IBC Prevails Over RERA On Individual Refund Rights In CIRP; Homebuyers Bound By Class Decision On Resolution Plan: NCLT Mumbai

 

IBC Prevails Over RERA in Case of Conflict with Individual Refund Rights; Homebuyers Bound by Collective Class Decision: NCLT Mumbai

Cause Title: Vivek Talwar & Others v. Rajesh Jhunjhunwala, Resolution Professional & Others
Case No.: I.A. (IB) No. 3688 of 2025 in C.P. (IB) No. 389/MB/2022

The National Company Law Tribunal, Mumbai Bench, has held that a resolution plan cannot be required to incorporate an individual homebuyer's right to seek refund under Section 18 of the Real Estate (Regulation and Development) Act, 2016 (“RERA”), where enforcement of such individual right is inconsistent with the collective insolvency resolution process contemplated under the Insolvency and Bankruptcy Code, 2016 (“IBC”).

A Bench comprising K.R. Saji Kumar, Member (Judicial), and Anil Raj Chellan, Member (Technical), dismissed an application filed by four homebuyers seeking reconsideration of the resolution plan of Spenta Enclave Private Limited and, alternatively, seeking directions for provision of an exit and refund mechanism for homebuyers who did not wish to continue with their respective units.

The applicants had booked two flats in the “Altavista” project developed by Spenta Enclave Private Limited and had paid approximately ₹89.23 lakh and ₹86.71 lakh towards the purchase consideration between 2017 and 2021. Although possession was initially represented to be delivered by December 2019 and subsequently by December 2020, the project remained incomplete. Consequently, the applicants sought refund and initiated proceedings before the State Consumer Disputes Redressal Commission in July 2022, prior to commencement of the CIRP.

The CIRP commenced on 24 March 2023. During the CIRP, the applicants submitted their claims as homebuyers, which were admitted by the Resolution Professional. They subsequently informed the Resolution Professional that they were unwilling to pay the balance consideration and did not wish to continue with the project. Their grievance was principally directed against the resolution plan on the ground that it did not provide an exit or refund mechanism for homebuyers seeking withdrawal under Section 18 of RERA.

The applicants relied upon Clause 18 of their respective Agreements for Sale, which contemplated refund with interest in the event of failure to deliver possession within the stipulated period. It was contended that the Successful Resolution Applicant (“SRA”), upon taking over the project, would step into the shoes of the erstwhile promoter and would consequently be bound by the contractual and statutory obligations owed to the applicants under RERA.

The resolution plan, however, specifically provided that “no cancellation of the Units by the Homebuyers will be entertained by the Resolution Applicant.” The applicants contended that such a provision amounted to an impermissible unilateral alteration of their contractual and statutory rights.

The Tribunal rejected the contention. It examined the scope of Section 18 of RERA, which enables an allottee, in specified circumstances, to seek return of the amount paid together with interest where the promoter fails to complete the project or is unable to give possession in accordance with the agreement. However, the Tribunal observed that, at the relevant stage, the SRA could not be treated as having stepped into the shoes of the erstwhile promoter.

The Tribunal noted that the resolution plan had not yet been approved by the Adjudicating Authority and, consequently, the SRA had not assumed control of the project. Its obligations to complete the project would arise in accordance with the resolution plan upon its approval. The SRA therefore could not, at that stage, be treated as having assumed all contractual obligations arising from agreements entered into between the applicants and the Corporate Debtor.

The Tribunal further noted that the CoC had considered the applicants' request for refund and had concluded that cancellation of units and consequent refund would adversely affect the cash flows of the Corporate Debtor. The Tribunal also took note of the fact that homebuyers constituted approximately 22.66% of the voting share in the CoC and had approved the resolution plan through their Authorised Representative, whereas the four applicants collectively represented approximately 0.22% voting share.

In this context, the Tribunal emphasised the collective nature of the insolvency resolution process and observed that the SRA ought to be permitted to take over the Corporate Debtor in accordance with the approved resolution framework, without being subjected to liabilities in a manner inconsistent with the resolution plan. The Tribunal also noted that the SRA was not a party to the proceedings and, therefore, relief affecting its rights and obligations could not appropriately be granted without affording it an opportunity of being heard.

Interplay between RERA and IBC

On the interplay between RERA and the IBC, the Tribunal observed that the two enactments operate in distinct fields. While RERA seeks to protect the interests of individual homebuyers and regulate the real estate sector, the IBC provides a collective statutory mechanism for resolution and revival of financially distressed corporate entities.

The Tribunal held that, where the provisions of the two enactments operate inconsistently, Section 238 of the IBC gives the Code overriding effect. Consequently, an individual remedy available to a homebuyer under RERA cannot be enforced in a manner that defeats or undermines the collective insolvency resolution process under the IBC.

The Tribunal also relied upon the statutory framework governing homebuyers as a class of financial creditors. In particular, it referred to Section 25A(3A) of the IBC, under which the Authorised Representative is required to cast votes in accordance with the decision taken by the requisite majority of the homebuyers comprising the relevant class. The Tribunal accordingly held that an individual homebuyer cannot seek treatment contrary to the collective decision of the class merely because such individual homebuyer may otherwise possess a separate remedy under another enactment.

The Tribunal further observed that it could not direct modification of the commercial terms of a resolution plan or compel the CoC or the SRA to renegotiate the terms of the plan.

The Tribunal underscored that the insolvency resolution process under the IBC proceeds on the basis of collective resolution of claims and balancing of the interests of various stakeholders. Since the applicants' claims had already been admitted within the CIRP, they could not insist upon a separate, individualised remedy outside the insolvency framework where such remedy was inconsistent with the resolution plan and the collective decision-making process under the IBC.

The Tribunal also took note of the fact that substantially similar refund claims had earlier been rejected in applications filed by the same applicants in 2024 and that the said orders had not been challenged before the Appellate Tribunal. The earlier orders had consequently attained finality.

In view of the above, the Tribunal found no sufficient ground to interfere with the resolution plan or to direct its reconsideration and accordingly dismissed the application without costs.

P&H HC - The Haryana Appellate Tribunal had "missed an important issue" by failing to address these specific agreement clauses and Force Majeure claims in its final order.

In the legal matter of M/s Signature Global (India) Limited vs. Praveen Kumar Gupta and 18 other connected cases (RERA-APPL-92-2025), the High Court of Punjab & Haryana at Chandigarh issued a final order on December 24, 2025. The Court set aside the previous orders of the Haryana Real Estate Appellate Tribunal and remanded the cases for fresh adjudication.

Key Legal Issues & Arguments

The primary dispute concerned whether the developer was liable for interest on delayed possession, or if the delay was justified under Force Majeure clauses within the Flat Buyer’s Agreements.

 * Appellant's Stance (Developer): The developer argued that the Appellate Tribunal failed to consider specific contractual clauses (such as Clause 5.1 and Clause 19) that defined "Force Majeure" to include epidemics (COVID-19), court orders, and government bans on construction (GRAP orders). They contended that these conditions automatically extended the possession deadline.

 * Respondent's Stance (Allottees): The allottees maintained that even if these clauses were considered, they were still entitled to substantial relief and challenged the accuracy of the developer's delay calculations.

Court's Findings on Force Majeure

The Court emphasized that when a specific contract exists, its terms govern the rights of the parties.

 * COVID-19 Impact: The developer sought extensions for both the first wave (March–September 2020) and the second wave (April–June 2021). While the Regulatory Authority had granted a 6-month extension for the first wave, the developer argued the second wave should also have been excluded from interest calculations.

 * GRAP Orders: The developer provided charts (Mark ‘A’ and ‘B’) detailing various periods where construction was halted in the National Capital Region (NCR) due to Supreme Court and government orders aimed at controlling air quality (Graded Response Action Plan).

 * Tribunal’s Error: The High Court found that the Appellate Tribunal had "missed an important issue" by failing to address these specific agreement clauses and Force Majeure claims in its final order.

Final Decision

The High Court ordered the following:

 * Remand: The matters were sent back to the Appellate Tribunal to be decided afresh, specifically taking into account the Force Majeure clauses of the buyer's agreements.

 * Appearance: All parties were directed to appear before the Tribunal on January 15, 2026.

 * Financial Security: Pre-deposited amounts currently held by the Authority in Gurugram must be placed in a Fixed Deposit (FD) at the highest interest rate, with release pending the Tribunal's new decision.

HREAT = The Decree Holder is Entitled to Get the Interest for the period of Date of Expected Payment till the Actual Payment of Amount.

HREAT = The Decree Holder is Entitled to Get the Interest for the period of Date of Expected Payment till the Actual Payment of Amount.

Hari Ballabh Sharma V/s Pareena Infrastructure Private Limited

Haryana Real Estate Appellate Tribual

Appeal No.133 of 2023

Date of Decision:  30.11.2023 

Fact of the Case :-

• In 2015 ,The appellant/allottee paid booking amount to the respondent/promoter for booking of a flat under Affordable Housing Policy” of Government of Haryana.
• on June 23, 2016 the appellant/allottee was allotted a flat in draw of lots.
• The total cost of the Flat was supposed to be Rs.17,49,330/- 
• on 19.07.2016 an ‘Apartment Buyer’s Agreement’ was executed between the parties.
• till May, 2018 The appellant/allottee made a total payment of Rs.15,70,537/-. 
• On 23.10.2018 The appellant/allottee through email and letter requested the respondent/promoter to cancel his booking after deduction of earnest money of Rs.25,000/- as per AH Policy and sought refund of the remaining amount.
• The respondent/promoter did not refund the money.

• Aggrieved with the above, the appellant/allottee filed the Original complaint number 26 of 2019 seeking relief of refund.

• On 02.04.2019 , the learned HRERA GURUGRAM Authority passed the Order of refund in favour of the appellant/allottee.

• the respondent/promoter paid the payment after 2 years in March 2021 did not pay any interest for the period it delayed the payment. 

• Aggrieved with the above, the appellant/allottee filed Execution complaint no.CR/3701/2021.

• On 05.01.2023 The said complaint was dismissed by Adjudicating Officer stating that the Decree is fully compiled.

Submissions by Appellant:-

• The appellant/allottee is aggrieved of the fact that the respondent/promoter did not make the payment to him as per the order of the Authority and forced him to file execution petition.
• The appellant contends that he is entitled to interest for the period of delay in payment of refund of Rs. 15,70,537/- from the date of the Authority's order (April 2, 2019) until March 2021, spanning two years @ 10% per annum which comes out to Rs. 3,14,107/-.

Observations made by the Hon’ble Court:-

• we deem it fit to grant interest to the appellant/allottee for the unjust delay in releasing the payment till March, 2021.
• the plea of the appellant/allottee for grant of interest of Rs. 3,14,107/- for the delay in payment beyond 90 days period till March, 2021 is legal and bonafide.

Court’s Order:-

• the said amount be paid to the appellant/allottee forthwith without any further delay.

Legal Maxim: Functus Officio

Legal maxim: Functus Officio

"Functus officio" is a Latin term meaning "having performed his or her office."

 In legal contexts, it signifies that an officer or official body no longer has further authority or legal competence because their original duties and functions have been fully accomplished.

For Example: A trial where a judge presides over a civil case. After the trial concludes, the judge renders a judgment, settling the dispute between the parties. Once the judgment is given, the judge becomes "functus officio." This means that the judge's authority to make changes to the decision ends.

Any further modifications or challenges to the judgment must be pursued through the appellate process, where other judges preside in higher courts of appeal.

A GPA (General Power of Attorney) holder can file a criminal case on behalf of the principal

A GPA (General Power of Attorney) holder can file a criminal case on behalf of the principal (the person who executed the GPA) in certain circumstances. Here are some citations:

Important case laws of Supreme Court:

1. "R. Rajagopal vs. C.J. Aravindan" (2003): The SC held that a GPA holder can file a criminal complaint on behalf of the principal
2. M/s. Haryana Telecom Ltd. vs. State of Haryana" (2011): The SC ruled that a GPA holder can file a criminal case, but the principal must be examined as a witness.

Important case laws of High Courts:

1. "Santosh Kumar Singh vs. State of Bihar" (2012) - Patna High Court: The court held that a GPA holder can file a criminal complaint, but must obtain prior permission from the Magistrate.
2. K. Srinivas vs. State of A.P." (2015) - Andhra Pradesh High Court: The court ruled that a GPA holder can file a criminal case, but the principal's statement must be recorded under Section 200 CrPC.

MahaRERA - To ensure that the said project is not jeopardized due to the outflow of finances it is directed that the amounts of interest shall be paid by the respondent promoter to the said complainants after obtaining the full occupancy certificate.

 MahaRERA - To ensure that the said project is not jeopardized due to the outflow of finances it is directed that the amounts of interest shall be paid by the respondent promoter to the said complainants after obtaining the full occupancy certificate.

Anil Kumar Dattani Versus Real Gem Buildtech Private Limited & Ors. Complaint No. CC006000000292852 Before the Maharashtra Real Estate Regulatory Authority Mumbai Decided on 13th May 2024)

Fact of the Case :-

• Respondent no. 1 i.e. Realgem Buildtech Private Limited  is the Promoter of the project.
• Respondent no. 2 i.e. Bhishma Realty Limited is the landowner of the project.
• Respondent no. 3 i.e Kindmaker Developers Private Limited  has been appointed as a Development Manager under the development management agreement dated 18-03-2018 and is basically an agent of the respondent no. 1 functioning for a fixed fee. the respondent no. 3 was appointed for the purposes of 
• inter alia managing, 
• monitoring, 
• supervising and 
• coordinating the construction and 
• development of the said project 
• together with the sales and marketing related activities including customer relationship management.

• The subject matter of the case is flat bearing no. 2302 on 23rd floor in the “RUSTOMJEE CROWN - PHASE I" at Prabhadevi, Mumbai.
• On 16-01-2019 The respondent issued  the allotment letter in the complainant's name. 
• On 25-01-2019 The complainant and the respondents entered into a registered agreement for sale.
• The respondent had assured to handover the possession of the said flat on 31-12-2021.
• The Flat was for a total consideration of Rs. 7,69,86,000/-
• The Complainant has already paid Rs. 7,41,83,995/- to the respondents from time to time..
• The respondent did not give the possession by the said date.
• On 27-09-2022 the complainant filed the present complaint..

Submissions by Appellant:-

• As per the RERA, the all 3 respondents are jointly and severally liable as per circular no. 12/2017 dated 04-12-2017.

Submissions by Respondent(s):

• The date of possession mentioned in the agreement for sale is 31-12-2021 and the same was subject to provisions of clause 8 of the said agreement which provides for a reasonable extension on occurrence of mitigating events.
• The Covid 19 pandemic was a force majeure event and therefore covered under clause 8 of the agreement for sale. 

Observations made by the Hon’ble Court:-

• the Respondent nos. 1 and 2 being the promoters of this project registered with the MahaRERA are liable to perform their part as stipulated in the registered agreement for sale dated 25-01-2019 signed with the complainant herein.
• With regards to respondent taking the plea on the issue of jurisdiction as per clause 16.1 of the said agreement for sale wheras the complainant has agreed for arbitration in case of any dispute arising in respect of the said agreement for sale.MahaRERA is of the view that the same is raised at a belated stage by filing its reply on record of MahaRERA,
• Further, there are no explicit provisions under RERA about the arbitration clause. Hence,the same stands rejected.
• As far as the issue raised by the complainant about GST input credit not being provided to him, the MahaRERA is of the prima facie view that the same does not fall within the purview of the MahaRERA under the provisions of the RERA. 
• However, it is for the concerned competent forum to deal with such issues. Hence, the complainant need to approach the appropriate forum for redressal of the said grievances about the GST. 
• The MahaRERA is not going to deal with the said issue for want of jurisdiction.
• the MahaRERA is of the view that the delay cited by the respondent such as delay in obtaining CFO NOC due to change in fire norms and the delay in obtaining NOC from MPCB do not fall within the force majeure factors mentioned in the draft model agreement for sale prescribed under the RERA and the relevant rules made thereunder.

Court’s Order:-

• The respondent promoter is directed to pay interest for the delayed possession to the complainants from 01-01-2023 ( as per agreements for sale i.e. 31-12-2021 + 1 year grace period due to Covid-19 Pandemic i.e. 31-12-2022) for every month till the actual date of possession of the said flat to the complainant or till the date of offer of possession with OC if any obtained by the respondent promoter. 
• to ensure that the said project is not jeopardized due to the outflow of finances it is directed that the amounts of interest shall be paid by the respondent promoter to the said complainants after obtaining the full occupancy certificate.

MAHA RERA - The delay in obtaining NOCs including Fire NOC do not fall within the force majeure factors prescribed under the RERA and the relevant rules made thereunder.

 MAHA RERA - The delay in obtaining NOCs  including Fire NOC do not fall within the force majeure factors prescribed under the RERA and the relevant rules made thereunder.

Anil Kumar Dattani Versus Real Gem Buildtech Private Limited & Ors. Complaint No. CC006000000292852 Before the Maharashtra Real Estate Regulatory Authority Mumbai Decided on 13th May 2024)

Fact of the Case :-

• Respondent no. 1 i.e. Realgem Buildtech Private Limited  is the Promoter of the project.
• Respondent no. 2 i.e. Bhishma Realty Limited is the landowner of the project.
• Respondent no. 3 i.e Kindmaker Developers Private Limited  has been appointed as a Development Manager under the development management agreement dated 18-03-2018 and is basically an agent of the respondent no. 1 functioning for a fixed fee. the respondent no. 3 was appointed for the purposes of 
• inter alia managing, 
• monitoring, 
• supervising and 
• coordinating the construction and 
• development of the said project 
• together with the sales and marketing related activities including customer relationship management.

• The subject matter of the case is flat bearing no. 2302 on 23rd floor in the “RUSTOMJEE CROWN - PHASE I" at Prabhadevi, Mumbai.
• On 16-01-2019 The respondent issued  the allotment letter in the complainant's name. 
• On 25-01-2019 The complainant and the respondents entered into a registered agreement for sale.
• The respondent had assured to handover the possession of the said flat on 31-12-2021.
• The Flat was for a total consideration of Rs. 7,69,86,000/-
• The Complainant has already paid Rs. 7,41,83,995/- to the respondents from time to time..
• The respondent did not give the possession by the said date.
• On 27-09-2022 the complainant filed the present complaint..

Submissions by Appellant:-

• As per the RERA, the all 3 respondents are jointly and severally liable as per circular no. 12/2017 dated 04-12-2017.

Submissions by Respondent(s):

• The date of possession mentioned in the agreement for sale is 31-12-2021 and the same was subject to provisions of clause 8 of the said agreement which provides for a reasonable extension on occurrence of mitigating events.
• The Covid 19 pandemic was a force majeure event and therefore covered under clause 8 of the agreement for sale. 

Observations made by the Hon’ble Court:-

• the Respondent nos. 1 and 2 being the promoters of this project registered with the MahaRERA are liable to perform their part as stipulated in the registered agreement for sale dated 25-01-2019 signed with the complainant herein.
• With regards to respondent taking the plea on the issue of jurisdiction as per clause 16.1 of the said agreement for sale wheras the complainant has agreed for arbitration in case of any dispute arising in respect of the said agreement for sale.MahaRERA is of the view that the same is raised at a belated stage by filing its reply on record of MahaRERA,
• Further, there are no explicit provisions under RERA about the arbitration clause. Hence,the same stands rejected.
• As far as the issue raised by the complainant about GST input credit not being provided to him, the MahaRERA is of the prima facie view that the same does not fall within the purview of the MahaRERA under the provisions of the RERA. 
• However, it is for the concerned competent forum to deal with such issues. Hence, the complainant need to approach the appropriate forum for redressal of the said grievances about the GST. 
• The MahaRERA is not going to deal with the said issue for want of jurisdiction.
• the MahaRERA is of the view that the delay cited by the respondent such as delay in obtaining CFO NOC due to change in fire norms and the delay in obtaining NOC from MPCB do not fall within the force majeure factors mentioned in the draft model agreement for sale prescribed under the RERA and the relevant rules made thereunder.

Court’s Order:-

• The respondent promoter is directed to pay interest for the delayed possession to the complainants from 01-01-2023 ( as per agreements for sale i.e. 31-12-2021 + 1 year grace period due to Covid-19 Pandemic i.e. 31-12-2022) for every month till the actual date of possession of the said flat to the complainant or till the date of offer of possession with OC if any obtained by the respondent promoter. 
• to ensure that the said project is not jeopardized due to the outflow of finances it is directed that the amounts of interest shall be paid by the respondent promoter to the said complainants after obtaining the full occupancy certificate.

Maha RERA - Issue of GST input credit does not fall within the purview of the provisions of the RERA. Hence, the complainant need to approach the appropriate forum for redressal of the said grievances about the GST.

Issue of  GST input credit does not fall within the purview of the  provisions of the RERA. Hence, the complainant need to approach the appropriate forum for redressal of the said grievances about the GST.  

Anil Kumar Dattani Versus Real Gem Buildtech Private Limited & Ors. Complaint No. CC006000000292852 Before the Maharashtra Real Estate Regulatory Authority Mumbai Decided on 13th May 2024)

Fact of the Case :-

• Respondent no. 1 i.e. Realgem Buildtech Private Limited  is the Promoter of the project.
• Respondent no. 2 i.e. Bhishma Realty Limited is the landowner of the project.
• Respondent no. 3 i.e Kindmaker Developers Private Limited  has been appointed as a Development Manager under the development management agreement dated 18-03-2018 and is basically an agent of the respondent no. 1 functioning for a fixed fee. the respondent no. 3 was appointed for the purposes of 
• inter alia managing, 
• monitoring, 
• supervising and 
• coordinating the construction and 
• development of the said project 
• together with the sales and marketing related activities including customer relationship management.

• The subject matter of the case is flat bearing no. 2302 on 23rd floor in the “RUSTOMJEE CROWN - PHASE I" at Prabhadevi, Mumbai.
• On 16-01-2019 The respondent issued  the allotment letter in the complainant's name. 
• On 25-01-2019 The complainant and the respondents entered into a registered agreement for sale.
• The respondent had assured to handover the possession of the said flat on 31-12-2021.
• The Flat was for a total consideration of Rs. 7,69,86,000/-
• The Complainant has already paid Rs. 7,41,83,995/- to the respondents from time to time..
• The respondent did not give the possession by the said date.
• On 27-09-2022 the complainant filed the present complaint..

Submissions by Appellant:-

• As per the RERA, the all 3 respondents are jointly and severally liable as per circular no. 12/2017 dated 04-12-2017.

Submissions by Respondent(s):

• The date of possession mentioned in the agreement for sale is 31-12-2021 and the same was subject to provisions of clause 8 of the said agreement which provides for a reasonable extension on occurrence of mitigating events.
• The Covid 19 pandemic was a force majeure event and therefore covered under clause 8 of the agreement for sale. 

Observations made by the Hon’ble Court:-

• the Respondent nos. 1 and 2 being the promoters of this project registered with the MahaRERA are liable to perform their part as stipulated in the registered agreement for sale dated 25-01-2019 signed with the complainant herein.
• With regards to respondent taking the plea on the issue of jurisdiction as per clause 16.1 of the said agreement for sale wheras the complainant has agreed for arbitration in case of any dispute arising in respect of the said agreement for sale.MahaRERA is of the view that the same is raised at a belated stage by filing its reply on record of MahaRERA,
• Further, there are no explicit provisions under RERA about the arbitration clause. Hence,the same stands rejected.
• As far as the issue raised by the complainant about GST input credit not being provided to him, the MahaRERA is of the prima facie view that the same does not fall within the purview of the MahaRERA under the provisions of the RERA. 
• However, it is for the concerned competent forum to deal with such issues. Hence, the complainant need to approach the appropriate forum for redressal of the said grievances about the GST. 
• The MahaRERA is not going to deal with the said issue for want of jurisdiction.
• the MahaRERA is of the view that the delay cited by the respondent such as delay in obtaining CFO NOC due to change in fire norms and the delay in obtaining NOC from MPCB do not fall within the force majeure factors mentioned in the draft model agreement for sale prescribed under the RERA and the relevant rules made thereunder.

Court’s Order:-

• The respondent promoter is directed to pay interest for the delayed possession to the complainants from 01-01-2023 ( as per agreements for sale i.e. 31-12-2021 + 1 year grace period due to Covid-19 Pandemic i.e. 31-12-2022) for every month till the actual date of possession of the said flat to the complainant or till the date of offer of possession with OC if any obtained by the respondent promoter. 
• to ensure that the said project is not jeopardized due to the outflow of finances it is directed that the amounts of interest shall be paid by the respondent promoter to the said complainants after obtaining the full occupancy certificate.

Maha RERA - There are no explicit provisions under RERA about the arbitration clause in agreement for Sale

There are no explicit provisions under RERA about the arbitration clause in agreement for Sale 

Anil Kumar Dattani Versus Real Gem Buildtech Private Limited & Ors. Complaint No. CC006000000292852 Before the Maharashtra Real Estate Regulatory Authority Mumbai Decided on 13th May 2024)

Fact of the Case :-

• Respondent no. 1 i.e. Realgem Buildtech Private Limited  is the Promoter of the project.
• Respondent no. 2 i.e. Bhishma Realty Limited is the landowner of the project.
• Respondent no. 3 i.e Kindmaker Developers Private Limited  has been appointed as a Development Manager under the development management agreement dated 18-03-2018 and is basically an agent of the respondent no. 1 functioning for a fixed fee. the respondent no. 3 was appointed for the purposes of 
• inter alia managing, 
• monitoring, 
• supervising and 
• coordinating the construction and 
• development of the said project 
• together with the sales and marketing related activities including customer relationship management.

• The subject matter of the case is flat bearing no. 2302 on 23rd floor in the “RUSTOMJEE CROWN - PHASE I" at Prabhadevi, Mumbai.
• On 16-01-2019 The respondent issued  the allotment letter in the complainant's name. 
• On 25-01-2019 The complainant and the respondents entered into a registered agreement for sale.
• The respondent had assured to handover the possession of the said flat on 31-12-2021.
• The Flat was for a total consideration of Rs. 7,69,86,000/-
• The Complainant has already paid Rs. 7,41,83,995/- to the respondents from time to time..
• The respondent did not give the possession by the said date.
• On 27-09-2022 the complainant filed the present complaint..

Submissions by Appellant:-

• As per the RERA, the all 3 respondents are jointly and severally liable as per circular no. 12/2017 dated 04-12-2017.

Submissions by Respondent(s):

• The date of possession mentioned in the agreement for sale is 31-12-2021 and the same was subject to provisions of clause 8 of the said agreement which provides for a reasonable extension on occurrence of mitigating events.
• The Covid 19 pandemic was a force majeure event and therefore covered under clause 8 of the agreement for sale. 

Observations made by the Hon’ble Court:-

• the Respondent nos. 1 and 2 being the promoters of this project registered with the MahaRERA are liable to perform their part as stipulated in the registered agreement for sale dated 25-01-2019 signed with the complainant herein.
• With regards to respondent taking the plea on the issue of jurisdiction as per clause 16.1 of the said agreement for sale wheras the complainant has agreed for arbitration in case of any dispute arising in respect of the said agreement for sale.MahaRERA is of the view that the same is raised at a belated stage by filing its reply on record of MahaRERA,
• Further, there are no explicit provisions under RERA about the arbitration clause. Hence,the same stands rejected.
• As far as the issue raised by the complainant about GST input credit not being provided to him, the MahaRERA is of the prima facie view that the same does not fall within the purview of the MahaRERA under the provisions of the RERA. 
• However, it is for the concerned competent forum to deal with such issues. Hence, the complainant need to approach the appropriate forum for redressal of the said grievances about the GST. 
• The MahaRERA is not going to deal with the said issue for want of jurisdiction.
• the MahaRERA is of the view that the delay cited by the respondent such as delay in obtaining CFO NOC due to change in fire norms and the delay in obtaining NOC from MPCB do not fall within the force majeure factors mentioned in the draft model agreement for sale prescribed under the RERA and the relevant rules made thereunder.

Court’s Order:-

• The respondent promoter is directed to pay interest for the delayed possession to the complainants from 01-01-2023 ( as per agreements for sale i.e. 31-12-2021 + 1 year grace period due to Covid-19 Pandemic i.e. 31-12-2022) for every month till the actual date of possession of the said flat to the complainant or till the date of offer of possession with OC if any obtained by the respondent promoter. 
• to ensure that the said project is not jeopardized due to the outflow of finances it is directed that the amounts of interest shall be paid by the respondent promoter to the said complainants after obtaining the full occupancy certificate.

Supreme Court of India - The power to supersede the authority is entrusted to the appropriate Government in terms of Section 82.

Supreme Court of India - The power to supersede the authority is entrusted to the appropriate Government in terms of Section 82.

Facts:-

• On 5 January 2024, one of the members of RERA superannuated.
• On 7 February 2024, the Chairperson resigned without giving notice of three months and the resignation was accepted immediately by the state Government.
• with effect from 10 March 2024, the remaining member of RERA proceeded on leave for a period of three months until 6 June 2024.
• On 9 March 2024, the State Government in the Department of Housing and Urban Development issued notice to the Authority proposing to supersede the Authority.

• On 12 March 2024, the State Government issued an order under Section 82(1) superseding the Authority.

• On 13 March 2024, the Government  appointed Shri M S Jaggi, IAS to exercise the powers and discharge the functions of the Authority under the Act in terms of the provisions of Section 82(1).

PIL in Punjab & Haryana High Court :-

• A Public Interest Litigation KEERTI SANDHU & ORS. V/s  STATE OF PUNJAB & ANR.CWP-(PIL) No. 48/2024  was moved before the High Court of Punjab & Haryana in which the order dated 14 March 2024 was passed by a Division Bench, where it noted that the authority has to exercise sensitive functions including permissions to be given to builders and dealing with complaints against builders and hence it is not in the interest of justice if the supersession is allowed at that point of time. Consequently, the order of the Government dated 12 March 2024 was stayed by the High Court.

Appeal in the Supreme Court of India :- 

• An appeal was preferred by the state in the matter of STATE OF PUNJAB & ANR. V/s KEERTI SANDHU & ORS.7152/2024 where the supreme court of india set aside the impugned order dated 14 March 2024 of the High Court.
• It also held that The power to supersede the authority is entrusted to the appropriate Government in terms of Section 82. 
• It also noted that The order of the High Court staying the notification of the State Government dated 12 March 2024 would not advance the purpose and object of the statute. 
• A stay on the supersession cannot either bring back the member who has superannuated or restore the Chairperson who has tendered his resignation.

MAHA AT - The Total Amount For Making deposit by Appellant promoter towards compliance of the proviso to Section 43 (5) of the Act will Include amounts received by the promoter directly from complainant as well as the amounts received from the financier out of the loan sanctioned under the subvention scheme.

The Total Amount For Making deposit by Appellant promoter towards compliance of the proviso to Section 43 (5) of the Act will Include amounts received by the promoter directly from complainant as well as the amounts received from the financier out of the loan sanctioned under the subvention scheme.

MB6 Residency Private Limited V/S Ketan Kataria & L & T Finance Holdings Ltd. Appeal No. AT006000000174630 of 2023 Before the Maharashtra Real Estate Appellate Tribunal Mumbai Decided in 18th July 2024

Fact of the main Complaint CC006000000054749 :-

• On 9th June 2018, The Original Allottees filed the captioned complaint before MahaRERA  seeking inter alia for refund of the entire money paid to promoter together with interest on the grounds as set out in the complaint.
• On 24tn February 2022, Upon hearing the parties, learned Member, MahaRERA has passed the impugned order whereby it directed appellant promoter inter alia to refund the entire amounts of Rs. 1,90,28,2751/- paid by complainant together with interest over it.
• On date 20th July 2023, Subsequently, the application filed by Appellant/promoter to review the order  was also disposed of by MahaRERA by dismissing the review application.
• Executing Authority issued recovery warrant of Rs.3,48,40,409/- towards the refund of Rs.1,90,28,275/- being the paid Principal amount by complainant to promoter and Rs.1,58,12,134/- being the interest till 30th January 2024.

Fact of the Appeal:-

• Aggrieved appellant/promoter has preferred the instant appeal before this Tribunal seeking inter alia to quash and set aside these two orders, dated 24th February 2022 and 20th July 2023 passed by MahaRERA.
• In view of both the said impugned orders, promoter  pre deposited Only Rs.85,22,583/- in the Tribunal on 24.05.2024 towards the  compliance of the proviso to Section 43(5) of the Act. 
• This Amount included the Amount of Rs.53,23,433/- deposited by the Allottee Plus interest over it and did not include the amount of Rs.1,36,30,530/- which it received from the Banking Partner L & T Finance Holdings Ltd as the Subvention payment.

The Appellate Authority Framed the following Question(s) for consideration:-

Whether the total amounts received by the promoter, i.e directly from complainant as well as the amounts received from the financier out of the loan sanctioned under the subvention scheme be accounted for making deposit by Appellant promoter towards compliance of the proviso to Section 43 (5) of the Act based on the impugned orders passed by the MahaRERA?

Observations made by the Hon’ble Court:-

• Payments for the costs of the subject flat have been made from two sources 
• (a) by the complainant himself directly to appellant and 
• (b) Payments made by the financier to the promoter on behalf of and in the name of the complainant under the said subvention scheme from out of the loan sanctioned to complainant borrower.
• Reliance was made on M/s Newtech Promoters and Developers Pvt. Ltd Vs, State of UP & ors. [civil Appeal Nos.6745-6749 of 2021]
• The provisions of Section 43(5) also stipulate for pre deposit of the entire amounts received from all the sources without making any distinction of the amounts paid to the promoter, whether amounts are received directly or indirectly or from different sources directly or indirectly or through different financial products/ instruments etc.
• The Complainant is the primary borrower to whom, the subvention loan has been sanctioned to the complainant (borrower) for funding the subject flat under the subvention scheme and this loan amount has been disbursed to promoter for and on behalf of as well as in the name of the complainant. Therefore, the complainant has the primary responsibility for repayment of the outstanding loans.
• Tribunal is expected to direct promoter to first deposit the total amount to be paid to the allottee and these pre-deposits are sine qua non before the said appeal be admitted and entertained for further consideration on merits.

Court’s Order:-

Appellant promoter is being directed once again as last chance to pre-deposit the entire amounts received from both the sources (A and B), i.e. total amounts received from the respondent no. 2, financier under the subvention scheme and also the amounts received directly from respondent no. 1 together with interest on the entire amounts.

MAHAREAT -When the Allottees asked the promoters to enter into an agreement for sale but the Promoters did not reply and did not enter into an agreement for sale thereupon Article 54 of Limitation Act, 1963 will not apply and also when the project is ongoing Section 22 of the Limitation Act, 1963 will be applied being continuing breach of contract.

When the Allottees asked the promoters to enter into an agreement for sale but the Promoters did not reply and did not enter into an agreement for sale thereupon Article 54 of Limitation Act, 1963 will not apply and also when the project is ongoing  Section 22 of the Limitation Act, 1963 will be applied being continuing breach of contract

M/s, Reddy Builders & Developers & ors V/s Hari Shankar Kankani & ors.

Appeal No, AT00600000053249/2021 in Complaint No. CC006000000195966 BEFORE THE MAHARASHTRA REAL ESTATE APPELLATE TRIBUNAL, MUMBAI

Fact of the main Complaint CC006000000195966:-

• Somewhere in the year 2005, The Respondents Allottees had booked a 3BHK flat under a pre-launched scheme in the project "Oregon" in Goregaon ,Mumbai undertaken by Appellants for a total consideration of Rs.38,99,740/-
• The Respondents Allottees paid an amount of Rs.6,90,000/- as booking amount which is more than 10% of the total consideration.
• The Appellant Company Reddy Builders issued allotment letter-cum-receipts to Allottees.
• The Allottees were continuously insisting the Promoters to execute the agreement for sale. Despite continuous follow-up of Allottees the Promoters conveniently avoided to execute the agreement for sale.
• The Appellant Company Reddy Builders agreed to handover the possession of the said flat to Allottees by 2012.
• However Till 2009, the Construction was not commenced due to some issue with slum dwellers.
• somewhere in the year 2021 ,being dissatisfied with the conduct of the Promoters, the Allottees filed Complaint No.CC006000000195966 and sought relief under Section 13 of the RERA Act,2016.
• The Appellant Company Reddy Builders appeared in the Complaint and remonstrated the Complaint by filing written submissions contending therein that the Complaint is liable to be dismissed primarily on following grounds viz; 
• (i) there ls no cause of action 
• (ii) the alleged transaction took place prior to RERA coming into force 
• (iii) the Complaint is not maintainable for want of proper pleadings 
• (iv) the Allottees are guilty of delay and latches 
• (v) the Complaint is hopelessly barred by the law of limitation.
• On 19/04/2021 After hearing the parties learned Authority disposed of the Complaint by directing the parties as under:
• a. If the Complainants are willing to seek refund of their money, the Respondent No.1 is directed to refund the entire money paid by the Complainants along with interest as prescribed under RERA and relevant rules made thereunder.
• b. If the Complainants are willing to be in the project the Respondent is directed to allot the flat having equivalent area as booked by the Complainants. An agreement for sale may be executed in accordance with the provisions of RERA and the relevant rules."
• Being aggrieved by the Order of  MahaRERA  the Appellants, who are Promoters, have preferred the captioned Appeal

The Authority Framed the following Question(s) for consideration:-

            Whether the Complaint is barred by the law of limitation?

Observations made by the Hon’ble Court:-

• It is not in dispute that after 2006 there was no correspondence between the parties till 2019.
• By the letters in 2019 & 2020 the Allottees asked the Promoters to enter into an agreement for sale.
• It is not in dispute that the Promoters have not replied the said letters.
• Article 54 of Limitation Act, 1963 speaks about the period of limitation for seeking specific performance of contract.
• There is limitation of three years for seeking relief of specific performance of contract.
• The period of limitation begins to run when the date fixed for performance, or, if no such date is fixed it begins when the plaintiff has noticed that performance is refused.
• In the instant case, there is no date fixed for performance of contract,
• As indicated above, by the letters, the Allottees have asked the promoters to enter into an agreement for sale. Promoters did not reply the said letters nor entered into an agreement for sale, It means the Allottees have noticed that performance of contract is refused by the promoters.
• it is not in dispute that the Promoters have commenced construction of the subject project somewhere in 2015-2016.
• Since it was an ongoing project, the Promoters have registered the project with MahaRERA and declared the date of completion of project as 31.07.2027,It means there is continuous cause of action.
• Section 22 of the Limitation Act, 1963 provides for the computation of limitation in the case of continuing breach of contract or tort. It provides that in case of a continuing breach of contract, a fresh period of limitation begins to run at every moment of time during which the breach continues.
• it relied on  Samruddhi Co-operative Housing Society Limited. Vs. Mumbai Mahalaxmi Construction Private Limited  Civil Appeal No 4000 of 2019 before the Supreme Court of India.

Court’s Order:-

Complaint is not barred by the law of limitation

MahaRERA - Section 15 only deals with voluntary transfer of a real estate project from an Existing Promoter to a new developer, wherever it is not a case of voluntary transfer by the Existing Promoter to the Incoming Promoter but through Planning Authorities, section 15 cannot be made applicable.

Section 15 only deals with voluntary transfer of a real estate project from an Existing Promoter to a new developer, wherever it is not a case of voluntary transfer by the Existing Promoter to the Incoming Promoter but through Planning Authorities, section 15 cannot be made applicable. 

Suo Motu Case No. 300 0F 2024 & Suo Motu Case No. 301 of 2024

Before the Maharashtra Real Estate Regulatory Authority, Mumbai

Date of Order March 27 , 2024

Fact of the Case:- 

• Some Slum land was situated in Kurla, Mumbai which is a declared slum.
• In the Year 2013 ,The Slum Rehabilitation Authority (SRA)  issued an LOI for its re-development to the RADIUS & DESERVE BUILDERS LLP.
• The RADIUS as promoter had registered 2 projects under section 5 of the RERA Act,2016 with the MahaRERA Authority.
• The Projects however did not move forward.
• on Date 20.09.2021, The SRA then under Section-13(2) of the Maharashtra Slum Areas (Improvement, Clearance and Redevelopment) Act,1971 (Slum Act) passed an order , removing RADIUS as the Promoter.
• SRA permitted the societies to pass a general body resolution terminating the RADIUS as Promoter and appointment of a new developer of their choice.
• on 29.01,.2023 The Societies ,in their general body meeting, in the presence of the Assistant Registrar, SRA, terminated RADIUS  as the developer for the SRA scheme of redevelopment of the three societies and appointed the Incoming Promoter CHANDAK REALTORS PRIVATE LIMITED as the new developer.
• An LOI dated 12.04.2023 was issued by the SRA to the incoming Promoter CHANDAK.
• On 04.09.2023, an application was made by the Incoming Promoter CHANDAK seeking change of Promoter for the said Projects. 
  

The Authority Framed the following Questions for consideration:-

1. weather the change of promoter application is maintainable under section 15 of the Act?
2. whether the incoming Promoter as appointed by the societies and confirmed by the SRA can be regarded as a Promoter under the said Act?
3. who would be responsible for the obligations towards the earlier allottees?

Observations made by the Hon’ble Court:-

• From the plain reading of section 15, it is clear that this section is applicable in cases where there is a transfer of a real estate project from an Existing Promoter to a new developer i.e. Incoming Promoter. 
• In the present case the said Projects are not transferred to the Incoming Promoter (new developer) by the Existing Promoter, but the Incoming Promoter is being appointed by the societies as the Existing Promoter was terminated by the societies and SRA on account of various defaults and SRA who is the Planning Authority has confirmed the appointment of the Incoming Promoter herein.
• This is not a case of voluntary transfer by the Existing Promoter to the Incoming Promoter. 
• The section 15 deals with voluntary transfer, Thus, a change in Promoter as envisaged under section 15 cannot be made applicable here..
• in SRA projects, It is the promoter  who constructs the rehabilitation houses and finances those by selling houses in the free sale component. 
• Every project must have a promoter which is either a private or a government entity who carries the project forward delivering the promised homes which is in the interest of the consumers.
• ln this particular case it is the SRA that is mandated to recognize the Promoter and provide him with the legal Authority to enter upon the land which is declared as slum and to cause to construct both the rehabilitation component and the sale component.
• The SRA in this case has passed the order appointing the incoming Promoter as the new developer. In effect it is this appointee who will now have rights to enter upon the land construct the same and subsequently enable conveyance to the societies.
• This section mandates that advertising, marketing, booking, selling and all other such related activities can only be done by the promoter. 
• Hence in this case for the said Project to move forward and to enable the Incoming Promoter to market advertise and sell the project the Incoming Promoter would have to be recognized as a promoter.
• Since the appointment of the Incoming Promoter does not fall under section 15 the obligation towards the allottees cannot be fastened on the Incoming Promoter.
• While terminating the Existing Promoter and issuing the LOI to the Incoming Promoter the SRA has clearly directed that the Incoming Promoter is to reimburse amounts spent by the Existing Promoter. 
• The Incoming Promoter is now under an obligation to ensure all expenditure incurred on the said Project by the Existing Promoter is reimbursed to him.
• The Incoming Promoter on assuming the role of the Promoter will not be saddled with the obligations of the existing allottees of the Existing Promoter. The existing allottees stand protected and can enforce their claims against the Existing Promoter.

Court’s Order:-

1. The Incoming Promoter to apply to MahaRERA for a new / fresh registration

number with respect to the said Project Nos. 1 & 2 as per rules and procedures

laid down under the said Act.

2. A new / fresh registration number to be issued to the Incoming Promoter after

due scrutiny of the registration application filed by them with respect to the said

Project Nos. 1& 2.

3. The Incoming Promoter to open a new designated bank account as per rules and

procedures laid down under the said Act for execution of the project.

4. The existing registration of the said Project Nos. 1 & 2 i.e. P51800009827 and

P51800005533 allotted to the Existing Promoter be kept in abeyance till

obligations of the existing allottees are settled.

5. The Existing Promoter shall not advertise, market, book, sell or offer for sale, or

invite person/s to purchase in any manner any apartment in the said Project

Nos. 1 & 2.