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SOCIETY CANNOT TERMINATE DEVELOPMENT AGREEMENT

WITHOUT PERMISSION FROM MAHA RERA 

Generally, the decision of termination of the Development Agreement is resolved by the Society in their SGBM for reasons not attributed to the fault of the Society and in event if the said Developers violated/breached any of the agreed terms of the Development Agreement or the Developers become financially weak or are involved in any criminal act involving moral turpitude or any act of insolvency or adjudged as insolvent or an order made against them or passed any such resolution of winding up either compulsorily or subject to the judgment of any Court or voluntarily or of the official assignee or liquidator in such acts of insolvency or winding up and unable to furnish the genuine reasons to the satisfaction of the Society.

Further, if the Developers have abandoned the redevelopment contract as evidenced by no progress of work or have failed to commence the works or have without any lawful excuse suspended the progress of the works after receiving the written notice from the Society to resume the work or have failed to obtain the IOD/CC within the specified time frame or resorted to suppression, wrong or misleading information or material breach of any of the terms and/or condition or breach of any of the contractual obligations under the Development Agreement either by the said Developers or by their architect or engineer, structural engineer, contractor or sub-contractor or any of their representatives causing irreparable losses or impairment on account of any reason caused to the Society or failure to complete the work within a specified period of completion of redevelopment and obtained full OC as specified herein in this Agreement unless expressly agreed in writing by the Society for extension of time frame.

However, this extreme step is taken by the Society prior to the Registration of the redevelopment project with MAHARERA by the Developers after the Commence Certificate is procured. Once the redevelopment project is registered by the Developers with MAHARERA, unless the prior approval taken from MAHARERA by the Society, the Society cannot terminate the Development Agreement. 

The Maharashtra Real Estate Regulatory Authority (MAHARERA) in a landmark order, protected the home buyers in a redevelopment project and directed the Developers and the Society to pay to MAHARERA, a penalty of Rs 15 lakhs for violating norms of RERA Act, 2016. 

MAHARERA while hearing the complaint of Kaushal Haria, Girish Chheda & Meghna Visaria and Velbai Haria who had booked their flats in New Sangeeta CHS Ltd, Vidyavihar (E) in May 2016. The said project was a redevelopment project which was assigned to the Developers M/s Valdariya Constructions. The Society had appointed the Developers in December 2011, executed and registered the Development Agreement with them. 

In the meantime, a dispute arose between the Developers and Society and the whole matter went to Arbitration. However, the Society terminated the Development Agreement executed with the Developers due to non-compliance of the development terms agreed and further refused to accept the rights of the purchasers to get their homes.

The Authorities of MAHARERA pronounced in the order that the termination of the Development Agreement executed between Developers and the Society is after the commencement of RERA Act and hence, the termination of the Development Agreement should have been done with prior permission of MAHARERA since the project was already registered with them and the Society is also a Promoter and therefore, transferring the development rights to some other Developers is not valid.

The Arbitrator allowed the Society for self-redevelopment. The complainants were seeking interest for delayed project and handover the possession with a parking lot and all amenities. Society submitted their response before the Court that the flats sold by the Developers was illegal and it was sold below the market price. Therefore, the complainants can seek a refund from the Developers and cannot seek an injunction against them.

Authorities of MAHARERA adjudged that under the Provisions of Section 2(zk) of the RERA Act, the Society is the Promoter of the project if the Developers fail to complete the project. Therefore, the Society is equally liable to the allottees i.e. the flat buyers who have booked their flats and are the allottees of the project registered with MAHARERA.

Further in the order, the Society was directed to give possession of flats to the to the said flat buyers by obtaining the Occupancy Certificate, as the Society had taken over the entire project for self-development as per the order of the Arbitrator.

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