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The Bombay High Court recently ruled that homebuyers can claim interest for delayed possession from developers under Section 18 of the Real Estate (Regulation and Development) Act, 2016 (RERA), even after taking possession of their homes.
The HC was hearing an appeal filed by a Pune developer challenging orders from the Maharashtra Real Estate Appellate Tribunal (MREAT) directing payment of interest for delayed possession to two homebuyers. The developer had promised possession in a project at Pune's Balewadi region by August 2016 and September 2017, but the homebuyers only received possession in 2018.
According to the RERA Act 2016, a homebuyer is entitled to claim refund/interest if he or she wishes to exit the project where the possession is delayed or where the homebuyer takes possession after delay by the developer.
Both homebuyers had filed complaints with MahaRERA - one in April 2019 and another in January 2020 - seeking interest for delayed possession.
In the April 2019 case, the developer argued that the homebuyer filed the case nine months after possession. The developer cited reasons for delay like stop work notices and suspension of the mining licenses by the Pune Municipal Corporation (PMC). However, MahaRERA and MREAT both ruled in the homebuyer's favor, directing interest payment for the delay in possession.
In the second case, MahaRERA initially ruled in favour of the developer, saying the homebuyer filed the case 1.5 years after possession, which is too late. But MREAT overturned this MahaRERA decision, directing interest payment.
The developer after the judgement in the MREAT filed a second appeal in the Bombay HC. However, the Bombay HC by its order dated March 22, 2024, set aside the applications filed by the developer stating that the homebuyer is not responsible for issuance of the stop work notice. It is for the developer to ensure that the required construction material is made available for completion of the project within the agreed time.
The Bombay HC stated that if the homebuyer was to file a complaint before MahaRERA and keep on litigating with the developer, the same would have led to further losses for the homebuyer. It was therefore in the interest of the allottee to first take possession of the flat before filing of the complaint under Section 18 of the RERA Act.
It also said that Section 18 applies both when homebuyers withdraw and continue with delayed projects. This clarifies homebuyers can take possession and later claim interest for delayed possession. Thus, the Bombay High Court's ruling provides clarity for homebuyers on their rights to claim interest under RERA.
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