Post covers Co Promoter Liability for Delay in Possession wherein Bombay High Court held them accountable and ordered refund of amount invested. This aids RERA to fix accountability of Co promoters in the project.
Co Promoter Liable to pay refund for Delay
1. Background:
o The Bombay High Court recently addressed the issue of co-promoter liability
under the Real Estate (Regulatory and Development) Act (RERA).
o The term “promoter” within RERA has been broadly defined to include all
individuals associated with building construction, regardless of whether they
have received funds from flat buyers.
o The case revolves around a real estate project in Mumbai.
o Wadhwa Group Housing joined as a co-developer in an SRA (Slum
Rehabilitation Authority) project in Andheri.
o The project involved two builders who had a Joint development agreement
to split the constructed area for sale.
o The court examined whether co-promoters, even if they haven’t directly
received money from buyers, can be held liable for refunding amounts due to
project delays.
2. Complaint and refund request:
o A flat buyer named Vijay Choksi had made a ₹1.2 crore partial payment to
the co-developer, SSS Escatics.
o However, SSS Escatics failed to meet the project deadline set for 2019.
o Choksi filed a complaint with MahaRera seeking a refund due to the project
delay.
3. Legal Issue:
o The central question was whether a co-promoter, even if they hadn’t directly
received money from flat buyers, could be held liable for refunds
under Section 18 of RERA (Real Estate (Regulatory and Development) Act).
o Wadhwa Group Housing challenged their joint liability as a co-promoter.
4. High Court Judgement:
o The Bombay High Court ruled that a co-promoter falls within the ambit of
the term “promoter” under RERA.
o Even if a co-promoter is merely an investor in the project and didn’t receive
any funds directly, they are collectively responsible for reimbursing amounts,
along with interest, for any delays.
o The court emphasized that the source of funds (whether pre-RERA or post RERA) is irrelevant when determining joint liability.
o The decision has significant implications for redevelopment projects in
Mumbai and clarifies the accountability of co-promoters.
5. Implications:
o This judgment has significant implications for redevelopment projects in
Mumbai.
o It clarifies the accountability of co-promoters and reinforces the rights of
homebuyers.
o Co-promoters must exercise due diligence to avoid delays and adhere to
regulatory timelines.
6. Conclusion:
o Co-promoters are now jointly liable for refunding homebuyers in case of
project delays, irrespective of whether they directly received funds.
o The ruling emphasizes the broad definition of “promoter” under RERA and
ensures greater transparency and accountability within the real estate industry.
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