When there is delay in giving possession, sometimes builder offers key and issues subjective Letter of Occupation to the flat purchaser when still construction work or completion work is going on. He asks flat buyers to occupy and say we have applied, and we will get Occupation in next 15-20 days. You may proceed to occupy.
In such case the buyer loses his right to get back his money?. Let us analyze now.

First let us see relevant provision of Real Estate ( Regulation and Development) Act,2016 ( RERA ).
18. RETURN OF AMOUNT AND COMPENSATION

(1) If the promoter fails to complete or is unable to give possession of an apartment, plot or building,—
(a) in accordance with the terms of the agreement for sale or, as the case may be, duly completed by the date specified therein; or
(b) due to discontinuance of his business as a developer on account of suspension or revocation of the registration under this Act or for any other reason, he shall be liable on demand to the allottees, in case the allottee wishes to withdraw from the project, without prejudice to any other remedy available, to return the amount received by him in respect of that apartment, plot, building as the case may be, with interest at such rate as may be prescribed in this behalf including compensation in the manner as provided under this Act:
Provided that where an allottee does not intend to withdraw from the project, he shall be paid, by the promoter, interest for every month of delay, till the handing over of the possession, at such rate as may be prescribed.

(2) The promoter shall compensate the allottees in case of any loss caused to him due to defective title of the land, on which the project is being developed or has been developed, in the manner as provided under this Act, and the claim for compensation under this subsection shall not be barred by limitation provided under any law for the time being in force.

(3) If the promoter fails to discharge any other obligations imposed on him under this Act or the rules or regulations made thereunder or in accordance with the terms and conditions of the agreement for sale, he shall be liable to pay such compensation to the allottees, in the manner as provided under this Act.

On plain reading of this provision it becomes clear that date of completion referred to in this provision means the date specified in the agreement. The word “therein” refers to the “agreement” and not the date of completion revised by the promoter unilaterally while registering the project.

Notes:
i. Possession without Occupation Certificate illegal : In Sion Kamgar cooperative Society vs MCGM Bombay High Court held that ,occupying the building without occupation certificate and commencing the activity styled as Nursing Home, cannot be countenanced and permitted in law.
ii. What if Developer fails to give possession on time? : In the matter of Avinash Saraf, Neha Duggar Saraf … Complainant.Vs Runwal Homes Pvt. Ltd. COMPLAINT NO: CC006000000000032 Section 18 of RERA imposes the liability on the promoter to return the amounts received by him in respect of the apartment of which he fails to give the possession on time.
iii. In the matter of Muddasar Builders vs. UOI 2018 (1) All.Bom.R 558 in para 261 it is held that , Section 18 is compensatory in nature and not penal. The promoter is in effect constructing the apartments for the allottees. The allottees make payment from time to time. Under the provisions of RERA, 70% amount is to be deposited in a designated bank account which covers the cost of construction and the land cost and has to be utilized only for that purpose. Interest accrued thereon is credited in that account. Under the provisions of RERA, 30% amount paid by the allottees is enjoyed and used by the promoter. It is, therefore, not unreasonable to require the promoter to pay interest to the allottees whose money it is when the project is delayed beyond the contractual agreed period. Even under Section 8 of MOFA on failure of the promoter in giving possession in accordance with the terms of the agreement for sale, he is liable to refund the amount already received by him together with simple interest @ 9% per annum from the date he received the sum till the date the amount and interest thereon is refunded. In other words, the liability under Section 18(1).
iv. What if possession is taken for fit-outs before getting Occuaption Certificate? In the matter of Complaint No. CC005000000000025 Mahadeo Nalawade (1) vs APL Yashomanagal Developers it was held by MAHARERA that complainants have received fit out possession of their respective flats. It is fact that Section 3(2)(i) of the Maharashtra Ownership Flats Act, 1963 provides that the promoter shall not allow persons to enter into possession until the completion certificate is given. Similarly, it provides that no persons shall take possession of the flat until the completion certificate is duly given by the legal authority. In view of this provision the fit-out possession cannot be treated as the legal possession. However, the distinction has to be made in respect of others because after taking the fit-out possession, they have actually been occupying the flats. It was held that, these persons are not entitled to get any relief under Section 18 of RERA.
Conclusion:
Considering this ratio flat buyers should avoid taking letter of possession or symbolic possession even for fit-outs.

Shruti Desai
Mumbai
5th April,2019

Get legal advice from Shruti Desai & Co. today

Send us an Email Go back to Services