MahaRERA Takes Action: 3 Developers Sentenced to Jail for Failing to Pay Interest on Delayed Possession

The Maharashtra Real Estate Appellate Tribunal (MahaRERA) has sentenced the promoters of Neptune Ventures and Developers to three months of civil imprisonment for their failure to comply with its 2021 orders. The developers were instructed to pay the interest amount on delayed possession to Lower Parel resident Atul Prabhu in relation to the company’s Bhandup project. This decision came after the developers failed to fulfill the tribunal's directives, which involved paying nearly Rs 5 lakh in interest under Rule 18 of the Maharashtra Real Estate (Regulation and Development) Act (RERA).

The case traces back to 2009 when Prabhu made an initial payment of Rs 51,000 for an allotment at the Bhandup project. The commencement certificate for the project was received in 2013, and the final sale agreement was executed in September 2013. According to the agreement, possession of the property was to be handed over by December 2016, with a six-month grace period, making the deadline for possession June 2017. However, despite multiple delays, possession was never provided, and the promoters failed to justify the delay convincingly. This led Prabhu to file a complaint under RERA.

The promoters, in their defense, cited various reasons for the delay, such as obtaining necessary permissions, financial crises, and changes in the Development Control and Promotion Regulations (DCPR). However, the tribunal found that these claims were not substantiated, and no solid evidence was provided to back them. The tribunal further observed that changes in the DCPR were prospective and should not have affected the project’s original schedule.

Rent Adjusted as Compensation Invalidated

One key aspect of the case was the developers' attempt to adjust Rs 4,32,697 as rent paid by Prabhu for the delayed possession. The promoters argued that this amount could be considered compensation for the delay. However, the tribunal ruled that this adjustment could not be recognized as valid compensation under either the Maharashtra Ownership Flats Act (MOFA) or RERA. The tribunal emphasized that rent adjustments cannot substitute the required compensation for delayed possession, which is mandated under the relevant real estate laws.

False Possession Claims

Adding to the developers’ troubles, the tribunal rejected their claim that possession had been offered to Prabhu in October 2018. The developers had produced a backdated possession letter in November 2018, but the allottees presented evidence proving that possession was never actually provided. The tribunal deemed this claim baseless and unsubstantiated, further adding to the developers' liability.

In another aspect of the case, the tribunal found that the developers had failed to comply with previous directives, including a failure to submit a compliance report to the Mumbai suburban collector regarding the attachment of their properties. In September 2024, the tribunal issued a fresh attachment warrant, instructing the collector to attach both movable and immovable properties belonging to the developers. However, despite clear instructions, the collector failed to submit a compliance report, prompting the tribunal to demand an explanation for the delay in action.

This case serves as a significant example of the penalties developers may face if they fail to comply with RERA regulations. MahaRERA has been increasingly active in addressing issues related to delayed possession and non-compliance with its orders. The case also highlights the tribunal’s firm stance on ensuring that developers meet their obligations, emphasizing that no substandard justifications, such as baseless rent adjustments or backdated documents, will be accepted as valid defenses.

The sentence of civil imprisonment is part of an ongoing effort to ensure accountability in the real estate sector and protect the interests of homebuyers. MahaRERA has shown that it will not hesitate to take stringent actions, including jail sentences and property attachments, against developers who fail to meet their commitments, ensuring that those seeking justice for delayed possession receive the compensation they are entitled to.

Image source- maharera