Karnataka RERA Holds Shriram Properties For Delayed Possession Of 2 Years, Orders Interest To Homebuyer

Background Facts

The homebuyer (Complainant) purchased a flat in the builder's (Respondent) project named Shriram Summit, located in Attibele, Bangalore Urban. Both the builder and the homebuyer entered into a sale agreement on 27.04.2018, under which the builder was supposed to hand over possession of the flat by December 2019. To purchase the flat, the homebuyer paid Rs. 59,25,579 to the builder.

The homebuyer contended that the builder executed the sale deed in their favor on 11.07.2022, after a delay of more than two years. The homebuyer mentioned that they had taken a loan from HDFC for the flat, and due to the delay, they are paying heavy interest to the bank and facing financial hardship. Therefore, being aggrieved, the homebuyer filed a complaint before the authority seeking interest on the delayed possession.

Contentions of Builder

The builder contended that the project was slightly delayed due to the discovery of rocks beneath the area where Block-3 units were being built. The builder submitted that the excavation of these rocks took longer than expected and argued that this delay should be considered a force majeure event.

The builder also contended that under Section 18(1) and Section 19(4) of the RERA, 2016, Homebuyer's right to claim compensation applies only if they choose not to withdraw from the project and is valid until possession is handed over and the sale deed is executed.

Observation and Direction by Authority

The Authority observed that, despite entering into an agreement for sale with the homebuyer to hand over possession of the flat by 31.12.2019, the builder failed to honor the terms of the agreement and only handed over possession and executed the sale deed after a delay of 2 years. Therefore, the homebuyer is entitled to receive interest under Section 18(1) of RERA, 2016.

The Authority rejected the builder's contention and held that, since the builder failed to meet the terms of the agreement and did not deliver possession within the agreed timeframe, the Authority did not accept the builder's objections.

Authority referred to the Supreme Court decision in M/s Newtech Promoters and Developers Pvt. Ltd vs. State of Uttar Pradesh & Ors [LL 2021 SC 641], where it was held that if the builder fails to give possession of the apartment, plot, or building within the time stipulated under the terms of the agreement, then the homebuyer's right under the RERA, 2016 to seek a refund or claim interest for delay is unconditional and absolute, regardless of unforeseen events or stay orders of the Court/Tribunal.

Therefore, the Authority directed the builder to pay Rs. 10,71,794 to the homebuyer as interest for the delay in handing over possession, within 60 days.

Case – Samsheer Nalakath Valappil & anr Versus M/S Shriram Properties Pvt Ltd

Citation – Complaint no: 01744/2023