KRERA orders developer to refund pre-EMI with interest for delayed project in Bengaluru

KRERA noted that the delivery and completion date of the project was in 2019, much before the onset of the pandemic in 2020.

The Karnataka Real Estate Regulatory Authority (KRERA) has ordered developer Shriram Properties to pay delayed interest on the pre-EMI component paid by the homebuyer after failing to handover the apartment as per the construction agreement, for the project Shriram Summitt in Bengaluru.

The project was supposed to be handed over in 2019. The homebuyer, Sabyasachi Maiti and his wife Debjani Ghosh Maiti, booked the project in 2018 for about Rs 72.4 lakh.

KRERA dismissed the appeal filed by the developer stating Covid-19 as a reason for the delay and asked the developer to pay delayed interest at the SBI Marginal Cost of Funds based Lending Rate (MCLR), with an additional 2 percent per annum from 2018 to the tune of Rs 34.6 lakh, till the date of possession in 2022, within 60 days of the order.

"The promoter shall also pay interest on the amount paid by the homebuyer for the subsequent period of delay in payment of the delay interest at the same rate," the order dated August 17 added.

Banks use MCLR to calculate the interest rate on various loans, including home loans.

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Sub Editor|Moneycontrol

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KRERA rejects delay for Covid-19 claims

Appealing before the Authority, the developer sought an exemption in the calculation of the delay interest due to the COVID-19 pandemic.

"Major scarcity of raw materials, unavailability of skilled labours and transport contributed to the delay. Additionally, the National Green Tribunal case against the project has also caused a delay in the project," the developer said.

However, KRERA noted that the delivery and completion date of the project was in 2019, much before the onset of the pandemic in 2020.

"The exemption due to the Covid pandemic is not tenable and also not agreed upon by the Authority. Additionally, the developer has not kept the KRERA intimated about the NGT case at the time of complaint registration. The onus is on the promoter to keep the homebuyers informed before the sale of the apartment and not keep them in the dark," the order added.

Homebuyers not willing for external settlement

KRERA noted that the developer had already approached the allottees to come to a settlement by paying 40 percent of the delayed interest component.

"The promoter was given more than four months to come to a settlement in Lok Adalat, however, the homebuyers have not agreed to the offer made by the developer. The Authority decided to send a notice after the stipulated time," the order said.

Thus the Authority ordered the developer to pay the delayed interest on the pre-EMI component within 60 days of the order according to Section 18 of the RERA Act.

Responding to queries from Moneycontrol, a Shriram Properties spokesperson said, "Some large projects like Shriram Summitt may face a few delayed handovers due to factors beyond our control, including limitations as a consequence of the pandemic like Covid and other external factors. All deliveries for this phase of the Summitt project have been completed successfully. We will now assess the next steps and options available to us, ensuring full adherence to the necessary regulations."