by THO
Maharashtra Real Estate Appellate Tribunal (MREAT) has directed the new developer of the Palais Royale project in Worli to maintain status quo regarding a home buyer’s flat and granted an injunction against creating third-party rights over the booked flat till the final hearing of an appeal against a MahaRERA order.
Also Read: MahaRERA grants Palais Royale developer one more year for completion
Palais Royale, one of the tallest skyscrapers in the city, was stalled after multiple PILs were filed in various courts against the developer, Shree Ram Urban Infrastructure Limited (SRUIL). The lender, Indiabulls Housing Finance Limited (IHFL), took possession of the property under the SARFAESI Act and later sold it to Honest Shelters Private Limited on June 26, 2019, in an e-auction. In November that year, a corporate insolvency resolution process was initiated against SRUIL before the National Company Law Tribunal (NCLT). MahaRERA in March 2021 approved Honest Shelters as the new promoter.
Also Read: MahaRERA unveils framework to regulate senior citizen housing
The home buyer, a Grand Paradi resident, had purchased the flat from SRUIL in June 2013 and paid ₹12.61 crore of the ₹25 crore total consideration for the property. As per clause 20 of the registered agreement, the flat’s possession was promised on or before December 31, 2014, by SRUIL. The home buyer filed a complaint with MahaRERA in July 2022, seeking interest from Honest Shelters for the delayed possession.
However, on March 20, 2023, MahaRERA dismissed the complaint as not maintainable.
Also Read: MahaRERA extends completion dates for three housing projects
“In effect, the execution of the mortgage deed by the lender to recover its dues and the subsequent sale to the new promoter under the SARFAESI Act has simply transferred the mortgaged property in question with the existing presold premises to the new promoter from the erstwhile promoter. The authority here would have to make a difference between the transfer of property and the transfer of liabilities and obligations under RERA,” MahaRERA chairperson Ajoy Mehta said in his order, ruling that the obligations and liabilities under RERA did not travel with the mortgaged property when it changed hands.
Also Read: MahaRERA says OC for bare shell not full OC, issues recovery warrant
The home buyer then filed an appeal with MREAT and sought interim relief by way of an injunction from creating third-party rights during the appeal’s pendency.
The home buyer argued that MahaRERA failed to consider its own circular dated June 4, 2019, which said even if the new promoter acquires and takes over a project under the SARFAESI Act, the onus and liabilities of the erstwhile promoters must be fulfilled by the new promoters as per the contractual obligations in the agreement for sale.
His application contended that there was no default on payment. While ₹11.5 crore towards the flat had been paid, ₹1 crore had been paid to the sister of the former promoter. The remaining amount of ₹13.5 crore shall become due 30 days after the developer obtains the occupancy certificate, the home buyer said.
The developer’s advocate, however, said payment of ₹1 crore towards the consideration of the flat was a disputed amount and the application was a duplication of the appeal challenging the MahaRERA order and should be dismissed. He contended that the project had been transferred by way of involuntarily transfer under the SARFAESI Act with the approval of the Bombay high court and therefore the transfer should be without any encumbrances and liabilities of erstwhile promoter.
After hearing both sides, a MREAT bench of Dr K Shivaji and Shriram R Jagtap said the Supreme Court, while hearing a special leave petition in the Pankaj Majithia vs Honest Shelters Private Limited case, on December 6, 2023, said “obligations of the flat buyers would be governed by their agreements.”
The MREAT bench said the rights of the developer and the flat buyers cannot be affected by this process and directed that the NCLT should not examine these aspects, which apparently trouble the parties.
“Accordingly we are of the considered view that the terms and conditions of the agreement for the sale executed between the applicant and the erstwhile promoter continue to be valid, binding and the rights as well as the contention of the parties will be governed by the provisions of the agreement read with the provisions of the RERA Act, which will continue to be applicable in the instant case,’ the bench said in its February 23 order.
