Karnataka RERA Orders Shriram Properties to Pay Interest for 2-Year Possession Delay

Karnataka RERA Finds Shriram Properties Responsible for 2-Year Possession Delay, Orders Interest Payment to Homebuyer.

August 20, 2024

The Karnataka Real Estate Regulatory Authority (RERA), led by Neelmani N. Raju (Member), has mandated M/S Shriram Properties Pvt Ltd to compensate a homebuyer with interest due to a two-year delay in delivering possession of a flat. According to the sale agreement, possession was to be handed over by December 2019.

Background

The homebuyer (Complainant) purchased a flat in Shriram Summit, a project by Shriram Properties, located in Attibele, Bangalore Urban. The sale agreement, dated April 27, 2018, specified that possession should be delivered by December 2019. The homebuyer paid ₹59,25,579 for the flat.

However, the builder only executed the sale deed and delivered possession on July 11, 2022, more than two years late. The homebuyer, who had financed the purchase with an HDFC loan, faced significant financial strain due to ongoing interest payments during the delay. Consequently, the homebuyer filed a complaint with RERA seeking interest for the delayed possession.

Builder’s Arguments

The builder claimed that the project was delayed due to unforeseen rock formations beneath Block-3, which required extended excavation time. They argued that this delay should be classified as a force majeure event.

Additionally, the builder contended that under Sections 18(1) and 19(4) of RERA, 2016, the right to claim compensation applies only if the homebuyer does not withdraw from the project and is valid only until possession is handed over and the sale deed executed.

RERA’s Observations and Directions

RERA observed that despite the agreement specifying a possession date of December 31, 2019, the builder failed to meet this deadline and only delivered possession after a two-year delay. Therefore, the homebuyer is entitled to interest under Section 18(1) of RERA, 2016.

RERA rejected the builder’s arguments, affirming that the builder’s failure to deliver possession on time invalidated their claims of force majeure. The Authority referenced the Supreme Court ruling in M/s Newtech Promoters and Developers Pvt. Ltd. vs. State of Uttar Pradesh & Ors [LL 2021 SC 641], which established that a homebuyer’s right to claim interest or a refund for delays is absolute and unconditional, regardless of unforeseen events or legal proceedings.

Consequently, RERA directed the builder to pay ₹10,71,794 to the homebuyer as interest for the delay, to be settled within 60 days.

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Adv. Sulaiman Bhimani Legal Consultant

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