Realty developers cannot use the force majeure clause for financial crisis and lack of approvals in any project, ruled the Maharashtra Real Estate Regulatory Authority in a recent order against Hindustan Construction Company’s subsidiary Lavasa Corporation.

In a matter related to a homebuyer Mudhit Gupta’s complaint against Lavasa seeking refund and compensation for failing to deliver his apartment, the company had taken a stand that it failed to complete the project owing to s tatus-quo order on the construction by the Ministry of Environment and Forest (MoEF), and is now facing difficulties to meet the liabilities to complete the project due to swelling financial obligations. “The aforesaid stand as has been taken by the respondents cannot come within the scope of the alleged clause of “force majeure”.

“Force majeure” clause can be made applicable when the entire situation is beyond the control or vis majeure,” MahaRERA Pune’s adjudicating officer SB Bhale said as he rapped the company. The ruling also assumes significance as this is the only order passed by the authority against Lavasa before the NCLT admitted a plea filed by its creditors, who had initiated the corporate insolvency resolution process under the Insolvency and Bankruptcy Code 2016 (IBC). MahaRERA has now decided to take a call on Lavasa investors’ matters only after the case in front of the bankruptcy court is resolved

The NCLT admitted the corporate insolvency resolution process against Lavasa Corporation on August 30. Gupta, the complainant homebuyer, had booked an apartment in Lavasa project in April 2010 and the developer had promised the delivery on or before April 21, 2014. The company failed to deliver the apartment even after receiving nearly 60% of the consideration from the homebuyer. MahaRERA has directed Lavasa to return the principle amount with 10.65% interest within 30 days. “The MahaRERA order has also created a charge on the said apartment in favour of the complainant until the refund and compensation is paid, thus making Gupta a secured creditor,” said Jairam Chandnani, senior lawyer who represented the complainant.

Following the complaint seeking compensation and withdrawal from the project, Lavasa had even challenged the maintainability of the complaint stating the apartment booked is not a sale but is a transfer through a lease agreement. However, the dispute was set aside by the Bombay High Court that long standing lease also can be termed as a sale and transfer under the provision of RERA. Lavasa was touted to be India’s first privately-developed city proposed on 23,104 acres of land across 18 villages in Pune district. The developer had started work on the project in 2002-03 but it is yet to be completed. Source: Economic Times

As indicated by segment 11(2) of the Real Estate (Regulation and Development) Act, 2016, the ad or outline issued or distributed by the promoter is required to say the site address of the expert wherein all points of interest of the enrolled venture are entered and incorporate the undertaking's MahaRERA enlistment number.

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