Mumbai: The Bombay High Court has held that section 18 of the Real Estate (Regulation and Development) Act (RERA) gives flat buyers an absolute right to claim compensatory interest for delayed possession, regardless of whether they accepted revised possession timelines.
“[Under] Section 18 of RERA Act, the handing over possession as per the terms of the agreement or as per the date specified is sacrosanct, remaining unqualified by any contingencies outside the terms of the agreement, and is not affected by the acceptance of delayed performance,” justice Sharmila Deshmukh said, while dismissing an appeal by CCI Projects Pvt Ltd.
The developer had challenged a March 2021 order of the Maharashtra Real Estate Appellate Tribunal, which set aside a September 2018 MahaRERA order and directed the company to pay compensatory interest to seven buyers in its Wintergreen project for delayed possession.
The buyers had received allotment letters in October 2011 promising possession by June 30, 2015. Sale agreements executed in March 2013 revised the possession date to February 2016.
Although the buyers paid nearly the entire consideration, possession was delayed, prompting them to approach MahaRERA in May 2018 seeking interest at 10.35% on the amounts paid from March 1, 2016 until actual possession.
MahaRERA noted that the project’s registered completion date had been extended from December 2018 to December 2019 and disposed of the complaints, permitting the buyers to seek interest after completion.
The Appellate Tribunal, however, held that the buyers were entitled to compensatory interest for every month of delay, leading the developer to move the high court.
Senior advocate Naushad Engineer, appearing for the developer, argued that the allottees had accepted the revised possession schedules without objection and the corresponding changes in the payment schedule.
He contended that under Section 55 of the Indian Contract Act, 1872, such acceptance amounted to consent to delayed performance, extinguishing any claim for compensatory interest unless prior notice was issued.
Rejecting the contention, justice Deshmukh held that RERA, being a special legislation, overrides the general provisions of the Indian Contract Act.
The court said Section 18 gives allottees the choice either to withdraw from the project and claim a refund with interest or continue with the project while seeking compensatory interest for every month of delay.
Even if continuing with the project amounted to accepting delayed performance under the Contract Act, the court held that it “does not impact the unfettered statutory right conferred by Section 18 of the RERA Act to claim interest”.