Vrajesh Hirjee v/s Skyline constructions

Brief Facts

The case arises from a possession dispute wherein the respondents failed to hand over the possession of a flat to the complainant within the agreed date of 31/12/2015. Owing to the same, the complainant had been seeking refund of his amount with interest under Section 18 of the Real Estate (Regulation and Development)Act, 2016 (RERA).

Issues

The main points of determination within the case were:

1. Whether there was an agreed date of transfer of possession?

2. Whether the respondents had failed to hand over the possession of the flat on the agreed date?

3. Whether the complainant was entitled to get a refund of the amount with interest?

Judgment

The Court ordered the respondents to pay the refund amount with simple interest at the rate of 10.55% per annum from the date of receipt till their repayment, along with stamp duty and registration charges, as well as the registration charges, costs and TDS amount.

Ratio

During its judgment, the Court placed reliance on Section 4 (1A) (ii) of MOFA which provides that before accepting advance payment or deposit that amounts to more than 20% of the sale price, the promoter is liable to enter into a written agreement for sale and mention in it the date by which the possession of the flat is to be handed over to the purchaser. Section 13(2) of RERA also casts a similar liability. The Court placed further reliance on the case of Fortune Infrastructure v/s. Trevor D’lima [(2018) 5 SCC 442] wherein the Hon’ble Supreme Court held that when no date of possession is mentioned in the agreement the promoter is expected to hand over the possession within reasonable time.

A period of three years was held to be “reasonable time”. Hence, the Court held that the respondents were liable to hand over the possession of the complainant’s flat by December 2014. As the complainant had contended that the agreed date of possession was December 2015, the Court decided that the agreed date was to be held as December 2015.

The Court also observed that under any circumstances, the respondents could not claim the extension of more than six months from the agreed date of possession in view of Section 8 (b) of Maharashtra Ownership Flats Act. Hence, the respondents were held to be liable to refund the complainant’s amount with interest at the prescribed rate.

The Court also upheld the decision in the case of Neelkamal Realtors Suburban Pvt. Ltd. v/s. Union of India (Writ Petition No. 2737 of 2013, Original Side), stating that the interest to be awarded on the amount under section 18 is not penal in nature but it is compensatory.

The Court also concurred with the reference to Section 8 of the MOFA wherein, on the promoter’s failure in giving possession in accordance with the terms of the agreement for sale, he is liable to refund the amount already received by him together with simple interest at the rate of 9% per annum from the date he receives the same till the date the amount and interest thereon is refunded. As Section 88 of RERA does not bar MOFA, the Court found that the adjudicating officer was entitled to award the interest from the date of default in addition to the compensation.

Moreover, the Court relied on explanation (ii) of Section 2 (za) of RERA which provides that the interest payable by the promoter to the allottee shall be from the date the promoter received the amount or any part thereof till the date of refund. As the respondents did not dispute the receipt of the amount, the Court held that the complainant was entitled to a refund and that the interest on the same was payable from the date of the receipt of the amount.

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