Can Possession be Denied to Home Buyer by Relying on Force Majeure Clause?

The Bombay High Court has held that a real estate developer cannot deny possession to home buyers by relying on the usual ‘Force Majeure” clause.

Background

A Second Appeal came before the Bombay High Court challenging the Order of RERA Appellate Tribunal, Mumbai (Maharashtra).

The Developer took a stand that there was a clause in the agreement which provided that the handing over of possession was subject to any cause beyond the control of the Real Estate developer including any order of local authority or delay in issuance of completion certificate or occupation certificate by competent authority.

The adjudicating authority accepted the claim of the claimant but awarded interest from January 2018 instead of June 2017, by giving 6 months grace period to the developer

When this matter was taken to appeal, the RERA Appellate authority held that in absence of any specific clause in the agreement, giving any specific grace period to the promoted, the adjudicating authority should not have given the 6 months grace period in awarding interest.

It was observed by the Tribunal that as per the agreement the possession should have been delivered by 30 June 2017 and therefore the interest should be calculated from 01 July 2017 till the actual delivery of possession o f the flat.

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Force Majeure Clause

The Bombay High Court agreeing with the findings of the Tribunal held that the said clause was an ordinary Force Majeure Clause, which does not provide any grace period to the Real Estate Developer.

Hon’ble Justice S.C. Gupte observed that the adjudicating authority has proceeded on the assumption that if the stand of the developer is taken to be true, the Promoted is entitled for a 6 months grace period.

But neither the Appellate Tribunal nor the adjudicating authority found favour with the reason of delay.

Accordingly the second appeal preferred by developer was dismissed, as no substantial question of law was involved.

Case Details:

Title:Westin Developers (P) Ltd. v. Raymond Alexis Nunes, 

Case No: Second Appeal (STAMP) No. 5329 of 2020, decided on 04-12-2020

Date of Judgment 04.12.2020

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