Karnataka RERA Directs Builder To Pay Interest To Home Buyer , Execute Sale Agreement, Form Homebuyers Association

Background Fact

The homebuyer (Complainant) booked a flat in the builder's (Respondent No 1) project and entered into an agreement for sale dated 20/05/19, paying a total of Rs. 16,00,000/- to builder No. 1 on various dates. According to the agreement, the builder assured the homebuyer of handing over possession of the flat by December 2019. However, the builder did not hand over the flat by the agreed date, nor did the builder execute a sale deed.

The homebuyer contended that despite receiving substantial payments from homebuyers, the builder failed to complete the project or provide promised amenities such as lifts, generators, and STPs, and did not obtain necessary completion certificates.

The homebuyer also contended that the builder have not updated quarterly reports on the RERA website and have not deposited 70% of the collected amount into a separate escrow account for this project, as required by the authority.

Therefore, the homebuyer filed a complaint before the authority seeking interest on delayed possession, completion of the project within three months, formation of a Homebuyers Association, handover of common areas, and imposition of penalties for RERA violations.

Observation and Direction by Authority

The authority observed that despite multiple notifications sent to the builder through their office addresses, email IDs, and a local newspaper publication, they did not appear before the Authority. They failed to participate in the proceedings by submitting a statement of objections or providing any documents. This behavior implies that the builder deprived homebuyer to obtain ownership of his flat.

The Authority relied on the Supreme Court decision in M/s Newtech Promoters and Builder Pvt. Ltd vs. State of Uttar Pradesh & Ors (LL 2021 SC 641), wherein it was held that if the Promoter fails to give possession of the apartment, plot, or building within the time stipulated under the terms of the agreement, then the Allottees' right under the Act 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. 6,51,614/- to the homebuyer as interest for the delayed period. Additionally, the Authority directed the builder to execute the sale deed in favor of the homebuyer and to form an association of homebuyers, as well as to hand over the common areas.

Case – Krishnaraj Salian Versus Aashirwad Infra Developers & another

Citation - Complaint No: CMP/221216/0010467