No Limitation To Claim Delay Interest Where Allottee Continues With Project: Allahabad High Court

The Allahabad High Court on 23 September held that an allottee who continues with a real estate project can claim interest for every month of delay in possession, as the Real Estate (Regulation and Development) Act, 2016 prescribes no limitation for raising such a claim.

A Bench of Justice Prashant Kumar dismissed Antriksh Developers and Promoters Pvt. Ltd.'s appeal against the U.P. Real Estate Appellate Tribunal's direction to pay delay interest, holding that the expression “demand” in the proviso to Section 18(1) cannot defeat an allottee's statutory right to compensation. It observed:

“A plain reading of Section 18(1) shows that no limitation or prescribed time frame has been provided by the legislature for raising a claim for delay interest where the allottee continues with the project. The expression “demand” occurring in the provision cannot be interpreted to defeat the substantive statutory right conferred upon an allottee to receive compensation for delayed possession.”

In 2010, the builder launched the 'Antriksh Golf View' project at Sector-78, Noida. The respondent booked a unit on 30 April 2010 and was allotted it through a letter dated 21 September 2010 at a basic price of Rs. 43,53,750. He subsequently paid Rs. 13,12,866 against a demand raised in April 2016.

The builder offered possession on 22 May 2017 without an occupancy certificate. The occupancy certificate was obtained only on 6 June 2018. Following the homebuyer's complaint, the Real Estate Regulatory Authority passed orders in September 2020. The builder thereafter raised a fresh demand of Rs. 24,13,940.

The U.P. Real Estate Appellate Tribunal held that the project was delayed, set aside the demand letter and directed payment of delay interest at MCLR+1% from December 2012 until 22 May 2017.

Before the High Court in an appeal under Section 58 of the Act, the builder contended that the Tribunal's order was coram non judice, that its liability to pay interest ceased once possession was taken, and that the delay was caused by orders passed by the National Green Tribunal restraining development around the Okhla Bird Sanctuary. It also claimed the benefit of the 'Zero Period' from 14 August 2013 to 19 August 2015 recognised by the Supreme Court in Griha Pravesh Build Teck Pvt. Ltd. v. Suresh Chander Sharma.

The Court rejected the objection to the Tribunal's coram, noting that the issue had not been raised before the Tribunal. It further noted that Section 55 of the Act saves the Tribunal's proceedings from invalidity on account of any defect in its constitution.

On the date fixed for possession, it noted that Annexure-B to the allotment letter, which would prevail in case of a contradiction, required possession by November 2012, before the NGT's stay came into effect in August 2013.

Further, the Bench found the builder's pleas to be mutually destructive. Its memorandum of appeal stated that construction had been completed in 2014, while the occupancy certificate had been applied for only on 27 August 2014. It observed:

“If the entire project was subject to a ban imposed by the NGT order, how could the project be completed during the said period. This clearly shows that they continued with the construction work contrary to the stay order passed by the NGT.”

Justice Kumar noted that the builder's default had accrued before the NGT stay, that the delay in applying for the occupancy certificate was attributable to the builder alone, and that unexplained delay remained even after excluding the 'Zero Period'.

Accordingly, the High Court dismissed the appeal.