Pay delayed possession charges within 45 days to 4 homebuyers: RERA orders builder

A bench directed the builder to pay interest at 10.8% per annum, holding that the delay amounted to a “gross breach of contractual and statutory obligations”.

The Delhi Real Estate Regulatory Authority (RERA) has directed a real estate developer to pay delayed possession charges ranging from approximately ₹55 lakh to over ₹83 lakh within 45 days to four homebuyers who have been waiting for their commercial shops for nearly 16 years.

Each buyer paid over ₹40 lakh based on representations that the project was a commercial development. (REPRESENTATIVE IMAGE/HT)

In two separate orders delivered on December 5, a bench comprising Anand Kumar (chairperson), Devesh Singh and Ajay Kumar Kuhar (members) directed the builder to pay interest at 10.8% per annum, holding that the delay amounted to a “gross breach of contractual and statutory obligations”, causing “severe financial and mental hardship” to the buyers.

The case pertains to the Central Square Complex at Bara Hindu Rao in northwest Delhi, where the complainants –Kamlesh Kumari, Chander Mani Dhir, Shaily Jhamb, and Lalit Jhamb – booked commercial shops in August 2007. Each buyer paid over ₹40 lakh based on representations that the project was a commercial development. As per the agreement, possession was due by October 2009. However, the developer failed to deliver because the land, originally earmarked for “flatted factories” (industrial use), was never converted to commercial use, despite the property being marketed and sold as a commercial business park.

The bench held that a delay extending nearly two decades from the booking date constitutes a fundamental violation of trust and legal duty. For Kumari and Dhir, the accrued delayed possession charges amount to over ₹82.98 lakh as of the order date. For the Jhamb family, the figure stands at over ₹55.3 lakh. The interests, however, will continue till they get possession of the shops, the court held.

“The respondent has failed to deliver possession of a commercial unit with a clear commercial title for over sixteen years from the contractual due date. This delay, extending nearly two decades from the original booking date, represents a gross breach of contractual and statutory obligations and has caused immense financial and mental hardship to the complainants,” the order stated.

The builder, represented by lawyers including Venkat Rao, contested the maintainability of the complaints. They argued that the project, constructed on industrial land, was intended for industrial purposes as per the agreement, and thus fell outside the purview of the Real Estate (Regulation and Development) Act, 2016. They also contended that possession was offered in August 2013 along with an invoice for balance payment, and that the buyers neither took possession nor cleared the outstanding dues.

RERA rejected these arguments. The authority found that the act of marketing, advertising, and selling the units as commercial property amounted to a “material misrepresentation.” The bench held that buyers cannot be compelled to accept possession of a property that suffers from fundamental title defects or cannot be used for its intended purpose.

“The law does not require a buyer to accept possession of property that suffers from fundamental title defects, or that cannot be used for its intended and represented purpose,” the order stated, justifying the complainants’ refusal to accept the flawed offer in 2013.

The authority also deemed the builder’s demands for maintenance charges before handing over possession as “unsustainable.” It emphasised that the developer cannot evade liability for delayed possession by making a defective offer that fails to meet the basic purpose of the purchase.

In a significant additional action, the authority initiated suo motu (on its own motion) proceedings against Pureearth Infrastructure Ltd for failing to register the ongoing project under RERA, despite actively developing, marketing, and advertising it as a commercial park to the public. A show-cause notice has been issued, asking the builder why penal action should not be taken for this statutory violation.