Co-founder equally responsible for refund: Bombay HC

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Co-founder equally responsible for refund: Bombay HC

| Updated: March 5, 2024 19:01

The Bombay HC has ruled that promoters include co-promoters, even if the latter has received no money from flat buyers. The Bombay HC has held that co-promoters are equally liable under the Real Estate (Regulatory and Development) Act (Rera) to refund the interest amount for any delay.

For context, the Wadhwa Group Housing had contested joint liability for participating as a co-developer in an Andheri SRA project. 

The court stated that agreements between promoters and flat buyers needn’t necessarily exist. It referred to the 2016 Act, which came into effect in 2017. It said that the word ‘promoter’ has “been so widely defined that it virtually includes every person associated with building construction.”

 “Even a person who is merely an investor (along with promoter) in the project” and benefits from it falls within the ambit of ‘promoter’, the court said while hearing an appeal by Wadhwa Group Housing Pvt Ltd against an Oct 2022 order of Rera appellate tribunal on refund liability.

Lawyers claim that HC’s judgment addresses a significant legal issue that could impact other redevelopment projects in the city.

Justice S V focused on whether a promoter who has not been paid by an allottee should be held accountable for providing a refund with interest under Section 18 of the Rera. 

In a joint development agreement in 2012, the two builders agreed to divide the constructed area to be sold between themselves.

A report in The Times of India mentioned that a flat buyer, Vijay Choksi, lodged a complaint to MahaRera, demanding refund of Rs 1.2 crore part payment he made to co-developer, SSS Escatics, which didn’t meet the project deadline of 2019.

The Wadhwa Group Housing, through counsel Naushad Engineer, claimed the amount was paid by Choksi to Escatics, who should be liable to refund it with interest.

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