Homebuyers Can Claim Delay Interest Even After Taking Possession, Says Allahabad HC

Homebuyers in India tend to overlook a series of their rights when it comes to buying a house. Many times, homebuyers skip or overlook seeking interest from developers for a delayed possession once they receive their unit. The Lucknow Bench of the Allahabad High Court has ruled that taking possession does not take away the buyer’s right to claim interest for the period during which the developer failed to deliver. The court also observed that the Real Estate (Regulation and Development) Act, 2016 (RERA) does not prescribe a specific limitation period for filing a claim for interest arising from delayed possession. The ruling was delivered by Justice Prashant Kumar on September 23, according to a report by ET Realty.

What Was The Case?

The case involved a buyer who booked a flat in a Noida project back in 2010. Under the agreement, the developer was expected to hand over possession by November 2012, at the latest. However, the possession was handed over in March 2017, which was almost four and a half years later than the agreed deadline. The possession was also offered without an occupancy certificate and other required documents.

The RERA appellate tribunal had earlier directed the developer to pay interest on the amount deposited by the buyer for the period between December 2012 and May 2017. The interest was ordered at a rate of one percentage point.

The developer challenged the tribunal’s decision before the High Court, arguing that the delay was caused by restrictions imposed by the National Green Tribunal (NGT) concerning construction and occupancy certificates within a 10-km radius of the Okhla Bird Sanctuary.

The High Court rejected the developer’s argument, noting that the developer’s own case states that the project had been completed back in 2014 and that the application for an OC had also been made that same year. According to the court, the developer could not simultaneously claim that the project was completed while arguing that its completion had been prevented by the NGT restrictions.

The court further highlighted that the NGT restriction came into force in August, 2013, while the contractual deadline for handing over possession was November 2012. Therefore, the developer’s default had already been triggered before the restriction was placed.

What’s The Judgement?

The judgment reinforced the importance of the protections made available to homebuyers under RERA regulations. For buyers who receive possession after a delay, accepting the keys does not automatically mean that they have given up their claim for interest for the developer’s delay.