MREAT orders coercive action against developer for failure to comply with refund order

Maharashtra Real Estate Appellate Tribunal has directed the suburban collector to attach and auction properties and bank accounts of Krishna Developers Pvt Ltd for failing to comply with an order to refund a homebuyer.

Mumbai: Maharashtra Real Estate Appellate Tribunal (MREAT) has directed the suburban collector to attach and auction immovable properties and bank accounts belonging to Krishna Developers Pvt Ltd after the developer failed to comply with its order for refund with interest granted to a homebuyer from one of its projects.

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“Perusal of records revealed that the non-applicant has not complied with the judgement decree despite having means deliberately. Hence, we are of the considered view that coercive actions are imperative to satisfy the judgement decree,” said appellate tribunal members Dr K Shivaji and Shriram R Jagtap in an order issued on Thursday.

The order directed the registrar to issue a recovery warrant based on the execution application filed by Kunal and Sonal Kumbhat, homebuyers from Krishna Residences Phase I project in Andheri East, for attachment and auction of the immovable properties and attachment of bank accounts. “The collector, Mumbai Suburban directed to take coercive steps and the registry to follow up and submit the report,” the order said adjourning the next hearing to February 23.

During the December 21 hearing, advocate Pooja Gaikwad, appearing for the developer, submitted that her client had filed a second appeal before the Bombay high court against the June 15, 2023 order of the MREAT, which ordered the developer to refund the Kumbhats a sum of ₹69.72 lakh with interest from the dates of payments.

She further submitted that settlement talks were on between the developer and home buyers. However, advocate Nilesh Gala, appearing for the home buyers, told the court that no settlement talks were going on and there was no stay granted by the High Court in the second appeal and hence requested the tribunal to initiate coercive measures.

Kunal Kumbhat and his wife, residents of Waterfield Road in Bandra West, had booked flat no 402 in the D wing of Krishna Residences Phase 1 for a total consideration of ₹2.65 crore and the agreement for sale was executed in December 2015 with a possession date of December 31, 2017. They paid ₹69.72 lakh, but the developer failed to deliver the possession on the agreed date. They filed a complaint before MahaRERA on December 28, 2020.

During the hearings before MahaRERA, the developer contended that the project was delayed due to changes in the Development Control Rules and the new DCPR 2034 and the construction of D wing came to a standstill. The developer also contended that the Covid-19 pandemic further delayed the project, and since the delay was beyond the control of the respondent, the complainants were not entitled to claim relief.

MahaRERA chairperson Ajoy Mehta passed an order on December 29, 2021, directing the developer to refund the paid amount to home buyers with interest from December 31, 2017, and allowed the developer benefit of Covid-19 moratoriums. However, Kumbhats approached the tribunal to modify the order and sought interest on a refund from the date of respective payments.

In its June 14, 2023 order, the tribunal bench had observed that the developer had completed A B and C wings and obtained an Occupancy Certificate, but the construction of D wing where the flat has been booked had not even commenced. Hence, it held that the developer had failed to deliver possession by the agreed date. Citing various judgments, it said the rights of allottees under Section 18 of RERA are “unconditional and absolute” regardless of unforeseen events and even factors beyond the control of the promoters.

The bench had ruled that MahaRERA circulars on Covid-19 moratoriums pertain to projects whose completion dates had expired on or after March 2020 on account of the prevailing pandemic, whereas the possession date in Kumbhat’s agreement for sale was December 31, 2017, nearly three years earlier. It ruled that the developer cannot be given the benefit of the moratorium circulars.

Holding that the home buyers were entitled to refund with interest from the date of respective payments, the tribunal observed that the MahaRERA order suffered from infirmities and needed to be modified accordingly. As per the execution application by Kumbhat, the developer was to refund ₹1.28 crore with interest as of August 31, 2023.