Facts of the Case

  • The Agreement: On January 24, 2013, Moongipa Realty Pvt. Ltd. (formerly known as Axayraj Buildwell Pvt. Ltd. - Appellant/Promoter) entered into seven registered Agreements for Sale with Shekhar Rajan Prasad (Respondent/Allottee). The agreements concerned Shop Nos. G-37 to G-43, admeasuring a total carpet area of 1,191 sq. ft. on the ground floor of the commercial building "Moongipa Arcade" (formerly "Ark Arcade") located in Andheri, Mumbai, for a total agreed consideration of ₹2,83,84,000.
  • Financial Discrepancies: A dispute arose regarding the exact amount of consideration paid by the allottee. The Appellant contended that the Respondent had paid ₹1,12,33,600 (excluding taxes), leaving a balance of ₹1,71,50,400. Conversely, the Respondent claimed a total payment of ₹1,14,33,600 (including taxes), establishing a balance consideration of ₹1,69,50,400. The Respondent was also contractually liable to pay ₹7,92,188 toward other miscellaneous statutory charges along with applicable Service Tax/VAT.
  • Delay and Regulatory Recourse: Due to construction delays and the non-completion of the commercial project within the agreed timelines, the Respondent filed two formal complaints (Complaint Nos. CC006000000044128 of 2018 and CC006000000181957 of 2019) before the Maharashtra Real Estate Regulatory Authority (MahaRERA).
  • MahaRERA Order: On January 28, 2021, MahaRERA issued a common order directing the Appellant to pay interest at the rate of 9% per annum on the total consideration paid by the Respondent. Crucially, the authority restrained the Appellant from modifying the sanctioned plans of the commercial layout without strictly complying with the statutory procedure set forth under Section 14 of the RERA Act.
  • Appellate Tribunal Modification: Aggrieved by the regulatory order, the Appellant approached the Maharashtra Real Estate Appellate Tribunal via Appeal Nos. AT006000000053065 and AT006000000053066 of 2021. On March 23, 2022, the Appellate Tribunal partially modified MahaRERA's order, specifically executing an injunction restraining the Appellant from making any modifications to the sanctioned layout plans that related explicitly to the commercial shops purchased by the Respondent without obtaining his express prior consent.
  • High Court Appeal: The Appellant filed Second Appeal Nos. 549 and 550 of 2022 along with Interim Application Nos. 16754 and 16757 of 2022 before the Hon'ble Bombay High Court challenging the Appellate Tribunal's ruling. Concurrently, the Respondent initiated Execution Application Nos. 23 and 24 of 2022 before the Appellate Tribunal to enforce the decree.

Issues Involved

  • Whether a promoter can modify or alter sanctioned construction layouts and change allocated units without executing a legally valid substitution or supplementary agreement that complies with Section 14 of the RERA Act.
  • Whether an allottee is entitled to receive continuous interest under RERA for delayed possession when the parties transition into a revised arrangement with a deferred possession date.
  • Whether the implementation of judicially recorded "Consent Terms" during the pendency of a Second Appeal before a High Court effectively extinguishes prior decrees passed by MahaRERA and the Real Estate Appellate Tribunal.

Petitioner’s (Appellant's) Arguments

  • Financial Redressal and Compromise: The Appellant argued that to resolve the long-standing dispute and terminate protracted litigation, they were willing to formally acknowledge and accept the Respondent’s calculation of the paid consideration as ₹1,14,33,600.
  • Substitution of Units: The Appellant proposed a mutual substitution of the original units. In lieu of the originally booked Shop Nos. G-37 to G-43 (1,191 sq. ft.), they offered "New Shops" (Shop Nos. G-33 to G-36 and G-41 to G-43) comprising a larger total carpet area of 1,228 sq. ft. on the ground floor of Phase III of the project. They undertook not to demand any additional monetary compensation for the excess 37 sq. ft. provided.
  • Third-Party Settlement: Regarding the fact that Shop Nos. G-33 to G-36 were already allocated to a third party (Mr. Jitendra Dewoolkar), the Appellant presented a formal undertaking via an affidavit from the third party, expressing full compliance to execute cancellation or exchange deeds to free up the units for the Respondent.
  • Staged Payments: The Appellant prayed that the balance payment of ₹1,69,50,400 should be strictly synchronized with the physical progress of construction verified by structural architect certificates.

Respondent’s Arguments

  • Protection of Financial Interests: The Respondent contended that any extension of the project deadline or alteration of the physical location of the commercial spaces must safeguard the finances already invested.
  • Enforcement of Interest: The Respondent insisted on the complete withdrawal of the accrued interest deposited by the builder with the Appellate Tribunal (amounting to ₹80,77,000 for the period from April 1, 2014, to May 31, 2022).
  • Compensatory Indemnity: The Respondent demanded an ongoing interest payout at 9% per annum from June 1, 2022, until the final physical possession of the new commercial spaces is delivered along with a valid Occupation Certificate (OC).
  • Mutual Execution: The Respondent agreed to execute all supplementary contracts, rectification deeds, and formal adjustments through his constituted attorney, provided the stamp duty, registration fees, and incidental costs were borne entirely by the builder.

Court Order / Findings

  • Acceptance of Consent Terms: The Hon’ble High Court, presided over by Justice Madhav J. Jamdar, took the comprehensive "Consent Terms" on record, marked as 'X', duly executed by the authorized signatories and advocates of both parties.
  • Substitution of Lower Decrees: The High Court ordered that upon the Appellant fulfilling its specific structural obligations—specifically executing the cancellation/rectification deeds with the third party within 45 days—the impugned orders of MahaRERA (dated January 28, 2021) and the Maharashtra Real Estate Appellate Tribunal (dated March 23, 2022) would stand entirely substituted by the judicial order passed in terms of these Consent Terms.
  • Acceptance of Third-Party Undertaking: The Court formally accepted the affidavit-cum-undertaking (marked 'X1') of the third-party allottee, binding him to execute the required cancellation and exchange deeds to facilitate the clean title transfer of the new units to the Respondent.
  • Disposal of Appeals: Consequently, the High Court disposed of Second Appeal Nos. 549 and 550 of 2022 in strict alignment with the Consent Terms. All connected Interim Applications were disposed of as they did not survive independently, and the Respondent was directed to withdraw his Execution Applications from the Appellate Tribunal.

Important Clarification

  • Strict Adherence to Section 14: The court-sanctioned agreement establishes that any modification or reallocation of real estate property units under Section 14 requires a clear, registered supplementary mechanism (Rectification Deeds/Supplementary Agreements) where the promoter bears the absolute financial burden of stamp duty and registration.
  • Architect's Certification for Milestone Payments: Demands for balance consideration amounts cannot be raised arbitrarily by a promoter. Every demand milestone (e.g., Plinth, Slab, Brickwork, Flooring) must be accompanied by an official certificate issued by the Project Architect proving construction stage completion.
  • Set-off Mechanism for Interest Default: In the event the promoter defaults on paying the monthly 9% p.a. interest on the paid consideration, a clear contractual right is established for the allottee to unilaterally deduct/set off the outstanding interest amount from the subsequent construction-linked milestones payable to the promoter.

Section Involved

  • Section 14 of the Real Estate (Regulation and Development) Act, 2016 (RERA): Adherence to sanctioned plans and project specifications, restricting the promoter from making structural modifications or alterations without the prior written consent of the allottee.
  • Section 18 of the Real Estate (Regulation and Development) Act, 2016 (RERA): Liability of the promoter to pay interest or compensation for failure to give possession of the apartment, plot, or building in accordance with the terms of the agreement for sale.

Link to download the order -https://mytaxexpert.co.in/uploads/1782895891_44compressed.pdf

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