Bombay Dyeing has breached section 12 & 18 of RERA act: MREAT

Mumbai

In a significant order, Maharashtra Real Estate Appellate Tribunal held that section 12 of Rera that deals with 'obligations of promoter regarding veracity of the advertisement' and permits "affected' buyers to withdraw from a project with refund of amount paid, would apply "retroactively'' in ongoing projects even when agreements for sale were transacted much prior to the Act coming into force.

The Tribunal granted part relief to about a dozen-odd buyers who had booked flats in 2012-13 in an uber-luxurious 85-storeyed skyscraper at Wadala and held "The promoter (Bombay Dyeing) has committed a breach of section 12 and 18 ( provides for refund to buyers when delay in possession) of Rera and allotees are entitled to withdraw from project and get refund with interest from promoter.''

Bombay Dyeing and Manufacturing Co Ltd, the promoters of the project called 'Island City Centre' at Spring Mills Compound in Wadala immediately filed appeals before the Bombay high court to challenge the correctness of the Tribunal's findings.

Vikram Trivedi, managing partner of law firm MKA & Co representing a buyer on Friday, said "with the restrictions due to corona virus, the matter in the HC is unlikely to be come up soon, unless any urgent hearing is sought by the developer."

In a common Judgment with two separately reasoned but concurring views, the tribunal comprising Sumant Kolhe and SS Sandhu overturned orders passed in January 2019 by MahaRERA chairperson Gautam Chaterjee. It permitted in 11 cases the cancellation of allotment letters and directed the builder, Bombay Dyeing to refund their booking amount of Rs 2 crore each with two percent more interest than the highest lending rate of State Bank of India (SBI).

It held that section 12 would kick in even if buyers had booked flats well before the Rera Act was passed. Section 12 provides for compensation by promoter to a person who "sustains any loss or damage'' due to "incorrect statement included in an advertisement or project prospectus. It also provides refund of entire investment with interest if a buyer wishes to withdraw from project on being "affected'' by the advertisement.

The operative part of the Tribunal's ruling was given last December but the reasoned judgment made available a week ago.

The buyers' represented by counsel Jai Chhabria with Rajani & Associates and Manilal, Kher Ambalal and was that these sections 12 and 18 are made applicable retroactively since Rera is a social and beneficial legislation. They cited a ruling of the Bombay high court while upholding constitutional validity of various Rera sections, to back their case. Counsel for Bombay Dyeing J P Sen however argued that the provisions of Rera, a substantive law, cannot be made applicable retrospectively and cited Supreme Court rulings to show that it could operate only "prospectively.''

The Rera appellate panel said that the HC had clearly held section 18 which provides for compensation to buyers as being 'retroactively applicable'. There was no challenge to provisions of section 12 of Rera then in the 2017 Neelkamal Realtors case where constitutional validity of various sections including section 18 was raised before the HC.

The Tribunal's Judgment said "Rera has been framed in larger public interest after thorough study and discussion...'' It said that since section 12 is also compensatory in nature'' thus the HC findings on section18 would equally apply to it, making it also retroactively or 'quasi-retroactively'' applicable.

Sandhu said, "Principle of quasi-retroactivity, applies a new law to a transaction which is in process of completion."

Sandhu also reasoned that the promoter's contention that retroactivity as held by the HC doesn't effect any accrued right or impose any new liability which did not exist prior to the Act coming in force, appears to be flawed.''

Several buyers alleged breach of section 12 and claiming misrepresentation of time of possession and amenities and had sought compensation under Rera.

But last January, the MahaRERA held that section 12 and 18 of Rera which respectively provide for withdrawal and refund with compensation to allotees for delays have no retrospective application.

It had held that section 12 was not attracted in this case since transactions dated back at least five years before the Act came into effect.

The project: There were two towers one with 77 habitable floors and three podium levels and four basements while the second tower has 74 floors with five podium levels and four basements. The project has around eight acres of green landscaping too.

The buyers claimed that they were promised possession 2017. It was a 20:80 scheme and they had paid about 19 percent of the flat price, around Rs 2 crore, in 2012-13 to the builder.

The Rera Act came into force in May 2017. Since the project was incomplete then, it was registered under the Act and a new possession date set for August 31, 2019.

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Source: realty.economictimes.indiatimes.com

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