Since the implementation of the Real Estate (Regulation and Development) Act, 2016, there has been many questions or issues raised by the builders about the force majeure clause and its implications during the legal proceedings, wherein it was taken as a defense to justify the delay before the RERA Authorities; this is a common ground taken by the builders to the naive aggrieved homebuyers.
Lately, MAHARERA has cleared stated that this clause cannot be the defense for the builders if they did not deliver the physical possession on time. Before taking this further first we should know what is force majeure and what does it actually mean?
As per the RERA act, force majeure means “a case of war, flood, drought, fire, cyclone, earthquake or any other calamity caused by nature affecting regular development of the real estate project”.
In the Real Estate Industry every Builder-Buyer agreement executed between the buyer and builder has a “Force Majeure” clause which in general terms means unforeseeable circumstances that prevent someone from fulfilling a contract, which is one sided, however the builder never considers that a buyer might have unforeseeable circumstance hence charges huge interest on delayed payments.
Nevertheless, this clause has been grossly abused by the builders in taking defense for delayed construction. Now the Maha RERA authority has ordered builder cannot take the defense of force majeure clause for financial crisis and lack of approvals in any project.
In a matter related to a homebuyer complaint against Builder 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. Court ordered “The aforesaid stand as has been taken by the respondents cannot come within the scope of the alleged clause of “force majeure”.
Further MahaRERA Pune’s adjudicating officer SB Bhale stated that Force majeure” clause can be made applicable when the entire situation is beyond the control or vis majeure,” as he rapped the company.
Now In the light of the above order passed by the Maha RERA Authority it can clearly be concluded that even if there is a force majeure clause in the Builder-Buyer agreement it will stand null and void since the reasons stated are futile.
Disclaimer – Please note that the above articles is based on the interpretation of related laws and judicial pronouncement which may differ from person to person. The reader are expected to take the expert opinion on the matter.