Raj Kapoor studio redevelopment: MahaRERA clears Godrej Properties of interest liability on homebuyer refunds

MahaRERA directs Godrej Properties to refund, without interest, the amounts paid by six homebuyers for seven flats in its Chembur project, Godrej RKS, in Mumbai

The Maharashtra Real Estate Regulatory Authority (MahaRERA) has directed Godrej Properties to refund, without interest, the amounts paid by six homebuyers for seven flats in its Chembur-based project, Godrej RKS, in Mumbai. 

The Maharashtra Real Estate Regulatory Authority (MahaRERA) has directed Godrej Properties to refund, without interest, the amounts paid by six homebuyers for seven flats in its Chembur-based project, Godrej RKS. (Picture for representational purposes only)(Ht Files)

Godrej Properties acquired the project from the Kapoor family for residential development, redeveloping the former film studio owned by the late Bollywood actor and filmmaker Raj Kapoor.

The homebuyers had cited financial difficulties following the COVID-19 pandemic as the reason for seeking a refund. MahaRERA instructed that the agreements be terminated once the refund is processed. 

While ordering the refund, the authority clarified that it cannot alter the terms of the agreement at this stage and directed the developer to refund the amounts as per the original contract, without any additional interest.

Here’s what the MahaRERA's order said

In its order dated May 29, MahaRERA noted that the developer had issued termination letters to all complainants between August 2021 and July 2023. It clarified that there was no delay in handing over possession; rather, the complainants had defaulted on the agreed payment schedules

As per the agreements, payments were to be made in stages linked to construction milestones. All homebuyers had signed application forms or sale agreements that clearly outlined the terms of default. The Authority ruled that it could not alter these contractual terms and found that five homebuyers, each associated with one flat, were not entitled to the refunds they had claimed.

Regarding the sixth homebuyer, who had purchased two flats, MahaRERA observed that the developer had issued a termination notice due to payment default. The Authority found the termination to be valid and stated that the developer is at liberty to proceed under Section 11(5) of the Real Estate (Regulation and Development) Act, 2016, to execute the cancellation deed. It also directed the complainants/allottees to cooperate and execute the cancellation deed.

Additionally, MahaRERA instructed the developer to refund all amounts received from the homebuyer towards the consideration of the flats within 60 days from the date of the order, in accordance with the terms of the agreement.

Upon receipt of the refund, MahaRERA directed the homebuyers to execute the cancellation deed within 30 days, on a date mutually convenient to both parties. The Authority also clarified that the homebuyers are not entitled to any interest on the refunded amount.

Meanwhile, an email query has been sent to Godrej Properties. If a response is received, the story will be updated.

The case

Six homebuyers purchased seven apartments in the Godrej RKS project located in Chembur, Mumbai. Of these, five apartments were transferred to buyers through registered agreements for sale, while one was allotted via an allotment letter in 2020. 

According to the MahaRERA order, the total consideration value for the seven units was ₹28.80 crore, of which the homebuyers had paid ₹6.21 crore.

Out of the six homebuyers, five approached MahaRERA seeking to withdraw from the project and requested a refund. They submitted that they had received termination letters from the developer stating that the entire amount paid had been forfeited. The complainants were also directed to return all documents related to their respective units.

The homebuyers cited financial and personal hardships arising from the COVID-19 pandemic, the impact of which, they claimed, continues to affect them.

Homebuyers' plea in MahaRERA

One of the six homebuyers stated that the developer had not executed a sale agreement and, after receiving a termination notice prior to the issuance of the Occupancy Certificate, was pressured via email to book another flat in a different project despite there being no such clause in the original application. 

The buyer also alleged that no clear calculation was provided regarding the non-refundable amount.

The other four homebuyers claimed they had attempted to transfer their bookings to new buyers, but delays and a lack of response from the developer eventually led to cancellations. The sixth homebuyer, who had purchased two apartments, cited financial difficulties due to the COVID-19 pandemic as the reason for non-payment and expressed a desire to continue with the purchase.

Here’s what Godrej Properties informed MahaRERA

In response to the complaints, the developer stated that one of the homebuyers had accepted the termination letter and subsequently booked a flat in another project, Godrej Urban Park. 

Therefore, the developer argued, the complaint related to the Godrej RKS project was no longer valid. They also contended that there was no valid contract as no sale agreement had been executed. 

Since the homebuyer had defaulted on payments, the developer maintained it was within its rights to terminate the booking and forfeit a portion of the amount as per the agreed terms.

Regarding the other four homebuyers, the developer said that there was no delay in possession. The Occupation Certificate (OC) for the project was issued in December 2023, well before the scheduled deadline of June 2024. As a result, the refund claims were not applicable under Section 18 of the Real Estate (Regulation and Development) Act, 2016. 

The developer further noted that one of the complainants had filed duplicate complaints seeking the same refund, which it termed as a misuse of the legal process.

In the case of the sixth homebuyer, who had booked two flats, the developer said the buyer failed to clear outstanding dues despite being given multiple opportunities. 

The developer argued that the homebuyer could not now seek an extension or request changes to the contract terms. It also said that the reliefs being sought were beyond the jurisdiction of RERA and that the developer had incurred financial losses due to the delays, for which it should be compensated.

Raj Kapoor studio redevelopment project

RK Films & Studios, the iconic film studio established by legendary actor and filmmaker Raj Kapoor in 1948, was located in Chembur, Mumbai. Set up just a year after India gained Independence, the studio became a significant part of Indian cinema history and was associated with several classic films over the decades.

In May 2019, the Kapoor family sold the 2.2-acre property to Godrej Properties for real estate development. According to registration documents accessed by Zapkey.com, the land parcel measuring 9,655.10 sq. m was acquired for approximately ₹250 crore.

Godrej Properties announced plans to develop a premium mixed-use project on the site, named Godrej RKS. The project was registered with MahaRERA in January 2020, with a scheduled completion date of December 2024.

In January 2020, the company launched a luxury residential offering at the site, featuring ‘Collector’s Edition’ three- and four-bedroom residences. The project’s architecture draws inspiration from Bombay Art Deco, paying homage to the legacy and cultural significance of the original RK Studios.