PUDA to pay interest to Mohali plot allottees for delay in possession

The authority held that the project’s pre-RERA contractual terms governed the dispute over instalment interest

The Punjab Real Estate Regulatory Authority (RERA) has directed the Punjab Urban Planning and Development Authority (PUDA) to pay interest at 11% per annum to two allottees of Gateway City in Sector 118-119, Mohali, for the delay in handing over physical possession of their plot.

The order does not direct a refund of the ₹2 lakh already paid as non-construction charges. (HT File)

RERA partly allowed a complaint filed by Neelam Garg and her son Sahil Garg, directing PUDA to calculate interest on the principal amount from the agreed possession date of March 8, 2018, until the actual delivery of possession on July 6, 2021. For payments made before March 8, 2018, interest will run from that date, while payments made afterwards will attract interest from their respective dates of deposit.

The authority has directed PUDA to release the interest within 90 days of receiving the order and submit a compliance report. Failure to comply may invite a penalty under Section 63 of the Real Estate (Regulation and Development) Act, 2016.

Advocate M Shahnawaz Khan represented the complainants.

The dispute concerns Plot No. 26, measuring 305 square yards, which PUDA allotted to Sahil Garg on September 8, 2016, for a tentative price of ₹64 lakh under its Gateway City scheme. PUDA later transferred the plot in the name of Neelam Garg on February 20, 2019. The complainants said the authority failed to provide basic amenities, including roads, sewerage, water and electricity connections, within the stipulated period.

They also challenged ₹13 lakh charged as interest on delayed instalments and ₹2 lakh collected as non-construction charges. They sought refunds with 12% annual interest, besides interest for the delay in possession.

PUDA opposed the complaint, arguing that the project had received a partial completion certificate on April 28, 2017, for 91 acres out of its total 121 acres, before the RERA Act came into force. It said the allottee had accepted the allotment terms, opted to pay the balance amount in installments carrying 12% interest and failed to take possession within 18 months. PUDA also maintained that the transferee took physical possession on July 6, 2021.

RERA held that the project’s pre-RERA contractual terms governed the dispute over instalment interest. It rejected the demand for a refund of ₹13 lakh, noting that the payment schedule was not linked to stages of development and the complainants had opted for instalments with interest instead of lump-sum payment.

However, the authority allowed their claim for interest on delayed possession under Section 18 of the Act. It also held that non-construction charges could apply only after three years from the date of possession, fixing July 21, 2024, as the relevant date.

The order does not direct a refund of the ₹2 lakh already paid as non-construction charges.