Realtors can’t use force majeure clause for lack of approvals, financial woes:...

    Realtors can’t use force majeure clause for lack of approvals, financial woes: MahaRERA

    Realty developers cannot use the force majeureclause for financial crisis and lack of approvals in any project, ruled the MaharashtraReal Estate RegulatoryAuthority in a recent order against Hindustan Construction Company’s subsidiary LavasaCorporation.
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    In a matter related to a homebuyer Mudhit Gupta’s complaint against Lavasa seeking refund and compensation for failing to deliver his apartment, the company had taken a stand that it failed to complete the project owing to status-quo order on the construction by the Ministry of Environment and Forest (MoEF), and is now facing difficulties to meet the liabilities to complete the project due to swelling financial obligations. “The aforesaid stand as has been taken by the respondents cannot come within the scope of the alleged clause of “force majeure”.

    “Force majeure” clause can be made applicable when the entire situation is beyond the control or vis majeure,” MahaRERA Pune’s adjudicating officer SB Bhale said as he rapped the company. The ruling also assumes significance as this is the only order passed by the authority against Lavasa before the NCLT admitted a plea filed by its creditors, who had initiated the corporate insolvency resolution process under the Insolvency and Bankruptcy Code 2016 (IBC). MahaRERA has now decided to take a call on Lavasa investors’ matters only after the case in front of the bankruptcy court is resolved.

    The NCLT admitted the corporate insolvency resolution process against Lavasa Corporation on August 30. Gupta, the complainant homebuyer, had booked an apartment in Lavasa project in April 2010 and the developer had promised the delivery on or before April 21, 2014. The company failed to deliver the apartment even after receiving nearly 60% of the consideration from the homebuyer. MahaRERA has directed Lavasa to return the principle amount with 10.65% interest within 30 days. “The MahaRERA order has also created a charge on the said apartment in favour of the complainant until the refund and compensation is paid, thus making Gupta a secured creditor,” said Jairam Chandnani, senior lawyer who represented the complainant.

    Info- https://realty.economictimes.

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