MahaRERA Directs Builder to Compensate Buyer with Interest for Flat Delay

In a recent directive, MahaRERA instructed Lokhandwala-Kataria Construction, the developer of the Minerva project in Lower Parel, to compensate a homebuyer for delayed possession. The buyer, who had booked two flats in the project, is entitled to interest from January 2022 until possession is offered with the Occupancy Certificate (OC). The interest rate will be calculated based on the State Bank of India's (SBI) Marginal Cost Lending Rate (MCLR) plus 2%, starting after the OC is obtained. Additionally, the developer must release the mortgage on the flats before handing over possession. The homebuyer claimed that the flats they booked were under mortgage, a fact revealed only after the booking process. Despite this, the promoter had falsely listed the flats as “unsold units” in the project’s disclosure statement. Faisal Rashid, the complainant, had signed agreements with the promoters in February 2019 for the purchase of two flats, paying 1 lakh as the booking amount for each unit.

The complainant highlighted that, as per the sale agreement, possession of the flats was to be handed over by December 2020. However, the respondent failed to meet this deadline. In response, the promoter argued that the complainant’s claims regarding the flats stemmed from a loan transaction rather than a sale transaction, labeling the claims as illegal, fraudulent, unjustified, and invalid.

MahaRERA noted that the complainant sought relief based on the registered agreements for sale. However, the respondent disputed these agreements, claiming they were executed in violation of an escrow arrangement between the complainant's father and a director of the respondent's company, allegedly using a fraudulently obtained power of attorney. Despite referencing documents like the escrow arrangement and MOU to challenge the validity of the agreements, the respondent failed to provide any substantial justification or evidence proving the agreements were illegal or fraudulent, or that the complainant engaged in any fraudulent activity.

The agreements for sale were executed in 2019, yet the respondent only challenged them in 2024—nearly five years later—coinciding with the scheduled hearings of these complaints on their merits. MahaRERA noted that this delay suggests the legal challenge by the respondent was an afterthought. Furthermore, the authority highlighted that the respondent executed a mortgage deed after the agreements for sale, violating explicit provisions of the RERA Act.

MahaRERA also pointed out that the respondent, by signing the agreements, acknowledged the complainant’s status as an allottee. As a result, the respondent cannot now dispute the complainant’s standing under the pretext of the escrow arrangement or MOU. Importantly, MahaRERA emphasized that the agreements for sale remain valid and enforceable, as no competent court has annulled them to date.

By LNN (Liyaans News Network)