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Bombay HC upholds MahaRERA and Appellate Tribunal orders; directs promoter to pay Rs5 crore compensation for 80-month delay
Moneylife Digital Team 01 October 2020
Consumer Interest
The Bombay High Court in an order issued on 25th September, directed real estate developer Renaissance Infrastructure to pay Rs5.04 crore as compensation to Parth Suchak, the purchaser, for a delay of over 80 months in handing over his property. The Court upheld the earlier judgements of the Maharashtra real estate regulatory authority (MahaRERA) and the RERA appellate tribunal for compensation, which were challenged by Renaissance Infrastructure.
 
The purchaser had bought six plots of land along with pre-engineered portal framed rectangular frame termed ‘warehousing building’ from the developer in December 2009. As per the sale agreement, the warehousing building and plots were to be handed over to Mr Suchak by 9 March 2010. The agreement also mentioned that in case the developer failed to hand over the properties on time, he would be liable to pay Mr Suchak a compensation amount (for loss of rent) at the rate of Rs 10 per sq feet per month.
 
Mr Suchak approached the state RERA when the developer failed to hand over the property. MahaRERA calculated the compensation amount as Rs 5.04 crore (calculated up to 30 June 2018, after the grace period of six months of the agreed date of possession and till the time of filing of the complaint-i.e. for about 80 months). When Renaissance Infrastructure challenged this order, the appellate tribunal asked the developer to deposit 50% of the compensation amount as per the RERA Act for entertaining the appeal.
 
However, Renaissance Infrastructure failed to pay the pre-deposit and the appellate tribunal dismissed the appeal on 20 March 2020. The developer then filed a second appeal in the HC.
 
The counsel for Renaissance claimed that the agreement with the purchaser was in lieu of a partnership, hence Renaissance was not a promoter. He also argued that the original claim of the purchaser was devoid of merits and that the challenged order was in the nature of liquidated damages, which the authority has no jurisdiction over.
 
In his order, single bench of Justice S C Gupte dismissed the case after observing that there were no infirmities in the orders passed by the RERA and the appellate tribunal. He held that the orders do not give rise to ”any substantial question of law for the consideration of the High Court”. He said the Renaissance Infrastructure was liable to hand over the property as agreed to, regardless of whether the purchaser was a former partner.
 
He commented, "Under this agreement, termed as agreement for sale, the appellant (Renaissance) was bound to hand over possession of the suit premises to the respondent within an agreed period”and thus the agreement is “nothing less than an agreement for sale.”
 
He said, "After all, consideration of an agreement for sale, instead of money, may well be any valuable consideration, including satisfaction of the allottee’s share in the promoter’s partnership.” 
 
It was also noted that none of the other grounds argued by the developer’s lawyer “call for dispension of pre-deposit” before the appellate Tribunal under Section 43(5) of the RERA Act, which is mandatory.
 
Renaissance Infrastructure has been ordered to pay the amount within a period of four weeks failing which the disputed property would be attached by the Tehsildar for sale. The lawyer of the developer applied for a stay of this order. However, it was rejected by the high court.
 
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