6 days ago
IIFL scores big win over Palais Royale delay. Stranded homebuyers may take cues.
Mumbai: In a significant win for IIFL Finance Ltd, the Maharashtra Real Estate Regulatory Authority (MahaRERA) has directed the developer of Mumbai's iconic Palais Royale project to pay the company interest for delayed possession of seven apartments.
As per the order dated 4 August, directed to the project's current developer Honest Shelters Pvt. Ltd, the interest payable to IIFL is about ₹33.61 crore for one apartment alone.
The total amount payable to IIFL under the order exceeds ₹100 crore, said a company executive. Mint could not independently confirm this. Honest Shelters and its advocates did not respond to Mint's queries.
The Palais Royale project, which has been delayed for over 15 years, has changed many developers. IIFL, one of the lenders to the project, was given possession of eight flats in lieu of the unpaid dues by the developer. This was before Honest Shelters took charge of the project.
Execution applications were filed for only seven apartments, and for the eighth flat an appeal is pending before the Maharashtra Real Estate Appellate Tribunal, the IIFL Finance executive said.
Honest Shelters had failed to comply with MahaRERA's 16 January order directing it to hand over possession of the eight apartments to IIFL Finance with occupancy certificates and pay interest for the delay.
The developer had argued that the MahaRERA adjudicating officer didn't have the power to enforce an earlier order, but the authority rejected this claim, saying the forum holds the power to execute such orders.
'This decisive action by MahaRERA sends a strong message to errant developers and reinforces that commitments to buyers and financiers must be honoured," said Binay Kumar Mishra, chief legal officer, IIFL Finance. 'IIFL will continue to take all legal steps necessary to protect its interests and ensure timely possession of the flats."
MahaRERA's judgement could also set a precedent for interest payouts to well-heeled homebuyers at Palais Royale, strengthening their rights and holding large developers accountable for delays.
Homebuyers in Palais Royale include the promoters of Metro Brands, Amit Rathi of the Anand Rathi wealth management group, and actor Sachiin Joshi.
Multiple delays
The Palais Royale project was taken over by Pune-based Honest Shelters in 2019 after the original builder, Shree Ram Urban Infrastructure Ltd, went bankrupt.
Located in Mumbai's Worli area, Palais Royale, which received regulatory nod for construction in 2005, is India's tallest and most luxurious residential tower. But the project has faced one delay after another, and many buyers are still waiting for their homes.
The latest missed deadline was in December, after two previous extensions during the covid years. Even under the original promoter, the project was delayed several years due to litigation with a non-profit organisation.
On 4 August, MahaRERA's adjudicating officer Ashok Alaspurkar passed an order asking Honest Shelters to pay interest from 1 January 2014 to 16 January 2025. The authority had directed that the amount be paid in one payment within 60 days.
It had also stated that if possession of the apartments was further delayed, the complainant could approach the court for an additional interest that would have to be paid from 17 January 2025 until the flat was handed over with the occupancy certificate.
As per court documents, the interest has been calculated based on a property value of ₹29.48 crore. However, the property's value has appreciated multifold and is currently listed at ₹77 crore on a real estate listing website.
The project has so far received occupancy clearance for 53 floors, as per reports.
