Sec 18 of RERA states in case the allottee wishes to withdraw from the project, without prejudice to any other remedy available, to return the amount received by him in respect of that apartment, plot, building, as the case may be, with interest at such rate as may be prescribed in this behalf including compensation in the manner as provided under this Act:
Provided that where an allottee does not intend to withdraw from the project, he shall be paid, by the promoter, interest for every month of delay, till the handing over of the possession, at such rate as may be prescribed.
The Bombay High Court has affirmed that under Section 18 of the RERA Act, a homebuyer retains the right to claim interest for delayed possession from a developer, even after taking possession of the flat / property.
This ruling came during the hearing of a case concerning a project in Pune’s Balewadi area. The Maharashtra Real Estate Appellate Tribunal (MREAT) had previously directed the developer to pay interest for the delayed possession, a decision challenged by the developer. Despite promises of possession on different dates, including August 2016 and September 2017, the possession was only granted to the two homebuyers in 2018.
As per the RERA Act of 2016, if a homebuyer experiences delayed possession or takes possession after a delay caused by the developer, they have the right to claim a refund or interest should they choose to exit the project.
Both homebuyers lodged complaints against the developer with MahaRERA on separate occasions: one in April 2019 and the other in January 2020. They sought interest for the delayed possession.
In the complaint filed by homebuyer Sagar Saboo in April 2019, requesting interest for the delayed possession, the developer argued before MahaRERA that the complaint was filed nine months after taking possession. Additionally, the developer stated that the Pune Municipal Corporation (PMC) had issued a stop work notice to assess the ongoing construction’s quality, contributing to the delay.
Furthermore, the developer mentioned the Bombay High Court’s restriction on using groundwater for construction activities and the suspension of mining licenses for sand excavators due to construction delays.
The developer contended that the homebuyer had completed all formalities and taken possession of the flat in September 2018, thereby waiving the right to claim interest or compensation.
However, MahaRERA ruled in favor of the homebuyer in June 2019, ordering the developer to provide interest for the delayed possession. The developer challenged this ruling at the Maharashtra Real Estate Appellate Tribunal (MREAT), which upheld the homebuyer’s rights in its June 2023 judgment.
In the midst of these proceedings, another homebuyer, Kavita Agrawal, approached MahaRERA in January 2020, also seeking interest for delayed possession. However, MahaRERA ruled in favor of the developer in its November 2020 order.
In its order, MahaRERA stated that Agrawal took possession of the flat in June 2018 and accepted compensation. However, she filed a complaint in January 2020, a year and a half later, seeking relief under Section 18 of the RERA. MahaRERA deemed the claim to be time-barred and unsustainable due to the delay in filing the complaint.
In a subsequent development, Agrawal challenged MahaRERA’s ruling in MREAT, which, in its June 2023 judgment, sided with the homebuyer, directing the developer to pay interest for the delayed possession.
Regarding the Bombay HC’s ruling, after the MREAT’s judgment, the developer filed a second appeal in the Bombay HC. However, in an order dated March 22, 2024, the Bombay HC dismissed the developer’s applications, stating that the issuance of the stop work notice was not the responsibility of the homebuyer but the developer’s. The court emphasized that it is the developer’s obligation to ensure the timely availability of construction materials for project completion.
The Bombay HC further highlighted that filing a complaint before MahaRERA and continuing litigation with the developer would only incur further losses for the homebuyer. Therefore, the court noted that it was in the homebuyer’s best interest to take possession of the flat before filing a complaint under Section 18 of the RERA Act.
The Bombay HC clarified that Section 18 of the RERA Act applies both when the homebuyer seeks withdrawal from the project and when there is a delay in project completion, with the homebuyer continuing participation.
Legal experts view this ruling as a significant relief for homebuyers facing similar situations. a Mumbai-based advocate stated that the Bombay HC’s decision affirms that there is no prohibition under Section 18 of RERA against homebuyers filing claims for interest after the issuance of the OC. Consequently, it’s now clarified that homebuyers can take possession after the OC and approach MahaRERA with a complaint regarding interest on delayed possession.
Posted and reproduced in Public Interest by
Adv. Sulaiman Bhimani Legal Consultant
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