Delay in approvals not covered under force majeure, says Bombay HC, rules in favour of homeowners

MUMBAI: In a precedent-setting verdict, the Bombay High Court has ruled that a real estate developer cannot rely on usual ‘force majeure’ clauses to deny possession to homebuyers.

The court has dismissed realty developer Westin Developers’ appeal against a Real Estate Regulatory Authority’s (RERA) order to set aside a six-month grace period allowed earlier.

“Developers now cannot rely on usual majeure clauses in flat agreements to deny interest under RERA for delayed possession of flat as contractually agreed,” said Huzefa Nasikwala, founding partner of Nasikwala Law Office, who represented the respondent in the case.


The RERA Appellate Tribunal had also directed the developer to pay interest to the homebuyer from the scheduled date of delivery until the actual possession.

In this particular case, the developer, through a second appeal, had challenged an order passed by RERA Appellate Tribunal, Mumbai following a homebuyer’s complaint of delay in handing over the apartment.

The homebuyer had also claimed interest from the developer as compensation for the delay from the scheduled delivery date and actual possession.

The adjudicating authority under Maharashtra Real Estate (Regulation and Development) Act, 2016, while accepting the homebuyer’s claim, had awarded interest from January 2018 along with six-months extension to the developer as grace period.

When the matter was pursued before the RERA Appellate Tribunal, it held that there was no specific clause in the agreement, entitling the developer to any grace period of six months or otherwise.

The tribunal observed that the date of delivery of possession of the premises stipulated under the agreement, was on or before June 30, 2017 and, accordingly, directed payment of interest from July 1, 2017 till the date of delivery of possession.

The developer argued that the agreement contained a clause that the date of possession was subject to any cause beyond the company’s control, including any government order or due to delay in issuing completion certificate or occupation certificate by the authorities.

According to the latest ruling, this clause is nothing but an ordinary force majeure clause where the promoter cannot be faulted for delay in delivery of possession, if such delay is caused by any reason beyond his control. And this clause by itself does not provide for any grace period to the promoter.

The Appellate Tribunal had held that there was no warrant for any such extension under the agreement between the parties and accordingly ordered interest with effect from the date of delivery of possession stipulated in the agreement.

It is important to note that neither the Appellate Tribunal nor the adjudicating authority found justification for the delay.

The grace period of six months considered by the adjudicating authority was nothing but an ad-hoc measure and was rightly not accepted by the Appellate Tribunal, the court said while dismissing the developer’s appeal.