The National Consumer Disputes Redressal Commission (NCDRC) has held that even after giving possession of apartments, developers are liable to pay compensation to homebuyers in a delayed project till the occupancy certificate (OC) has been obtained.
Bengaluru-based real estate group Vahe Projects Private Ltd has been directed to pay 6 percent interest until actual possession to the buyers of Vahe Imperial Gardens, which has been delayed for about seven years.
In an order dated March 3, the court clarified its December 28, 2022 judgement, stating that actual possession will be considered on the date the occupancy certificate (OC) is issued, even after the homebuyers move into the apartments.
"The homebuyers are entitled to claim compensation delay until the date of the actual possession or the date of OC," the order said.
The case
The project Vahe Imperial ·Garden in eastern Bengaluru's Gunjur was scheduled to be handed over by 2015.
The construction agreement was executed in 2013 and currently, the project has 139 apartments across two towers; the cost of each apartment today starts from Rs 60-70 lakh.
After the handover date lapsed, the developer failed to give possession despite having taken 95 percent and in some cases up to 100 percent of the amount.
The NCDRC order noted that the progress reports sent by the developer to the homebuyers did not mention any such delays.
However, the homebuyers started moving in without occupancy certificates from 2016-2017 onwards.
Upendra Mishra, one of the first few homebuyers to move in, said, "I had paid more than 90 percent of the amount and every month was clearing the bank EMI. Staying on rent at that time, we had no choice but to move in," he added.
Mishra said when the homebuyers moved in, services like Bengaluru Electricity Supply Company Ltd, common amenities and sewage treatment plant were non-functional.
"Even today, we do not have the clubhouse or other amenities. Only one of the two elevators is working and all no-objection certificates (NOCs) are pending," he added.
In 2018, the homebuyers filed a case at NCDRC claiming delayed compensation and a complete handover of the apartments.
On December 28, the court passed an order for the homebuyers asking the developer to pay delayed compensation to the homebuyers till the date of possession.
"However, it was unclear about the date of possession given that the homebuyers have already moved in. Thus on March 3 the court again clarified that the date of possession will be counted till the OC has been issued," Chandrachur Bhattacharyya, the advocate representing the homebuyers said.
A list of questions has been sent to the developer, and Moneycontrol will update the story on receiving a response.
NCDRC findings
The court found that in a 2018 communication to the homebuyers, the developer admitted that the pending work in the project was still going on.
This communication clearly shows that the possession of the flats was offered to the buyers in an incomplete and unfinished state, the order said.
The court also noted a Bruhat Bengaluru Mahanagara Palike (BBMP) notice to the developer stating that the basic facilities in the high-rise building like electricity, sewerage treatment plant, drinking water, lift facilities and other civil works have not been completed.
Developer’s case
In the initial proceedings, the developer had contended that after taking possession the allottee can no longer remain a consumer, especially after two years of the sale deed execution.
However, the court said that the developer delayed in handing over the possession of the flat with valid OC. Hence, the homebuyers have their right to claim delayed compensation for their apartments, the December order added.
The court noted the Supreme Court judgement of Supertech Ltd vs Rajni Goyal of 2018 and said that the offer of possession is only valid only when the complete OC has been obtained.
"In this case, the homebuyers are entitled to claim compensation delay until the date of the actual possession or the date of OC," the March 3 order mentioned.
Thus the NCDRC held that the developer has to pay delayed compensation to the homebuyers at 6 percent annual interest till the actual possession takes place.
Bhattacharyya added that this judgement will ensure that developers cannot hold homebuyers responsible for incomplete possession of the apartments. "Only after OC has been issued, the project will be deemed complete and the builder's interest liability will stop, especially in delayed projects," he added.
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