Karnataka RERA Directs Builder To Pay Interest To Homebuyer, Execute Sale Agreement, Complete Project

Background Facts

On 14.02.2020, the homebuyer (Complainant) entered into a sale agreement to purchase a flat in the builder's (Respondent no 1) project named Dvaraka Enclave, and paid a total of ₹21,60,000. The builder assured the homebuyer that possession of the flat would be handed over by December 2020.

However, the homebuyer contended that the builder has failed to deliver the flat within the promised timeline, leaving the building incomplete with no signs of progress. This has caused significant inconvenience and financial hardship for him. Despite multiple requests, the builder has shown little interest in completing the project, even though a substantial portion of the sale amount has been received.

The homebuyer also contended that several promised amenities, such as the lift, generator, transformer, drainage system, sewage treatment plant (STP), building lighting, fire license, solar water heating system, and reticulated gas system, have not been provided. Additionally, the builder failed to obtain the completion certificate for the project from the competent authority.

Furthermore, the homebuyer contended that the builder has failed to update quarterly and annual reports as required by RERA, 2016, and did not deposit 70% of the collected funds into a separate escrow account as mandated by the act.

Aggrieved by these issues, the homebuyer filed a complaint before the authority, seeking interest for the delay, possession of the flat, completion of all pending works, and a penalty on the builder for violating the provisions of RERA, 2016.

Observation and Direction of Authority

The authority noted that the builder agreed in the sale agreement to pay monthly interest in the event of a delay if the homebuyer did not withdraw from the project. However, the builder has not paid any interest to the homebuyer during the delay period.

Therefore, the authority concluded that the builder, after accepting a substantial portion of the payment from the homebuyer, failed to fulfil the promise of timely delivering possession of the flat. As a result, the authority held that the homebuyer is entitled to receive interest from the builder for the delay in handing over possession of the flat.

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.

The authority directed the builder to pay ₹6,65,286 to the homebuyer as interest for the delayed possession. Additionally, the builder was ordered to complete the project with all promised amenities, obtain the occupancy certificate from the local authority, and execute the sale deed in favor of the homebuyer. The authority also directed the secretary to investigate whether the builder violated any provisions of RERA, 2016.

Case – Suprith & anr Versus Aashirwad Infra Developers

Citation – Complaint No: CMP/221216/0010470