Karnataka’s real estate regulator has held that homebuyers cannot claim interest on delayed refund amounts after signing a deed of cancellation.
The Karnataka Real Estate Regulatory Authority (KRERA) noted that as per the deed of cancellation, the amount refunded to the homebuyer was towards full and final settlement between the parties.
"In the powers conferred under Section 31 of the RERA Act, the complaint is hereby dismissed," the regulator said in an order dated July 24, 2023.
As per the deed of cancellation, the parties agreed that all rights, liabilities and interest with respect to the property would be considered to have been settled between the parties. Accordingly, KRERA said the developer refunded the principal amount as final settlement, which the homebuyer accepted.
"Thus his claim for delayed interest is hit by the doctrine of estoppel and cannot be considered," the regulator said. Estoppel is the principle that prevents one person from contradicting an action or statement from the past.
The case
In this case, homebuyer Ayush Sinha bought an apartment for Rs 1.55 crore in Godrej Reflection Phase 1 project in Sarjapura in Bengaluru in 2019. The apartment was supposed to be handed over in March 2023.
However, on a challenge by activists, the National Green Tribunal cancelled the environmental clearance for the project in July 2021 due to violation of buffer zone regulations and municipal laws. In August 2021, the homebuyer opted for a complete refund and executed the deed of cancellation the following month.
Work on the project was stalled and the case is currently sub judice in the Supreme Court, KRERA said. The homebuyer had been given options to stay invested in the project, transfer to another project in Bengaluru, or get a refund.
However, Sinha filed a complaint at KRERA, claiming that the developer did not respond to emails requesting payment of interest on the delayed refund.
A list of questions has been sent to Godrej Properties and Moneycontrol will update the story after receiving a response.
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