RERA Overrides Contract Act, Homebuyers Can Claim Interest for Delay Despite Continued Payments: Maharashtra REAT

The Maharashtra Real Estate Appellate Tribunal (REAT) has recently held that homebuyers can claim interest for delayed possession under the Real Estate (Regulation and Development) Act, 2016 even if they continued making payments after the promised possession date.

A bench of Judicial Member Shriram R. Jagtap and Administrative Member Rajgopal Devara rejected the developer's reliance on Section 55 of the Indian Contract Act, 1872 to argue waiver of claims.

The tribunal said, “The substantive provisions of Section 18 (1) (a) of RERA Act, 2016 would prevail to provide interest and/or compensation on account of delay, rendering Section 55 of the Indian Contract Act ineffective. Right conferred under Section 18 of RERA Act, 2016 to allottees is indefeasible. Section 18 of RERA Act itself is a notice to the promoter about the claim of allottees and therefore, merely because allottees have made payments to promoter towards consideration value even after unilateral change of dates of possession by the promoter that does not mean that allottees have waived their right to claim interest. Therefore, we are of the considered view that there is no waiver and allottees are well within their right to claim interest for delay in possession in terms of Section 18 (1) (a) of RERA Act, 2016.”

Dismissing a batch of appeals filed by CCI Projects Private Limited, the tribunal upheld orders directing the developer to pay interest for delay in handing over flats in its “Wintergreen” project in Borivali East.

The dispute arose from the “Wintergreen” project in Borivali East. Homebuyers had entered into agreements between 2010 and 2015, which specified possession timelines largely between 2016 and 2018. The tribunal noted that the developer did not hand over possession within these agreed timelines.

Despite this, the homebyers continued to make payments as per the agreements. They later approached the Maharashtra Real Estate Regulatory Authority, seeking interest for the delay. The authority allowed their claims, which have now been upheld by the appellate tribunal.

Challenging these orders, the developer argued that by continuing payments without protest after revised possession timelines, the homebuyers had accepted the delay. It said they had lost their right to claim compensation under Section 55 of the Indian Contract Act, 1872, which provides that a party may lose the right to claim damages if it accepts delayed performance without reserving its rights.

Rejecting this contention, the tribunal held that such conduct does not amount to waiver of rights under RERA. It found no material to show that the allottees had expressly agreed to revised possession dates. It also found no evidence that they had consciously given up their claim to interest.

The tribunal further held that RERA overrides the Contract Act in case of inconsistency. It said Section 55 cannot be used to defeat the statutory right of homebuyers to claim interest for delay.

Holding that the developer had failed to deliver possession within the timelines agreed in the contracts for sale and could not rely on waiver, the tribunal dismissed the appeals. It upheld the grant of interest to the homebuyers.

For Appellant (CCI Projects Private Limited): Advocates Naushad Engineer, Abir Patel.

For Respondents (Ramesh Shivsaran Singh & Ors.): Advocates Mangesh Nalawade, Avinash Pawar, Aman Shukla, Nishant Chothani, Yash Chheda, Mahalaxmi Ganpati, Aditya Pratap, Ritik Srivastav.