The Maharashtra Real Estate Appellate Tribunal (MREAT) has directed the promoters of RA Residences in Dadar East, Mumbai, to pay a penalty equivalent to 2% of the project cost, execute a conveyance deed in favour of the housing society and distribute sale proceeds from certain commercial units among the allottees.
The tribunal’s order relates to changes made to the project’s sanctioned plan after the original 2017 plan formed the basis of agreements entered into with homebuyers. MREAT held that substantial changes involving additional Floor Space Index (FSI) and Transferable Development Rights (TDR) required prior informed consent from the allottees.
The project comprises two residential buildings and an IT commercial building. It was originally scheduled for completion in June 2018. The completion timeline was subsequently extended first to 2019 and later to March 2025.
Tribunal Directs 2% Penalty and Conveyance
Under its directions, MREAT ordered the promoters to deposit a penalty equivalent to 2% of the project cost. The promoters were also directed to execute a conveyance deed in favour of the society for the residential building, proportionate to the FSI consumed under the 2017 sanctioned plan.
The conveyance is to include the building’s common areas and amenities. The tribunal also directed the promoters to demarcate and hand over 64 remaining guest-parking spaces to the society.
In another significant direction, the tribunal ordered that the sale proceeds from units in the commercial building constructed using additional FSI/TDR beyond the 2017 plan be apportioned among the allottees.
The case was brought before the authorities by the housing society, which was represented by advocate Nilesh Gala. The society had initially approached MahaRERA with allegations concerning guest parking, recreational ground areas, additional FSI and the construction and sale of ground-floor offices in areas it claimed were common spaces.
Dispute Over Changes to 2017 Plan
The dispute primarily concerned changes made to the sanctioned development plan after the project agreements had been entered into with buyers.
According to the society’s case, the 2017 sanctioned plan formed the basis of the agreements for sale. The plan was subsequently revised and approved in January 2021. The society contended that these changes were made without obtaining prior consent from the society or the allottees.
MREAT examined the difference between the development plan presented to allottees in July 2017 and the revised plan approved in January 2021.
The tribunal noted that the built-up area or FSI of the residential building increased from 30,540.77 sq m to 31,769.76 sq m. While the increase in the residential component was relatively limited, the commercial building saw a substantial increase in its area.
The commercial building’s area rose from 3,231.63 sq m to 7,473.74 sq m, with the additional development enabled through premium FSI.
The tribunal held that such a substantial deviation from the development plan disclosed to buyers required prior informed consent. According to the order, consent must be specific and based on adequate disclosure of the proposed changes.
MREAT also found that the agreements for sale did not contain sufficient details regarding the proposed utilisation of TDR or FSI originating from other land.
Additional FSI and TDR
FSI determines the amount of floor area that can be developed on a particular plot, while TDR enables development rights to be transferred and used at another location subject to applicable planning regulations.
The tribunal’s observations have significance in the context of changes to development potential after homebuyers have entered into agreements. MREAT held that where substantial changes affect the development originally disclosed to allottees, promoters cannot rely solely on contractual provisions without obtaining the required consent.
The case also involved allegations that additional FSI attributable to the society’s share had been consumed without proper compliance. The society further alleged that the promoters had not completed the required conveyance or handed over relevant building and common-area documents.
Tribunal Says Conveyance Cannot Be Indefinitely Delayed
MREAT also addressed the issue of conveyance of the residential building to the society.
The tribunal held that conveyance cannot be indefinitely postponed on the ground that the entire project has not been completed. It observed that once a building has been completed, an occupation certificate obtained, possession handed over and the society registered, the promoter’s obligation under Section 11 to execute conveyance arises.
The tribunal further held that a contractual provision linking conveyance to completion of the entire project cannot override this obligation once the statutory requirements for conveyance have been met.
This aspect of the order addresses a common issue in projects comprising multiple buildings or phases, where individual buildings may become operational before the entire development is completed.
Restrictions on Subsequent Development
MREAT also considered the use of additional development potential after the obligation to convey the property had arisen.
The tribunal held that once the development potential disclosed to the allottees has been exhausted and the obligation to convey has arisen, subsequently available FSI or TDR cannot be used to construct additional structures or floors in a manner that affects the rights of the society and allottees.
The order therefore deals with several interconnected issues, including changes to sanctioned plans, additional FSI/TDR, commercial development, parking spaces, conveyance and the rights of homebuyers.
The directions in the RA Residences case require the promoters to comply with the financial and property-related obligations determined by MREAT, including the 2% penalty, distribution of specified commercial sale proceeds, handover of the remaining guest parking spaces and execution of conveyance for the residential building based on the 2017 plan.
