The Maharashtra Real Estate Regulatory Authority (RERA) held that the realty developers cannot use the force majeure clause in case of financial crisis in the project. This order was passed against the subsidiary of Hindustan Construction Company, Lavasa Corporation.
In this case, a homebuyer Mudhit Gupta filed a complaint against Lavasa demanding compensation on account of failure to deliver his apartment. The company said that it had failed to complete the project due to the status-quo order on the construction by the Ministry of Environment and Forest (MoEF) and thus, is now facing financial crises to meet the liabilities. The above stand does not come within the “force majeure” clause.
The RERA officer in Pune held that the clause can be made applicable only when the entire situation is beyond control. This ruling has gained significance only because of the fact that this is the only order which has been passed against the Lavasa before the admission of plea by NCLT, filed by the creditors to initiate the insolvency process under the Insolvency and Bankruptcy Code, 2016. Now, the RERA has decided to resolve the investors’ matter only after the case is solved under the Bankruptcy Code.
The insolvency process was admitted by the NCLT against Lavasa on August 30. The company failed to deliver the apartment even after receiving 60% of the advance. He was directed to return the amount with interest. The complaint was challenged by Lavasa on the ground that the apartment is not for sale but it is a transfer through lease. The Bombay High court held in this regard that lease is a transfer and sale under the RERA.
Courtesy/By: Kritika Mehandiratta
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10 Sep 2018
