Bhubaneswar: The Odisha Real Estate Appellate Tribunal (OREAT) has set aside an Odisha Real Estate Regulatory Authority (ORERA) order and declared illegal a builder’s decision to cancel the allotment of an apartment in a premier housing project at Kalarahanga after receiving the buyer’s payment.The tribunal in its recent order directed the builder to raise a revised demand for delayed interest instead of cancelling the allotment. The dispute relates to a flat in the project that the buyer booked in Dec 2017 for Rs 91.36 lakh and paid Rs 10 lakh as the booking amount. An agreement for sale was eventually executed in March 2022.According to the buyer, delays in securing a housing loan arose partly because of restrictions on fresh property registrations following proceedings before the Orissa high court in a public interest litigation. The loan was sanctioned in Jan 2023, and the balance amount of Rs 81.36 lakh was remitted to the developer in the same month.However, the developer had already issued a cancellation notice in the meantime and subsequently raised a demand exceeding Rs 1.23 crore, including delayed interest calculated at 10.35% from Dec 2017 and a penalty for alleged delayed possession. The allotment was later cancelled, and the amount remitted by the buyers was returned.The tribunal found fault with both components of the developer’s claim. It held that charging delayed interest from the date of allotment in 2017 was unjustified because the developer itself had granted time for payment up to Dec 31, 2022. Consequently, interest could not be imposed for the period during which extensions had been granted.OREAT also rejected the developer’s reliance on a clause providing for a penalty of Rs 5 per square foot per month for delayed possession. The tribunal observed that the clause would apply only where an allottee had completed payment but failed to take possession. Since that situation had not arisen here, the penalty demand was not sustainable.Setting aside ORERA’s July 2023 order, the appellate tribunal ruled that the cancellation in Feb 2023 was illegal and directed the developer to issue a fresh demand calculating delayed interest at 10.35% only for the period from April 1, 2022, to Jan 18, 2023. The buyer was granted one month to make the payment.The case is significant because it touches upon a recurring issue in the Odisha real estate sector — delays in execution of sale agreements, possession, conveyance deeds and disputes over interest calculations. Legal experts say the OREAT ruling reinforces the principle that builders cannot benefit from extensions granted to allottees.
