Punjab RERA Orders Builder To Pay Interest To Homebuyer For Delayed Possession In The LAKE Project

Punjab Real Estate Regulatory Authority (Authority) bench consisting of Malwinder Singh Jaggi (Member), has directed the builder to pay interest to the homebuyer for the delay in handing over possession of the flat in a construction linked plan real estate project. A construction-linked payment plan involves the bank, homebuyer, and builder. The bank disburses funds to the builder periodically on behalf of the homebuyer until the property is ready for possession. Background Facts The homebuyers [Complainants] paid Rs. 5.00 lakhs to book a flat in the builder's [Respondent] project named THE LAKE for a total price of Rs. 93,11,550. On 21.03.2015, the builder allotted the flat to the homebuyers through an allotment letter. The project followed a construction-linked plan, and the builder promised to hand over possession of the flat within 42 months, by 21.09.2018. However, despite the homebuyers paying Rs. 76,30,207.94 of the total prices and taking a bank loan from the State Bank of India, they have not received possession of the unit, and the project remains far from completion. Additionally, the project was advertised to be developed around a large water body/lake, but the builder has changed the plans, and no such water body exists. Aggrieved by the delay, the homebuyers filed a complaint with the Authority, seeking possession of the flat after obtaining the Occupancy and Completion Certificates, along with interest for the delay. Contentions of Builder The builder contended that, as agreed between the parties, the development and construction of the unit were to be completed within 42 months, with an additional grace period of 6 months, totaling 48 months from the date of the allotment letter. This timeline was subject to force majeure conditions, timely payments, and other reasons beyond the builder's control. The builder further contended that the development period was calculated to be approximately 61 months and 12 days. Therefore, the stipulated date of possession would be 03.05.2020, which coincided with the Covid-19 pandemic affecting the entire country. Observation and direction by Authority The Authority observed that the homebuyers have not yet received possession of the unit and have been waiting for a long time. The builder has not provided a clear commitment on when the possession will be delivered. Therefore, the Authority noted that it would be unfair to make the homebuyers wait for interest relief when the possession date is still unknown. The Authority referred to Section 18(1) of the Real Estate Regulation and Development Act 2016, which reads as follows: 18. Return of amount and compensation. (1) If the promoter fails to complete or is unable to give possession of an apartment, plot, or building, — (a) in accordance with the terms of the agreement for sale or, as the case may be, duly completed by the date specified therein; or (b) due to discontinuance of his business as a developer on account of suspension or revocation of the registration under this Act or for any other reason, he shall be liable on demand to the allottees, in case the allottee wishes to withdraw from the project, without prejudice to any other remedy available, to return the amount received by him in respect of that apartment, plot, building, as the case may be, with interest at such rate as may be prescribed in this behalf including compensation in the manner as provided under this Act: Provided that where an allottee does not intend to withdraw from the project, he shall be paid, by the promoter, interest for every month of delay, till the handing over of the possession, at such rate as may be prescribed. Therefore, the Authority held that the builder is liable to pay interest due to the delay in handing over possession. The Authority directed the builder to pay interest on the amount of Rs. 76,30,207.94 at a rate of 10.85% per annum until the builder makes a valid offer of possession after obtaining the occupancy certificate. Case – Ashok Kumar and another Versus M/s Omaxe Chandigarh Extension Developments Pvt. Ltd. Citation - RERA/GC No.0518 of 2022

Punjab RERA Orders Builder To Pay Interest To Homebuyer For Delayed Possession In The LAKE Project

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Punjab RERA Orders Builder To Pay Interest To Homebuyer For Delayed Possession In The LAKE Project

Aryan Raj

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