Society must step into builder's shoes, complete project: MahaRERA

 30 August 2021

Mumbai

Ganga Jamna Sangam society in Khar (W) was recently formed by 19 flat purchasers who had paid large sums to the builder but were still to get possession of their apartments.

MahaRera Chief Ajoy Mehta’s order said: “The issue or legal validity of termination is not crucial before this authority nor within its scope to adjudicate on its validity. The more important issue...are the implications of the termination and the consequences that follow on the allottees, including the new flat purchasers in the saleable component, the bank and the society at large. It is amply clear that the developer acquired the rights to develop from the development agreement entered upon by the society.”

“The society cannot now by the action of termination wish away the liabilities created by the developer,” it added. The August 21 order further said that on termination, the society becomes the ‘promoter’ and all earlier bona fide liabilities created by the developer would now “squarely rest on the shoulders of the society”.

It added, “The society, thus, cannot now abandon the allottees, including new flat purchasers, on the pretext that the development agreement is terminated. Societies, while appointing developers, must conduct proper due diligence of the development agreement being entered into.

During execution of the project, it should exercise supervision and monitor its progress diligently to ensure that the purpose of appointing the developer is achieved in a timely manner and all bona fide liabilities created in the process are fulfilled.”

It said the society “shall step into the shoes of the respondent (builder)...and ensure smooth completion of the project, safeguarding interests which shall include payment of interest on delayed possession of all present allottees and all new purchasers, if any,...and in no manner jeopardise their interest in terms of their individual rights and interest”.

Six flat purchasers had approached MahaRera complaining that the builder had failed to deliver the flats, and sought compensation with interest. The society, too, filed an intervening application. So did Bank of Baroda, which had loaned the builder for this project. Twelve flats were mortgaged by the builder to the bank.

The bank submitted that there are still 13 unsold apartments on which they have a charge created. Its interest is towards recovery of the outstanding bank dues as the builder did not pay its debts towards the mortgaged loan.

The MahaRera order said the society will have to take necessary legal recourse to recover the interest and other charges. Secondly, the interest of the bank shall be protected and the same shall be taken care of while appointing the new developer by the society.

All the liabilities shall be transferred to the new developer or the said society in case of self-development on ‘as is where is’ basis, it added. “Lastly, the society must ensure that all the liabilities as accruing on date, including the liability of paying interest on delayed possession, all the transactions as on date and all the duties-cum-responsibilities as on date are clearly enumerated,” it said.