Homebuyers can claim compensation if construction is halted for any reason: Karnataka RERA

The homebuyer, Supriya Shetty, had paid Rs 1.35 crore to book a flat in the project that had a handover date of June 2016.

The Karnataka Real Estate Regulatory Authority (KRERA) has held, in the matter of a Bengaluru-based project, that homebuyers have the right to demand compensation for delays regardless of the reasons for the stoppage of construction.

In this case, the local municipal authority had halted the construction of the Alexandria project in south-west Bengaluru's Uttarahalli area after a wall collapsed in the adjacent building in 2017 — thus delaying the project further.

Ruling in favour of the homebuyer, the KRERA order dated September 11 said, "The developer, Menorah Realities, is directed to pay Rs 83.04 lakh towards interest for the delay period at a rate of 9 percent per annum. Additionally, the developer is to execute the sale deed and hand over possession within 60 days."

The homebuyer, Supriya Shetty, had paid Rs 1.35 crore to book a flat in the project that had a handover date of June 2016.

"The project is still under consideration. The homebuyer has approached KRERA for completion of the project, delayed compensation, and monetary losses," the order added.

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Sub Editor|Moneycontrol

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The case

The developer, however, has denied all allegations and contended that the project was never stalled. "The wall of the adjacent building had collapsed due to heavy rain. As a result, the local municipal corporation suspended the licence for construction pending investigation of the adjoining project," it said.

It added that the developer had sent multiple reminders to the corporation to revoke the stay on construction.

On the other hand, Shetty argued that in 2015 she had requested a minor modification that does not require structural changes, in the kitchen. "That is still pending, and the project came to a complete halt without any communication from the developer. When work was resumed, the modification was not done and still the developer demanded Rs 70,000 for it," she said.

RERA findings

KRERA noted that, considering everything, the fact of the matter was that the project was not handed over to the homebuyer within the stipulated timeline.

"Per the MOU signed between the parties after the halting of the construction, the revised date of handover was December 2019. The project got a clearance certificate from the Karnataka Fire Department in 2019, and applied for an occupancy certificate in 2021, which is still pending," the order said.

The Authority agreed that the homebuyer had paid a substantial amount for booking the apartment, and that there was a delay of more than two years.

Quoting a Supreme Court judgment in Newtech Promoters and Developers Pvt Ltd vs Uttar Pradesh government in 2021, KRERA said that if the developer fails to give possession of the apartment within the stipulated timeline, regardless of the circumstances, it is the unqualified right of the allottee to seek refund with interest under Section 18 and 19 of RERA Act.

"Having failed to hand over the apartment, the developer is directed to pay delayed compensation with interest and hand over possession," the order added.