The Bombay High Court has ruled that a homebuyer can claim for interest for delayed possession from a developer under Section 18 of RERA Act even after taking possession of the flat.
The HC was hearing a case filed by a developer of a project in Pune’s Balewadi area against verdicts by Maharashtra Real Estate Appellate Tribunal (MREAT) that directed payment of interest for delayed possession. The developer had promised possession on two different dates including August 2016 and September 2017. However, the possession was given to the two homebuyers only in 2018.
RERA Act on interest for delayed possession
According to the RERA Act 2016, a homebuyer is entitled to claim refund/interest if he or she wishes to exit the project where the possession is delayed or where the homebuyer takes possession after delay by the developer.
The two cases
Both the homebuyers had filed complaints against the developer with MahaRERA on two different dates – April 2019 and January 2020 – seeking interest for the delayed possession.
In the complaint filed by homebuyer Sagar Saboo in April 2019 demanding interest for delayed possession, the developer argued before the MahaRERA that the homebuyer filed complaint nine months after taking the possession, adding that the Pune Municipal Corporation (PMC) had issued stop work notice to verify the quality of ongoing construction, which led to the delay.
The developer also cited the Bombay High Court restricting the use of ground water for construction activities and mining licences for sand excavators being suspended for delay in construction.
The developer further argued that the homebuyer took the possession of his flat after completing all the formalities in September 2018, and therefore the homebuyer has waived his right to claim the interest or compensation.
However, the MahaRERA, by its June 2019 order, ruled in favour of the homebuyer by ordering the developer to give interest for delayed possession. The developer further challenged the order in Maharashtra Real Estate Appellate Tribunal (MREAT), which too ruled in favour of the homebuyer by its June 2023 judgement.
Amid this, another homebuyer Kavita Agrawal approached the MahaRERA in January 2020, seeking interest for delayed possession. The MahaRERA, in its November 2020 order, ruled in favour of the developer.
Also read: Can homebuyers claim compensation for delayed projects after taking possession?
The MahaRERA in its order said that Agrawal after taking possession of the flat in June 2018 and accepting the compensation, filed complaint in January 2020, after a period of one-and-a-half years seeking relief under Section 18 of the RERA. The MahaRERA said therefore the claim of the complainant is time barred and not even sustainable.
Also read: MahaRERA directs homebuyers of delayed Mumbai project to exit only after completion
However, Agrawal challenged the order in MREAT, which, in its June 2023 judgement, ruled in favour of the homebuyer and directed the developer to pay interest for the delayed possession.
Bombay HC's order
The developer after the judgement in the MREAT filed second appeal in the Bombay HC. However, the Bombay HC by its order dated March 22, 2024, set aside the applications filed by the developer stating that the homebuyer is not responsible for issuance of the stop work notice. It is for the developer to ensure that the required construction material is made available for completion of the project within the agreed time.
The Bombay HC stated that if the homebuyer was to file complaint before MahaRERA and keep on litigating with the developer, the same would have led to further losses for the homebuyer. It was therefore in the interest of allottee to first take possession of the flat before filing of the complaint under Section 18 of the RERA Act.
Section 18 of the RERA Act applies to both, when the homebuyer seeks withdrawal from the project as well as when there is delay in completion of the project in respect of which the homebuyer continues to participate, the Bombay HC said.
Expert opinion
According to legal experts, it is a relief for homebuyers in a similar situation.
"It is a relief for homebuyers as Bombay HC has held that the MREAT has rightly corrected the error committed by the MahaRERA by observing that there is no bar under Section 18 of RERA which prohibits an allottee from filing claim for interest after issuance of OC Hence, it is now clarified that homebuyers can take possession after OC and may approach MahaRERA with a complaint in case of interest on delayed possession," Trupti Daphtary, a Mumbai based advocate, said.
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