The Maharashtra Real Estate Regulatory Authority (“Authority”), vide its order dated July 30, 2020 in the matter of Deepesh Singh and Ors. v. Neelkanth Constructions, disallowed a developer from constructing an additional floor in a building without the consent of 2/3rd (two third) of the allottees.
Complaint:
The complainants had purchased the flats in 2017 and 2018 and as per the agreement for sale, the possession of flats was to be handed over on March 31, 2019, however, the respondent failed to hand over the possession on time. The respondent received the occupancy certificate on November 27, 2019 and the respondent handed over possession to the complainants in December, 2019. Therefore, the complainants sought interest for the delayed possession. Further, the respondent is not willing to allot the car parking spaces to the complainants. The respondent also allegedly failed to form an association of allottees or a society even after 50% (fifty percent) of the units were sold and consequently, the respondent had not executed deed of conveyance. The respondent had been demanding to construct an additional 4th (fourth) floor to utilise the additional floor space index (“FSI”).
Issues:
The issues which arose for consideration before the Authority were:
Arguments by the respondent:
The respondent claimed that the delay was on account of a new authority CIDCO NAINA coming into existence in 2013. It was argued that though the respondent had applied for occupancy certificate in September, 2018, the application was rejected due to deviation from the approved plans. The respondent further contended that the complainants, after getting possession, cannot stop the respondent from consuming the FSI of the entire land. Moreover, the respondent claimed that the complainants were obstructing formation of a society with an ulterior motive of extracting money from the respondent. The agreement for sale also specified that additional floors may be constructed by the respondent. Additionally, the respondent argued that the allotment of car parking space was not in the commercial arrangement. It was contended that the car parking space is the property of the developers and they are permitted to sell it.
Analysis:
The Authority held that since the respondent had failed to handover the possession of the flats as on the date agreed in the agreement for sale, it had violated Section 18 of the Real Estate (Regulation and Development) Act, 2016 (“Act”) and rules made thereunder.
The argument of the respondent that the delay of the project was due to establishment of a new authority, CIDCO NAINA, was rejected by the Authority. CIDCO NAINA was established in 2013 and the agreements for sale were executed in 2017 and 2018. Therefore, the respondent was aware of the constraints and accordingly agreed on the date of handing over the possession. Therefore, the reasons cited for delay were rejected.
Regarding the car parking space, the Authority observed that as per the provisions of the Act, a developer may sell only the covered car parking space by charging certain amount. Therefore, the open car parking space, in the present case, must be handed over to the society and cannot be sold in an open market.
With respect to the issue of formation of society and execution of conveyance deed, the Authority held that as per Section 11(4)(e) of the Act, the developer must form a society within 3 (three) months from the date when the majority of the flats have been booked in a building. Since more than 51% (fifty one percent) of the allottees have booked the flats and also full occupancy certificate is received, it is the statutory duty of the respondent to form a society and no condition can be laid down for the same as it is not permissible under the Act.
Further, as per Section 14 of the Act, the consent of 2/3rd (two third) allottees is required for any modification or change in the sanctioned plan. Therefore, in order to construct an additional 4th (fourth) floor in the building, the respondent must obtain the consent of 2/3rd (two third) allottees as required under Section 14 of the Act.
Conclusion:
The Authority held that there was no fault on the part of the complainants and the respondent has failed to provide satisfactory reason for the delay in completion of the project. Therefore, the Authority directed the respondent:
Please find attached a copy of the order.
This update has been contributed by Prakash Panjabi (Senior Partner) and Shivani Agarwal (Associate).
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