Defenses: COVID, Partner’s Death, and “Fit-Out” Offers
The respondents, Salim Mehmood Khan (proprietor and partner) and Reliable Realtouch, contested the complaint as “defective and unauthorized.” They claimed possession was offered in March 2024, but the complainants refused it, demanding three parking spaces (against one per sanctioned plans). They cited external factors for delays:
- The sudden death of Managing Partner AliAsger Abid Bhanpurawala on March 4, 2017, disrupting finances and operations.
- COVID-19 pandemic halting construction from 2020 onward.
- Pending OC due to MHADA’s delay in allotting 36 flats via lottery – a statutory requirement for this redevelopment project on MHADA land.
The promoter asserted that 80% of flats in Wing F had been handed over as “fit-out possession,” and around 40 allottees had accepted it. They argued these were “extraordinary circumstances beyond control,” absolving them of liability.
In their rejoinder, the complainants denied lawful possession claims, highlighting the site’s uninhabitable state (e.g., ongoing construction in Wings C and D posing safety risks) and illegal GST/Service Tax charges. They relied on precedents like Jyoti K. Narang v. CCI Projects Pvt. Ltd. to argue strict promoter liability.
MahaRERA’s Key Finding: “Fit-Out Possession” is Invalid Without OC
In Paragraph 12 of the order, MahaRERA categorically stated: “Since the OC for the said project has not yet been obtained, the question of handing over possession (whether physical or otherwise) does not arise at all. Moreover, it is a settled legal position that ‘fit-out possession’ does not constitute valid or lawful possession in the eyes of law, as lawful possession can be delivered only upon receipt of the requisite statutory approvals, including the OC.”
This ruling dismisses the promoter’s shelter under “fit-out” offers, emphasizing that RERA mandates full compliance with building norms. The authority rejected allegations of buyer default for refusing such possession, reinforcing that allottees cannot be forced to accept incomplete or unsafe units.
Delay Liability and Interest Calculation Under Section 18
MahaRERA analyzed the delay under Section 18 of RERA, which entitles allottees to monthly interest (SBI MCLR + 2%) for delays if they choose to stay in the project. The AFS date (May 31, 2018) was undisputed, but the promoter’s excuses were scrutinized:
- COVID-19: Invalid for pre-2020 delays but entitled to MahaRERA’s moratorium benefits (Orders 13 and 14 of 2020–2021, excluding March 15, 2020–February 28, 2022).
- Partner’s Death: Not “force majeure”; an internal business risk.
- Even assuming force majeure, the pre-RERA AFS allowed only a 6-month extension under MOFA Section 8(b), pushing the deadline to November 30, 2018.
Thus, interest accrues from December 1, 2018, till the date of lawful possession with OC, on actual consideration paid (excluding taxes, stamp duty, etc.).
Rejection of Compensation and Rent Claims
The complainants’ demands for separate compensation and rent reimbursement were rejected (Para 21). MahaRERA clarified that Section 18 limits relief to interest for allottees opting to continue, with no provision for additional compensation or rent loss.
Deferred Payment and Set-Off: Balancing Buyer Rights with Project Viability
In a pragmatic move (Para 23), MahaRERA deferred interest payment until full OC is obtained, to prevent fund diversion that could stall the project (valid till December 2025). This aligns with RERA’s objectives under Sections 11, 14, 34, and 37 to ensure timely completion for all allottees.
Key directions (Para 24):
- Mutual set-off: Promoter can deduct outstanding dues (e.g., society charges) from interest at possession time.
- Equity safeguard: If interest exceeds dues, dues are waived immediately; no further demands.
This protects the project’s cash flow while ensuring buyers aren’t burdened further.
Broader Implications for Homebuyers and Developers
The order underscores RERA’s dual focus: protecting allottees from delays while incentivizing project completion. It warns promoters against using “fit-out” as a workaround and highlights the need for transparent extensions and OC timelines. For buyers in similar situations, it advises documenting payments and refusing invalid possession offers. With thousands of delayed projects in Maharashtra, this precedent could embolden more complaints, pushing for stricter compliance.
The complaint was partly allowed and disposed of, with no further hearings scheduled.
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