Bom HC | Can real estate developers rely on ‘force majeure’ clause to deny possession to homebuyers? Court explains

Bombay High Court: S.C. Gupte, J., held that a real estate developer cannot rely on usual ‘force majeure’ clause to deny possession to homebuyers.

The instant appeal challenged the Order passed by RERA Appellate Tribunal, Mumbai.

Original Complaint that was filed by the respondent was:

Respondent who was a flat purchaser and who had claimed interest from the appellant for the delay in handing over of possession of the premises, for the period from the date of possession stipulated under the agreement till the date of actual possession.

Further, it was stated that Maharashtra Real Estate (Regulation and Development) Act, 2016 while accepting the respondent’s claim awarded interest from January 2018; the adjudicating authority gave six months extension on a unilateral basis to the appellant by way of a grace period.

When the above-stated matter was carried in appeal by the respondent-complainant in RERA Appellate Tribunal it was held that there was no specific clause in the agreement, entitling appellant/promoter to any grace period of six months or otherwise.

Appellate Tribunal observed that the date of delivery of possession of the premises stipulated under the agreement was on or before 30 June 2017 and, accordingly, directed payment of interest from 01-07-2017 till the date of delivery of possession of the premises.

Appellant’s Counsel submitted that the agreement referred to above contained a clause that the possession date was subject inter alia to any cause beyond the control of the Developer including any order of the Centre, Local Authority or Body or due to delay in issuing completion certificate or occupation certificate by the Authorities.

It was noted from the above contention that the said clause was nothing but an ordinary force majeure clause, where the promoter cannot be faulted for the delay in delivery of possession, if such delay is caused by any reason beyond his control.

Force Majeure clause doesn’t provide for any grace period to the promoter.

Bench while considering the facts of the case stated that it is apparent from the record that the adjudicating authority was not impressed by any of the reasons submitted by the appellant towards the justification for the delay.

Adding to the above, Court found that the order of the adjudicating authority proceeded on the basis that even if facts pointed out by the Promoter were to be taken into consideration as justification for the delay, a six months’ grace period could be granted for delivery of possession to the Promoter.

“…neither the Appellate Tribunal nor the adjudicating authority found in favour of the Appellant/Promoter insofar as its case for justification of the delay was concerned.”

Hence, a grace period of six months considered by adjudicating authority was nothing but an ad-hoc measure and was rightly not accepted by the Appellate Tribunal.

Accordingly, the substantial question of law arose from Appellate Tribunal’s impugned order.

Therefore, the second appeal was dismissed. [Westin Developers (P) Ltd. v. Raymond Alexis Nunes, 2020 SCC OnLine Bom 3912, decided on 04-12-2020]


Advocates who appeared for the matter:

Dakshesh Vyas a/w Dominic D’Souza and Sumit Kothari i/b. Agrud Partners, for Appellant/Applicant.

Huzefa Nasikwala a/w Sujit S. Mashal i/b. Nasikwala Law Office, for Respondent.

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    Thanks for sharing valuable information about real estate investments on open plots

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