Flat buyers entitled to interest under Rera for each month’s delay: Bombay high court

Mumbai: Bombay HC on Monday held that under Real Estate (Regulation and Development) Act (Rera), buyers have an unqualified right to get interest every month for delayed possession.Justice Madhav Jamdar held that the law was brought in to alleviate buyers’ woes and regulate construction to prevent delays, and developers cannot delay possession for years while expecting to escape the resultant statutory consequences under Rera. The court said buyers who stay with a project despite delays are unconditionally entitled to interest for every month of delay until possession.Ten buyers had sought interest citing delay in a Mulund project they had booked in 2005-07. In 2018, an appellate tribunal under the Act directed the builder to pay interest from Feb 2014 till possession is given.The builder’s spokesperson said on Tuesday that of 250 buyers, 230 got possession of their flats last year and “have settled in”.Citing Supreme Court rulings, HC said a buyer borrows money to pay for a house and simultaneously plays the role of a financer as building projects collect money upfront and this puts the buyer in a very vulnerable position. Hence, under Section 18 of the Act (which allows demand for compensation or cancellation of booking), it is “the absolute right of the allottee either to continue in the project or to withdraw from the project,” it said.The spokesperson for the builder, Runwal Constructions, said, “The company is committed to its buyers, always strives to complete projects on time and has already refunded those who withdrew from the project, at 12% interest from the date of booking’’. The builder will be filing an appeal against the HC judgment as it involves substantial questions of law.The builder had filed a ‘second appeal’ in HC to raise substantial points of law. One was whether the Maharashtra revenue tribunal doubling as an appellate body under Rera was valid at the time of the order. HC held that it was.The other issue was whether a tribunal can set a date from when to impose interest on a builder when project is delayed and whether MahaRera can, while deciding a plea for interest, fix a possession date when delay is due to reasons beyond the builder’s control.The delay was caused by reasons beyond the control of the builder, the defence argued. The lawyers cited that large tracts of Mulund had come under forest reservation in 2006 and were released only after a decade in 2016. Subsequently, the builders sought permissions in 2019, following which work on the project began, they said. The tribunal must factor genuine cases of delay when dealing with pleas for interest, they added . Justice Jamdar agreed that mitigating circumstances must be considered as held by a division bench earlier.Anjani Kumar Singh, counsel for the 10 buyers, said the law was enacted to protect homebuyers from delays, delays cannot be indefinite and builders have a civil liability to pay interest for delays.HC said, “Rera was enacted with an object to ensure greater accountability towards consumers, to significantly reduce frauds and delays and the high transaction costs, and to balance the interests of consumers and promoters by imposing certain responsibilities on both, and to bring transparency of the contractual conditions, set minimum standards of accountability and a fast-track dispute resolution mechanism.”