In such cases, a MahaRERA order mandates arbitration, although experts have questioned the order.
Is it true that a clause in a deal between a homebuyer and a developer that says disputes must be resolved through arbitration precludes the buyer from seeking relief under the Real Estate (Regulation and Development) Act, 2016, (RERA) if the agreement was signed before RERA was enacted?
That appears to be the case, according to a Maharashtra Real Estate Regulatory Authority (MahaRERA) order issued on January 14, which stated that in the case of a dispute of alleged delayed possession in such a situation, the home buyer cannot seek redress from MahaRERA and must instead rely on the Arbitration and Conciliation Act, 1996. It ordered the homebuyer and developer to proceed to arbitration, claiming that RERA could not change the terms of the agreement they had signed before the act was enacted. The buyer has filed a complaint with the RERA Tribunal.
Experts, on the other hand, have deemed this order to be illegal and have warned that it may set a bad precedent. They said that the real estate statute passed by Parliament clearly states that it takes precedence over all other agreements and that MahaRERA should simply execute the law rather than interpret it in this situation.
Case history
On November 10, 2014, the complainant, Ayyaz Khan, signed a purchase agreement for a flat of 1,059 square feet. The deadline for getting hold was set for March 31, 2017. Khan paid more than Rs 1.86 crore out of a total sum of Rs 2.54 crore. Khan, on the other hand, has yet to take control. The date for handover recorded with RERA, according to MahaRERA registration, was 2021 and was further extended to June 31, 2022, according to the ruling. Khan has argued in the MahaRERA that no approval was obtained for this extension, and as a result, he is seeking interest and compensation till the date of possession.
Developer’s argument
The developer in the case, Era Realtors, has stated that the matter should be referred to arbitration, stating that while the agreement for sale specifies a possession date, it also specifies arbitration in the event of a dispute and that the delay occurred due to slum dweller agitation because it was a slum rehabilitation project. Khan had purchased the apartment through the project's sale component. Property for free sale is authorized to be built in a set proportion to the rehabilitation building or a certain piece of the land parcel intended to house slum people under such schemes. One of the reasons for the project's late start, according to the developer, is delays in governmental clearances for environmental clearance.
MahaRERA’s order
RERA would take effect later, according to the MahaRERA order signed by MahaRERA chairperson Ajoy Mehta. "To the best of their knowledge, the parties have put in place a mechanism in the shape of an arbitration clause to postpone any conflicts that may emerge owing to non-adherence to the declared completion date," it stated.
"The system of contract act was available in law then, and it is likewise recognized in law today, and it cannot be rewritten just because a specific statute (RERA) is now available," the judge continued. To claim that the parties should have known that a specific law would be implemented in 2016, and so should not have indemnified themselves under the law in effect at the time of the sale deed's execution in November 2014, is absurd."
"The parties will now have to adhere to the conditions of the sale agreement of November 20, 2014," the order continued. The parties can no longer use RERA to resolve a dispute over which the applicable remedy was defined in the agreement at the time. The parties are bound by the sale agreement, which includes an arbitration clause that would apply in this case because it was signed before the implementation of RERA. The case has been dismissed, and the parties can now proceed with the requisite arbitration processes under the Arbitration Act."
RERA, according to lawyers, is a must-have in the picture.
"The ruling sets a bad example since once a project is registered with MahaRERA, the developer should not be able to contest MahaRERA's authority or the applicability of RERA regulations," said Satish Dedhia, an advocate and vice-president of the RERA Practitioners Welfare Association. A developer cannot claim that just certain RERA provisions will apply. It is not permissible for a developer to claim that registering a project with MahaRERA will provide him with benefits that the flat purchasers will not receive. It is not an issue of rewriting, but rather of interpreting and applying the provisions of such an agreement. MahaRERA was created to protect buyers, not developers."
"Normally, every agreement for sale inked provides a statement that the agreement is done in accordance with the terms of the MOFA (Maharashtra Ownership Flats (Regulations of The Promotion of Construction, Sale, Management, and Transfer) Act, 1963) or RERA," Dedhia continued. Thus, MOFA used to be the unique law that governed the sale and transfer of flats in Maharashtra, and today RERA is the law that rules the sale and transfer of flats in Maharashtra. The promoter cannot object to the law's applicability once the parties have agreed to MOFA's and now RERA's authority. Model agreements have also been given by MOFA and RERA. Except for the commercial bargain, the parties are required to adopt model agreements."
"An overriding statutory requirement cannot be overridden by a contract between the parties." RERA is retroactive and affects existing rights, according to the Supreme Court and the Bombay High Court. Its action is based on a period of time prior to its occurrence. It imposes a new responsibility on already completed transactions or considerations, or it destroys or damages acquired rights," Dedhia stated.
The MOFA agreement format was followed.
"My argument for my client was that we followed the standard agreement for sale format of MOFA, which indicates the disagreement is subject to arbitration," said advocate Namrata Powalkar, who is representing the developer in this case. We followed the MOFA in effect at the time, and the RERA Act was enacted afterward. The honorable chairman decided the matter in favor of my client after hearing both sides' submissions."
Buyer hope in RERA Tribunal
"The order was passed in January 2022, which is being challenged by my client before the Hon'ble MahaREAT," said advocate Harshad Bhadbhade, who is representing the buyer (Maharashtra Real Estate Appellate Tribunal). The case is now pending and will be heard as soon as possible."
© 2023 Rera News. All rights reserved.