The Bombay High Court has delivered a pivotal ruling affirming that real estate developers remain liable for structural defects under the Real Estate (Regulation and Development) Act, 2016, even after the contractual warranty period has expired. This decision reinforces the statutory duty of builders to ensure structural integrity and provides critical clarity for homebuyers seeking redress beyond technical contractual limits.
Background & Facts
The Dispute
The appellants, Runwal Constructions Registered Partnership and Omkar Esquare, are real estate developers who constructed residential projects in Mumbai. Multiple purchasers, including respondents Bharat Shah, Neha Arvind Nadkarni, Nitin Korgaonkar, Pravir Karmokar, Garfield Deepak Dsouza, Sathish Kumar, Satish Maruti Shirsekar, Sudhir Ray, Prachi Chindarkar, Samira Sultana Halim Mohammed, and Parag Chandrakant Sawant, filed complaints before the Maharashtra Real Estate Regulatory Authority (MahaRERA) alleging serious structural defects in their apartments. These included water seepage, cracking of load-bearing walls, inadequate waterproofing, and compromised structural stability.
Procedural History
The complaints were initially heard by MahaRERA, which found the developers in violation of Section 14 and Section 18 of RERA. The Authority ordered remedial works, compensation, and directed the developers to bear all costs associated with repairs. The developers appealed to the Bombay High Court under Section 43 of RERA, challenging the findings on grounds of limitation, lack of evidence, and the argument that liability ceased after the two-year warranty period stipulated in the sale agreements.
- 2018: Individual complaints filed by homebuyers before MahaRERA
- 2020: MahaRERA passed orders holding developers liable for structural defects
- 2021: Developers filed appeals before the Bombay High Court
- 2022: Multiple second appeals consolidated under SA Nos. 251 - 261 of 2022
Relief Sought
The appellants sought to set aside the MahaRERA orders, arguing that statutory liability under RERA cannot extend beyond the warranty period. The respondents sought confirmation of the orders, demanding full repair of defects and compensation for mental agony and loss of enjoyment.
The Legal Issue
The central question was whether Section 14 and Section 18 of RERA impose an ongoing obligation on developers to rectify structural defects even after the contractual warranty period has expired, or whether liability is confined to the terms of the sale agreement.
Arguments Presented
For the Appellant
The appellants contended that RERA does not create an indefinite liability and that the two-year warranty period under the sale agreements is the exclusive limit for claims. They relied on M/s. DLF Limited v. Ramesh Kumar to argue that RERA is a regulatory statute, not a warranty guarantee, and that extending liability beyond the warranty period would impose unreasonable commercial burdens. They further argued that the MahaRERA orders lacked specific technical evidence linking defects to construction negligence.
For the Respondent
The respondents countered that Section 14 imposes a statutory duty on promoters to ensure structural soundness for five years from the date of handover, irrespective of any contractual warranty. They cited RERA v. M/s. Prestige Estates Projects Ltd. to emphasize that RERA’s provisions are consumer-centric and override contractual limitations. They submitted expert structural reports and photographs proving that the defects were inherent to construction methodology and not due to post-handover misuse.
The Court's Analysis
The Court undertook a purposive interpretation of RERA, emphasizing its legislative intent to protect homebuyers from exploitative practices. It held that Section 14 mandates that promoters shall ensure the structural integrity of the project for five years from the date of handing over possession. This obligation is statutory, not contractual, and cannot be contracted out of.
"The warranty period in a sale agreement is a minimum floor, not a ceiling. To hold otherwise would render Section 14 otiose and defeat the very purpose of RERA."
The Court distinguished M/s. DLF Limited v. Ramesh Kumar, noting that case dealt with minor cosmetic defects, whereas the present matter involved structural failures affecting safety. It affirmed that MahaRERA’s reliance on expert reports was valid and that the burden of proving absence of negligence lay with the promoter under Section 18(2).
The Court further held that Section 18 entitles buyers to compensation for loss or injury arising from defective construction, regardless of warranty expiry. The five-year period under Section 14 is a statutory guarantee, and developers cannot evade liability by relying on private contractual terms.
The Verdict
The respondents prevailed. The Court upheld the MahaRERA orders, holding that developers are statutorily liable for structural defects for five years from possession, irrespective of any shorter warranty period in sale agreements. The Court directed the appellants to complete all repairs within 90 days and pay compensation as awarded.
What This Means For Similar Cases
Statutory Liability Overrides Contractual Limitations
- Practitioners must now argue that Section 14 of RERA creates a statutory warranty period of five years, which supersedes any shorter contractual warranty
- Sale agreements limiting liability to two years are unenforceable to the extent they conflict with RERA
- Developers cannot rely on disclaimers or exclusion clauses to avoid structural defect liability
Expert Evidence Is Critical in RERA Proceedings
- Homebuyers must submit structural engineering reports to establish causation
- Developers must rebut such reports with independent technical evidence
- MahaRERA and courts will prioritize objective technical findings over oral assertions
Compensation Is Not Discretionary
- Under Section 18, compensation for loss of enjoyment, mental distress, and repair costs is mandatory where defects are proven
- Delay in repair entitles buyers to additional compensation for inconvenience
- Practitioners should routinely claim both repair costs and consequential damages in RERA petitions
