Mumbai: Now, flat buyers can claim interest for delay even after possession

Experts hail the Bombay High Court ruling as a major victory for flat purchasers with similar grievances. File Pic/Nimesh Dave

The Bombay High Court has reiterated the legal position that a flat buyer who has taken possession may raise a claim in the form of interest for delay in handing over the flat. The court ruled that there is no bar under section 18 of RERA for the flat buyer to make such a claim.

Welcoming the recent court order (uploaded on March 30), MahaRERA experts and advocates stated that this would encourage litigants to teach errant promoters a lesson. MahaRERA experts say such a provision was always in the RERA Act, but was often overlooked during the initial days of MahaRERA. They said the HC verdict was passed against a Pune-based promoter, who had approached HC challenging the order of MREAT (Maharashtra Real Estate Appellate Tribunal) which had upheld the order by MahaRERA authority.

The case

After flat buyer Sagar H Saboo received an Occupancy Certificate (OC) from the promoter on August 30, 2018, he approached MahaRERA claiming interest for the delay in handing over the flat. MahaRERA on June 17, 2019, ordered the promoter to pay Saboo simple interest at the rate of 10.75 per cent on the payments made for the delay. The promoter Park Xpress JV then approached the Maharashtra Real Estate Appellate Tribunal challenging the MahaRERA decision. MahaRERA in its order dated June 27, 2023, upheld the order of the authority.

Promoter's contention

Lawyer for the promoter submitted that the cause of delay in completion of the project was beyond his control. The promoter cited delay on account of mishap at the construction site which led to the Pune Municipal Corporation (PMC) issuing a stop work notice for nine months. Besides, there was also restriction imposed by the court on the use of ground water and on mining of sand.

According to the promoter's counsel, the principles enunciated in the judgment essentially apply to the case where the buyer opts for withdrawal from the project and the interest can be awarded only on the amount of refund. The counsel thus concluded that the buyer took possession of the flat and thereafter filed the complaint in April 2019 as an afterthought and so sought the MahaRERA order on payment of interest to be set aside.

Court observation

Justice Sandeep Marne in the six-page order observed that the promoter was responsible for the issuance of stop work notice by PMC. The court observed that the restraining orders by the court on use of ground water and mining of sand for construction were of general nature, whereas it was the promoter's responsibility to ensure availability of sufficient construction material for timely completion of the project.

The court observed that the promoter cannot be permitted to cite reasons such as non-availability of ground water or sand to avoidance liability to pay interest. On the submission that the allottee accepting possession of the flat and filing a complaint before the regulatory authority is concerned, Justice Marne said, "I do not see why the buyer should be prevented from doing so. If he was to file complaint before possession and keep litigating with the promoter, the same would have put the buyer to further losses as the interest liability of the promoter would have been frozen on the date of procurement of Occupancy Certificate, and the money paid by the buyer to promoter would have remained blocked. It was in the interest of the buyer to first take possession of the flat."

Flat allotee can still seek interest

"The flat purchaser is entitled to seek interest on delayed possession of the flat from the date of possession mentioned in the agreement till the date of receiving possession of flat after receipt of occupation certificate. Often promoters arm-twist flat purchasers to give up in writing that they have no claim whatsoever after receiving possession of flat even after the possession is delayed," said Advocate Godfrey Pimenta, a MahaRERA practitioner.

MahaRERA Bar Association reacts

"We have over 10 such cases in renowned projects across the city where the flat purchasers filed complaints against the builder for delayed possession after receiving the occupancy certificate. Builders tend to approach the high court on these complaints. Hence, this order by the high court will help in similar cases and the flat buyers will finally get justice," said advocate Anil D'souza, Secretary, Bar Association of MahaRERA Advocates.

Sec 18
Of MahaRERA which empowers flat buyers to raise claim on account of delay