Do homebuyers lose claim to interest on delayed flat once you accept possession? Here’s what Allahabad HC ruling states…

The Allahabad High Court in a ruling has held that homebuyers do not lose the statutory right to claim interest for delay in getting possession of a house, merely because they subsequently accepted the flat, PTI reported.

In its order dated Wednesday, 23 September, the Lucknow bench of the Allahabad HC noted that the Real Estate (Regulation and Development) Act i.e. RERA does not specifically state or prescribe any limitation period for claiming interest on account of delayed possession, the report added.

Allahabad HC dismisses builder’s appeal: Here’s why

According to the report, the bench of Justice Prashant Kumar dismissed the appeal filed by Antriksh Developers and Promoters regarding a dispute in its Antriksh Golf View project in Sector 78 of Noida, Uttar Pradesh.

Justice Kumar observed that homebuyer Shyam Sunder Agrawal booked a flat in the project in question in 2010, with possession originally dated for November 2012. However, possession was offered by the builder only in May 2017, without the occupancy certificate and other necessary documents, it added.

While hearing the case, the RERA Appellate Tribunal ordered the developer to pay interest on the amount deposited by Agrawal for the period from December 2012 to May 2017 at a rate of 1% above the Marginal Cost of Fund Based Lending Rate (MCLR), the report added.

This RERA tribunal order was challenged in the HC by the developer, who claimed that the delay was caused by a National Green Tribunal (NGT) order which restricted construction and the grant of occupancy certificates within a 10-km radius of the Okhla Bird Sanctuary.

The high court however rejected this claim, and noted that the developer’s own case was that the project had been completed in 2014 and an application for the occupancy certificate had also been made that year. “It could not, therefore, simultaneously claim that the project was complete and that its completion had been prevented by the NGT restraint,” the Court observed.

The judgement further noted that while the NGT restriction came into effect in August 2013, the original contractual deadline for handing over possession of flat was November 2012. The developer’s default had thus already occurred before the restriction came into force, according to the order.

Should homebuyers cheer? Here’s what this HC order means for you

According to the HC bench’s judgement, the benefit of the “zero period”, as recognised by the Supreme Court, could extend only to the period during which the project was actually affected by the restraint and could not wipe out the delay that had occurred before the NGT order.

The court accordingly upheld the direction to pay interest for the delayed period and dismissed the developer’s appeal.

Earlier, in August, the Allahabad HC also imposed a ₹2.5 lakh cost on a builder after a Noida homebuyer was forced into a 13-years long litigation battle for delayed possession of a flat. It also upheld 24% annual interest payable to the homebuyer for the delay, LiveLaw reported.

Homebuyers have the right to seek a refund of the amount paid, along with applicable interest penalty in case of delay. Further, a buyer who chooses to wait for the possession instead of seeking a refund can claim interest for the period of delay. This is generally calculated at the rate prescribed by RERA, which could be around 2% above MCLR, as per RERA rules.

Notably, for homebuyers, these judgements provide precedence for similar cases where delay in possession occurred, and you are due interest and penalty payments as per the applicable norms.

In Uttar Pradesh, in particular, the state government’s zero-period policy was reintroduced in 2019 to give an impetus for projects stalled due to litigation over land acquisition issues, NGT orders, or if the RERA delayed possession of deed execution, as per an HT report. It waived off penal interest and other dues on builders for such delays, provided they gave written assurance the projects would be complete by June 2021. The zero-period policy was earlier applied in 2011-12 (during farmer protests) and 2013 (NGT orders), it added.

What should homebuyers do in case of delayed possession?

If you are facing a problem with delayed possession of flat / home, following these steps to protect your legal rights:

• Review and check the original sale agreement to confirm the agreed-upon possession date and terms of delivery.
• Contact the developer seeking formal explanation for the delay as builders are often required to send formal notices to homebuyers, stating details and cause of the delay.
• You can approach the RERA authority with a complaint if the delay extends beyond the stipulated period and the builder fails to provide a resolution. The complaint must include the facts of the case and any communication between the buyer and the builder.
• If you are not satisfied by the RERA resolution or the builder has not complied with the RERA order, you can next approach a consumer court or take legal action as per the provisions under RERA and the Consumer Protection Act.

(With inputs from PTI)