Q. Our society with 20 flats signed a registered Development Agreement (DA) with a developer in April 2021 for redevelopment. After obtaining the IOD, the building was demolished, and the project was registered with MahaRERA, showing a completion date of December 31, 2025. However, construction has only reached the plinth level, despite the plan for a 14-floor tower. The DA promised possession by December 2024, but work stopped in January 2024, and the developer has also stopped paying rent due to financial issues. Given this delay, we doubt his repeated assurances of completion. In this situation, we seek clarity on, (a) Can the society terminate the DA? (b) Is MahaRERA’s permission required for termination? (c) Can we cancel the MahaRERA registration now or must we wait until December 2025? (d) If we terminate the DA and cancel registration, how do we recover 14 months’ rent arrears? —Nishikant Kulkarni, Andheri (East).
A. Yes, the society can terminate the DA. If the DA provides for termination in certain circumstances stipulated therein, you can terminate it in accordance with such provision in the DA. In case the DA does not provide for the termination clause and if there are serious and persistent breaches of the terms of the DA, then the society can certainly terminate the DA. However, in such case, precaution has to be taken that a proper resolution to that effect is passed by the majority of the society members in a Special General Body.
Furthermore, before actual termination, the Society must serve a Legal Notice pointing out the breaches committed by the developer and call upon him to rectify the breaches in a reasonable time. The said notice should also warn him that in case the developer fails to rectify the breaches, the DA would be terminated by the society without any further notice. In spite of such legal notice, if the developer fails or neglects to rectify such breaches or fails to promise that he is willing to rectify breaches within a reasonable period, the society will be entitled and justified in terminating the DA, even if the DA does not have a clause for termination.
While terminating the DA, the society should also inform the developer that it reserves the right to claim arrears of rent and other dues, and damages, if any. For such termination of DA, the society need not obtain permission from MahaRERA. However, a copy of such legal notice pointing out breaches and consequent notice of actually terminating the DA must be served on not only the MahaRERA but also on the concerned town planning authority.
The most advisable way in your situation would be to serve legal notice for termination of the development agreement and if there is no positive response from the developer, then the society should complain to MahaRERA under section 7 of RERA for revocation of MahaRERA registration of your project. MahaRERA authority is empowered under section 7 to revoke the registration granted by it in the following circumstances: (a) the Developer makes default in doing anything required by or under the RERA Act, Rules or Regulations, or (b) the Developer violates any terms /conditions of approval given by the competent authority, or (c) Developer involved in any kind of unfair trade practices or irregularities or (d) Developer indulges in any fraudulent practices.
However, it is interesting to note that as per Sec 7 (3), instead of revoking the Registration of the project, MahaRERA Authority can impose such further stringent terms & conditions as it thinks fit, in the interest of the allottees. Oftentimes, this provision has saved real estate projects. In such cases, the Developer is required to satisfy MahaRERA authority with adequate evidence that he is capable of completing the said project with some revised timelines.
The Society can also insist that the Developer clears the outstanding rent within a fixed time frame. It is seen that the hanging sword of Revocation of Registration under Sec. 7 and stringent terms to be imposed by MahaRERA under Sec 7 (3) work wonders. It has the potential of a win-win situation for society, developers, and homebuyers.
(Advocate Shirish V Deshpande is Chairman, Mumbai Grahak Panchayat Queries can be sent to him on
