HC imposes ₹10 lakh compensatory cost on developer for delay in handing over flat

A Mumbai-based developer has been ordered to pay a compensation cost of INR10 lakh ($13,600) after appealing against a directive from the Maharashtra Real Estate Regulatory Authority to pay interest to a buyer for delayed delivery of a flat. The Bombay High Court upheld the directive and ordered the court receiver to take possession of the property and hand it over to the buyer. However, the developer has not received an occupancy certificate, so the buyer can only use the flat for fit-out purposes and not as a residence.

MUMBAI: The Bombay high court recently imposed a compensatory cost of ₹10 lakh on a Vile Parle-based developer, who had appealed against the Maharashtra Real Estate Regulatory Authority (MahaRERA) order, directing the developer to pay interest to a buyer for delay in handing over of a flat.

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The HC upheld the MahaRERA order as the building had been completed and directed the court receiver to take possession of the flat and hand it over to the buyer. However, as the developer has not received the occupancy certificate (OC), the buyer was directed to access the flat only for fit out purposes and not for residential use.

The single judge bench of justice Madhav Jamdar, which heard the second appeal filed by Forefront Private Limited, a developer, who had taken up redevelopment of an old building in Vile Parle in 2015.

As per the redevelopment agreement, the developer was to hand over 30 of the 55 flats to the old members and sell 25 flats. The firm had entered into a deal with Rujuta and Mandar Thatte for a flat on the fourth floor of the Forefront Primeria building. Thattes were to get a flat admeasuring 1,169 square feet for a consideration of ₹4.4 crore. Forefront was to hand over the possession of the flat in 2017.

However, the MahaRERA had upheld the contentions of Thatte and directed Forefront to pay interest for the period of delay. The developer then filed an appeal against the MahaRERA order in the HC.

During the hearing, the HC bench was informed by advocate Pradeep Thorat along with advocates Aditi Naikare and Aniesh Jadhav that the building had been completed but the developer was not handing over possession of the ready flat. The bench was told that Thattes wanted possession of the flat for fit out purposes.

Advocates Kausar Banatwala and Tushar Goradia for the developer submitted that the building was yet to receive the OC and hence possession could not be handed over to the buyers.

The bench, however, appointed a court receiver to take possession of the flat and hand it over to Thattes, adding that the access to the flat was only for fit out purposes and not for residence till the OC was received.

The HC also directed Forefront to pay a compensatory cost of ₹10 lakh, which will go to Tata Cancer Society, and disposed of the petition.