Ashok Narang, a realtor, and other buyers had initially filed a complaint with Maharashtra Real Estate Regulatory Authority (MahaRERA) alleging delay in possession.
They sought refund and an exit under Section 18 and invoked Section 12 of the Real Estate (Regulation and Development) Act (RERA) for compensation. They alleged reduced amenities and other “unilateral changes” in the apartment and project layout by the builder while registering the then ongoing project in May 2017 when the MahaRera Act came into force. The developer said amenities were provided.
Section 12 of RERA places an obligation on a builder or promoter of a project for “veracity” of an advertisement or brochure. It says when a buyer who has paid a deposit based on information in a brochure or advertisement suffers a loss due to false information contained in it, he can be compensated by the builder.
The HC judgment by Justice C V Bhadang held: “Section 12 would also apply to the obligation of the promoter regarding the information given…prior to the registration of the project under the RERA Act of 2016 as ongoing project.” The provision is “retroactive”, the HC held.
The HC said the “brochure indeed mentions the date of possession as 2017”.
The developer said the date was subject to its disclaimer in the brochure. The HC rejected the argument, saying the disclaimer did not mention the date of possession.
The buyers had got no relief from MahaRERA but in December 2019, Maharashtra Real Estate Appellate Tribunal cancelled the allotments and had directed the developer to refund the money. They had paid Rs 2 crore or 20% of the flat cost when booking.
Aggrieved, Bombay Dyeing went to the HC in a second appeal. Its counsel Dinyar Madon, J P Sen and Niyathi Kalra argued that the Act requires an agreement for sale to be in existence in writing, for builder’s obligation under Section 12 or 18 (compensation to buyer over delay in possession) to kick in.
Shiraz Rustomjee, counsel for the buyers, said there was no mention in the law specifically for a written agreement for sale, except in Section 13, which bars any deposit or advance being taken by a builder sans an agreement for sale.
The HC “found force” in buyers’ argument that Section 18 and the definition of “agreement for sale” in the Act “do not provide for the requirement of a written agreement of sale”.
“Had the legislature intended the agreement referred to in Section 18 also to be in writing, nothing prevented it from doing so,” said the HC ruling, though the judge said he does “not propose to lay down an absolute proposition of binding nature on the issue” since the refund is also based on violation of Section 12 of RERA.
The HC dismissed the builder’s appeal and did not grant a stay. The builder may appeal.