“Force Majeure” is a general principle that comes into play when included as a clause that provides temporary reprieve to a party from performing its obligations under a contract due to any circumstances beyond the said party’s control.
Under the provisions of RERA, the Force Majeure clause covers natural calamities or acts of God but not a pandemic. Therefore, a final order was promulgated by MahaRERA secretary Vasant Prabhu on 18th May, 2020 invoking force majeure for Covid-19 in line with the advisory order issued by the Ministry of Housing and Urban Affairs (“MoHUA”) and MahaRERA as dated 02 April, 2020, regarding extension of registration of real estate projects and concurrently extending timelines of all Statutory Compliances, due to ‘Force Majeure’ during the Covid-19 pandemic. MahaRERA’s move is significant as MahaRERA has the highest number of real estate ventures registered with it in the country.
The circular states that in view of the pandemic and consequent nation-wide lockdown with effect from March 2020, reverse migration of labourers to their native places and break in supply chain of construction material, the construction activities of real estate projects across the country have been severely impacted.
The MahaRERA had earlier provided an extension for all projects and registrations for three months till June 31st, 2020. It stated that the Force Majeure period will be treated as a “moratorium period” for the purpose of calculating interest under Sections 12, 18 19(4) and 19(7) of the Act, also that any registration of agreement for sale which becomes due during the same six month period can be extended till the expiry of the force majeure period. Similarly, any amounts accruing under Section 40 of the Act can be recovered after the force majeure period is over.
The force majeure period invoked shall be of six months, starting from 15th March, 2020 to 14th September, 2020. For further extension beyond the said six months, for adversely affected projects, concerned promoters will have to apply in accordance with provisions of Section 6.
In the Neel Kamal Realtors Suburban Pvt. Ltd. and Anr. Vs Union of India and Others , the Hon’ble Bombay High Court division bench has observed that the object and purpose of the Real Estate (Regulation and Development) Act, 2016 is to complete the development work within the stipulated timeline. “Keeping in view the spirit of this order and to ensure that the available liquidity in the designated RERA Accounts get utilized, on priority, for completion of the project, any refund, which under rule 19 of MahaRERA Rules becomes due during the Force Majeure period is allowed to be executed in a period extending up to one month after the expiry of the Force Majeure period”.