MUMBAI: On Monday, the Bombay High Court ruled that under the Real Estate (Regulation and Development) Act (Rera), buyers have an unequivocal right to receive interest monthly for possession delays.
Justice Madhav Jamdar stated that the law aims to protect buyers from delays and ensure timely construction. Developers cannot postpone possession indefinitely while evading the consequences mandated by Rera. Therefore, buyers who remain invested in a project despite delays are entitled to interest for each month of delay until they receive possession.
Ten buyers sought compensation due to a delay in a Mulund project booked between 2005 and 2007. An appellate tribunal in 2018 ordered the builder to pay interest from February 2014 until possession is granted.
The builder’s spokesperson noted that out of 250 buyers, 230 received their flats last year and are now settled in.
The High Court referenced Supreme Court rulings, explaining that buyers often borrow funds to purchase homes while also acting as investors, as builders typically collect money upfront. This arrangement places buyers in a precarious position. Consequently, Section 18 of the Act empowers the allottee to either proceed with the project or withdraw.
Runwal Constructions’ spokesperson stated, “We are committed to our buyers, and we strive to complete projects on time. We have also refunded those who opted out of the project at a 12% interest rate from the booking date.” The builder plans to appeal the High Court judgment due to substantial legal questions involved.
The builder had submitted a ‘second appeal’ to the High Court to address significant legal issues, including the validity of the Maharashtra revenue tribunal acting as an appellate body under Rera. The High Court affirmed its validity.
Another key issue involves whether the tribunal can determine when to start imposing interest on a builder for project delays, especially when these delays stem from factors outside the builder’s control.
The builder argued that the delays were indeed caused by factors beyond their control, citing that large areas of Mulund were designated as forest reserves in 2006 and were only released in 2016. They subsequently sought permissions in 2019, and work on the project commenced thereafter. The tribunal should consider genuine delays in interest claims, which Justice Jamdar acknowledged as important.
Anjani Kumar Singh, representing the ten buyers, asserted that the law is designed to safeguard homebuyers from delays, emphasizing that such delays cannot be indefinite, and builders carry civil liability to compensate for them.
The High Court concluded, “Rera was established to enhance accountability towards consumers, significantly reduce fraud and delays, lower transaction costs, balance the interests of consumers and promoters by imposing responsibilities, and ensure transparency in contractual conditions, set minimum standards, and provide a fast-track dispute resolution mechanism.”
