Bombay High Court Says Homebuyers Retain Right To Delay Interest Despite Staying With Project

The Bombay High Court has held that homebuyers who continue with a housing project despite delayed possession do not lose their statutory right to claim interest for the delay.

Justice Sharmila U. Deshmukh dismissed an appeal filed by CCI Projects Private Limited and upheld a Maharashtra Real Estate Appellate Tribunal order directing the developer to pay interest to purchasers of an apartment in the Wintergreen building of its Rivali Park project in Mumbai.

“The unqualified absolute right of the allottee stands statutorily recognised and the continuation with the project, which if expressed in the language of Section 55 of Contract Act, constitutes acceptance of delayed performance, does not impact the unfettered statutory right conferred by Section 18 of RERA Act to claim interest,” the court observed.

Rajesh Kumar Chaudhary and Sapna Chaudhary booked an apartment in the Wintergreen building. Their agreement provided that possession would be handed over on or before February 2016.

When possession was not delivered, the couple approached MahaRERA in 2018 after paying about ₹1.91 crore towards the apartment and related charges.

MahaRERA directed CCI Projects to hand over the apartment before December 31, 2019 and left the purchasers free to seek interest later. The Maharashtra Real Estate Appellate Tribunal subsequently directed the developer to pay interest from March 1, 2016 until possession.

Before the court, CCI Projects argued that the homebuyers had accepted revised possession timelines. The purchasers maintained that those revised timelines had been communicated unilaterally and could not defeat their claim for interest on the delay.

The court noted that the appellate tribunal had found no authentic evidence showing that the purchasers had accepted revised possession dates or waived their right to claim interest.

The court further held that an allottee's statutory right to interest for delayed possession cannot be curtailed by the notice requirement under the Contract Act.

“RERA Act being a special enactment will prevail over Contract Act, a general law. Section 89 of RERA Act gives it an overriding effect over anything inconsistent with the other laws and the retroactive application of RERA Act would impose an obligation on the promoter to pay interest for the delayed possession computed from the date of handing over possession as specified in the agreement even in the absence of any notice to the promoter by the allottee of its intention to do so,” the court held.

Finding no error in the tribunal's reasoning, the court upheld the direction requiring CCI Projects to pay interest from March 1, 2016 until possession was handed over and dismissed the appeal.

For Petitioner (CCI Projects Private Limited): Senior Advocate Naushad Engineer, instructed by Wadia Ghandy & Co.

For Respondents (Rajesh Kumar Chaudhary & Ors.): Advocate Harshad Bhadbhade.