Accepting delayed flat possession doesn’t bar homebuyer from claiming interest: HC

The court also observed that the Real Estate (Regulation and Development) Act (RERA) does not prescribe any specific limitation period for claiming interest on account of delayed possession

LUCKNOW The Lucknow bench of the Allahabad high court has held that a homebuyer does not lose the statutory right to claim interest for delay in getting possession merely because he subsequently accepted the flat.

The court further noted that the NGT restriction came into effect in August 2013, whereas the contractual deadline for handing over possession was November 2012. The developer’s default had thus already occurred before the restriction came into force, according to the order. (Pic for representation)

The court also observed that the Real Estate (Regulation and Development) Act (RERA) does not prescribe any specific limitation period for claiming interest on account of delayed possession.

Justice Prashant Kumar made the observations while dismissing an appeal filed by a real estate firm in a dispute concerning its project in Noida.

The buyer had booked a flat in the project in 2010, with possession due by November 2012. However, the developer offered possession only in May 2017 and, according to the court, did so without the occupancy certificate and other necessary documents.

The RERA Appellate Tribunal had directed the developer to pay interest on the amount deposited by the homebuyer for the period from December 2012 to May 2017 at a rate of one per cent above the Marginal Cost of Fund Based Lending Rate.

The developer challenged the order, contending that the delay was caused by a National Green Tribunal (NGT) order restraining construction and the grant of occupancy certificates within a 10-km radius of the Okhla Bird Sanctuary.

The high court rejected the contention, noting 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 further noted that the NGT restriction came into effect in August 2013, whereas the contractual deadline for handing over possession was November 2012. The developer’s default had thus already occurred before the restriction came into force, according to the order.

The bench observed that the benefit of the “zero period” 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.

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