Paid for the flat, been paying EMIs and rent for years, and finally got the keys, only after a long wait? A recent Allahabad High Court ruling could be significant for homebuyers who accept delayed possession but still seek compensation for the time they were kept waiting.
The Lucknow bench of the Allahabad High Court has ruled that accepting possession of a delayed flat does not, by itself, take away a homebuyer’s right to claim interest for the period of delay.
The court dismissed an appeal filed by Antriksh Developers and Promoters Pvt Ltd in a dispute involving its Antriksh Golf View project in Sector 78, Noida. It upheld the direction requiring the developer to pay interest to the homebuyer, Shyam Sunder Agrawal, for the delay in handing over his flat.
What did the case involve?
Agrawal booked a flat in the project in 2010, with possession contractually due by November 2012. However, the developer offered possession only in May 2017, nearly five years after the contractual deadline. The court also noted that the possession offer was made without an occupancy certificate and certain other documents required for a valid handover.
The RERA Appellate Tribunal had earlier directed the developer to pay interest on the amount deposited by Agrawal for the period from December 2012 to May 2017 at a rate one percentage point above the Marginal Cost of Funds-based Lending Rate (MCLR).
It should be noted that in Noida and Greater Noida, several buyers took possession after signing a fit-out possession agreement without an occupancy certificate. The fit-out possession letter typically says that the builder has applied for an occupation certificate and that the buyers can take possession for interior work or fit-outs, as they are called.
Developer cites NGT restrictions
The developer challenged the order, arguing that the delay was partly due to a National Green Tribunal (NGT) order restricting construction and the issuance of occupancy certificates within a 10-km radius of the Okhla Bird Sanctuary.
The High Court, however, rejected the argument as a justification for the entire period of delay.
The court noted that the contractual deadline for possession was November 2012, while the NGT restriction came into effect only in August 2013. It also noted the developer’s submission that construction was completed in 2014 and that an occupancy certificate application was made that year. The court observed that the developer could not simultaneously claim that the project had been completed in 2014 and that the NGT restraint had prevented its completion.
The bench further held that the benefit of the ‘zero period’ recognised by the Supreme Court could apply only to the period during which the project was actually affected by the restraint. It could not wipe out the delay that had already accrued before the NGT order came into force.
What legal experts say
Ketan Mukhija, Partner and Co-Head of PE/VC at Kochhar & Co, said accepting possession of a delayed flat does not, by itself, extinguish a buyer’s right to claim statutory interest for the period of delay.
The judgment, therefore, makes clear that acceptance of possession cannot, by itself, be treated as a waiver of the entitlement to interest that accrued during the period of delay, said Mukhija.
The observation is significant because RERA itself does not prescribe a specific limitation period for a claim seeking interest on delayed possession under Section 18(1). However, it should not be understood to mean that such claims are automatically maintainable regardless of how much time has elapsed or the circumstances in which they are brought. The judgment addresses the absence of a specific limitation provision under RERA; questions of maintainability must still be considered on the facts of each case, he explained.
He said the ruling also highlights the importance of chronology when a developer seeks to rely on a regulatory restriction to explain a delay. In this case, the contractual possession deadline preceded the NGT restriction by several months, meaning the developer’s default had already arisen before the restraint came into force.
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Venkat Rao of Intygrat Law Offices LLP said “delay in handing over possession and the right to seek compensation for such delay is now a statutory right under RERA and has otherwise been well established,” Rao said.
In certain circumstances, the right to seek compensation for delayed possession may also survive even after execution of the conveyance deed, he added.
