Punjab RERA Orders Omaxe Chandigarh Extension Developers To Pay Interest To Homebuyer For Five-Year Delay In Possession

The Punjab Real Estate Regulatory Authority has recently directed Omaxe Chandigarh Extension Developers to pay statutory interest to a homebuyer for a delay of more than five years in handing over possession of a flat in its project 'The Lake'.

A coram of Member Arunvir Vashista held that the delay violated Section 18(1) of the RERA Act and that the homebuyer was entitled to interest from the promised date of possession until a valid offer is made after obtaining an occupation certificate.

The case concerned a homebuyer who was allotted a flat in January 2015 for a total price of Rs 66.12 lakh. The buyer had already paid Rs 48.92 lakh, which was more than 80 percent of the total sale consideration. Under Clause 40(a) of the Allotment Letter, the builder was required to hand over physical possession within 42 months of signing, which was by July 2018. Despite this obligation, the builder had not handed over the flat even after a delay of more than five years, prompting the buyer to approach the Authority seeking interest for the entire period of delay.

The builder argued that the complaint was not maintainable because the Allotment Letter contained an arbitration clause and therefore the Authority lacked jurisdiction. It also contended that the Allotment Letter did not provide for payment of interest in case of delay and that the homebuyer could not claim relief beyond the terms of the contract.

The authority rejected these arguments. It referred to the Supreme Court judgment in Emaar MGF v. Aftab Singh and noted that the arbitration clause does not take away the jurisdiction of the Authority. It also observed that the RERA Act itself provides a statutory right to interest for delayed possession and that such a right cannot be excluded by contractual terms.

The authority recorded that Clause 40(g) of the Allotment Letter permitted compensation in the event of delay and noted that the Supreme Court had previously held one sided terms in builder buyer agreements to be unlawful in Pioneer Urban Land and Infrastructure Ltd v. Govindan Raghavan.

The authority, subsequently concluded that the builder had clearly failed to meet its obligation to hand over the flat by the agreed date. It held that the prolonged delay violated Section 18(1) and directed the builder to pay interest at the prescribed rate of MCLR plus two percent on the amount paid by the homebuyer from the promised date of possession until a valid offer of possession is issued after receiving the occupation certificate.

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