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Delayed possession: Can a developer blame the landowner’s jail term for failing to secure an occupancy certificate?
In a contentious case near Mumbai, a developer's claims of delays due to a jailed landowner were dismissed by MahaRERA, which ruled in favor of the homebuyer and mandated compensation for the prolonged wait for possession and the Occupation Certificate.
In a dramatic turn in a long-stalled project near Mumbai, a real estate developer attributed the delay in obtaining the Occupation Certificate (OC) to multiple factors, including legal disputes and the landowner's imprisonment in an unrelated case. However, the Maharashtra Real Estate Regulatory Authority (MahaRERA) dismissed these claims, ruled in favour of the homebuyer, and directed the developer to pay interest for the delayed possession.
The case
The case concerned a long-delayed housing project, where the homebuyer approached MahaRERA seeking relief for the extended wait for possession. In his defence, the developer claimed that the delay in obtaining the OC was due to legal issues and the landowner being jailed in an unrelated case, which he said caused technical delays beyond his control.
According to the order, the homebuyer had purchased the flat under an agreement for sale executed in 2010, for a total consideration of around ₹20 lakh. While the agreement did not specify a possession date, the homebuyer claimed that the developer’s representatives had promised possession within one year. The project later ran into legal trouble, prompting the developer to offer a refund, but the homebuyer chose to remain invested.
Homebuyer’s plea
Due to the delay in handing over possession of the flat along with the OC, the homebuyer approached MahaRERA in 2020. The complaint stated that the developer, while registering the project with MahaRERA, had unilaterally and unreasonably extended the possession date from the initially committed 2011 to 2017, and later to 2019. Despite these extensions, possession of the flat along with the OC was still not provided.
The homebuyer sought directions for the developer to pay interest for each month of delay, starting from 2013, three years after the flat was booked, or, alternatively, to pay interest at the highest marginal cost of lending rate (MCLR) of the State Bank of India (SBI) plus 2% per month, calculated from the proposed completion date of the project as per MahaRERA, i.e., from 2017, until full realisation.
Developer’s defence
In response to the homebuyers’ allegations before MahaRERA, the developer stated that the agreement did not specify a possession date and was executed under the Maharashtra Ownership of Flats Act, 1963 (MOFA).
The developer said the homebuyer had agreed to all terms and consciously entered into the agreement without objection, noting that no commitment was made to hand over possession within a stipulated time frame.
The developer said that court cases delayed the project, but claimed efforts were made to protect buyers’ interests. Homebuyers were repeatedly offered two options: a flat in another project or a full refund with interest. The complainant chose to wait, which, according to the developer, waived any compensation claims for the alleged delay.
The developer further stated that construction delays were due to an injunction order issued by the Civil Court and were therefore not attributable to them.
Regarding the Occupation Certificate (OC), the developer said the application was submitted in December 2018, but authorities required the landowner’s signature. The landowner was jailed and facing insolvency proceedings, preventing the signing of documents. Although the developer sought a waiver of this requirement, the OC remained pending.
MahaRERA's verdict
MahaRERA, in its order, directed the developer to hand over possession of the flat along with the OC and to pay interest for the delay in the project.
The MahaRERA in its order stated, "The developer is directed to handover possession of the said flat to the homebuyer along with OC, within 30 days from the date of this order with interest paid towards the sale consideration at the rate of State Bank of India’s Highest Marginal Cost of Lending Rate plus 2 percent per annum from 2013 till actual possession of the said flat is handed over to the homebuyer by the developer."
