In a significant legal victory for homebuyers, the Maharashtra Real Estate Appellate Tribunal (MahaRERA Tribunal) has delivered a detailed order affirming the retroactive power of the Real Estate (Regulation and Development) Act, 2016 (RERA Act). The ruling came in the appeals of two allottees from an incomplete project in Malad, solidifying the protection RERA offers to consumers even for agreements made before the law was enacted.
The case involves two appeals filed by Hasmukh Vershi Gala and Paresh Kantilal Gala against the promoter, M/s. Adarsh Industrial Estate Private Limited, for their project “Link Park” in Malad (West). The dispute centered on the promoter’s prolonged failure to hand over possession of the flats, which were booked by the appellants in 2013. According to the Memorandums of Understanding (MoUs) signed at the time, possession was to be delivered within 54 months, plus a 6-month grace period, with the final dates being in early to mid-2018.
However, the promoter failed to meet this deadline, and as of the date of the order, the project was still incomplete without an occupation certificate. The appellants initially approached the Maharashtra Real Estate Regulatory Authority (MahaRERA), seeking to withdraw from the project and claim a full refund with interest under Section 18 of the RERA Act.
In a common order, MahaRERA allowed the withdrawal and refund but imposed a condition that the refund and interest would only be paid after the promoter obtained a full occupation certificate. The authority also granted the promoter a “moratorium period” for interest payments due to the COVID-19 pandemic, based on a force majeure event.
The appellants challenged this conditional refund order at the MahaRERA Tribunal. During the appeal, the promoter did not appear despite being given sufficient opportunities. The Tribunal reviewed the case and found that the promoter had unequivocally failed to hand over possession, and that the MoUs, although pre-dating the RERA Act, could be enforced under the law. The tribunal’s order cited a pivotal Supreme Court case, M/s. Newtech Promoters and Developers Pvt. Ltd. V/s. State of U.P. & Others, which established that the RERA Act is retroactive in operation and serves to protect the interests of allottees in ongoing projects.
Crucially, the Tribunal concluded that under Section 18 of the RERA Act, allottees have an unconditional right to a refund with interest if the promoter fails to give possession. Therefore, the tribunal rejected the MahaRERA’s condition to defer the refund until the project’s completion, stating it was not legally sustainable.
The MahaRERA Tribunal partially allowed the appeals, directing the promoter to refund the entire amount paid by the appellants within 30 days of the order. This amount must include interest calculated at a rate of 2% above the State Bank of India’s Highest Marginal Cost Lending Rate (MCLR), with the interest dating back to the time of each payment until the money is actually returned to the complainants. The tribunal, however, rejected the appellants’ claim for compensation due to a lack of supporting documentary evidence.
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