Karnataka RERA Directs Builder To Refund Homebuyer's Amount With Interest After Builder Failed To Complete Project On Time

Background Fact

The homebuyer (complainant) booked a flat in the builder's project named Mantri Manyat Energia. Both the homebuyer and the builder entered into the agreement for sale and construction dated 03.06.2016 for a total sale consideration of Rs. 92,96,596.

To purchase the flat, the homebuyer entered into a tripartite agreement with the builder and India Bulls Housing Finance Limited (Respondent No 3). Out of the total consideration, the homebuyer paid a total of Rs. 82,84,533 to the builder, out of which Rs. 46,48,298 was disbursed by Respondent number 3 to the builder.

As per the agreement for sale, the builder promised to deliver possession of the flat to the homebuyer by 31.12.2018, with a grace period of 12 months. Despite paying a significant consideration, the builder failed to deliver possession of the flat on the stipulated time. Aggrieved by the delay, the homebuyer filed a complaint before Karnataka RERA seeking refund of amount with interest.

KRERA Order

The Authority holds builder liable for delay in delivering the possession of the flat and therefore directed the builder to pay a refund with interest to the homebuyer under Section 18(1) of RERA, 2016.

The Authority referred relevant part of Section 18 of The Real Estate (Regulation and Development) Act, 2016, which is read as follows:

(1) If the promoter fails to complete or is unable to give possession of an apartment, plot or building, — (a) in accordance with the terms of the agreement for sale or, as the case may be, duly completed by the date specified therein; or (b) due to discontinuance of his business as a developer on account of suspension or revocation of the registration under this Act or for any other reason,

he shall be liable on demand to the allottees, in case the allottee wishes to withdraw from the project, without prejudice to any other remedy available, to return the amount received by him in respect of that apartment, plot, building, as the case may be, with interest at such rate as may be prescribed in this behalf including compensation in the manner as provided under this Act:

Provided that where an allottee does not intend to withdraw from the project, he shall be paid, by the promoter, interest for every month of delay, till the handing over of the possession, at such rate as may be prescribed.

The Authority relied on the judgment of the Supreme Court in the case of M/s Newtech Promoters and Developers Pvt. Ltd vs. State of Uttar Pradesh & Ors., wherein it was held that if a builder fails to deliver possession of the apartment, plot, or building within the time stipulated under the terms of the agreement, then the homebuyer's right under the Act to seek refund and claim interest for delay is unconditional and absolute, regardless of unforeseen events or stay orders of the Court/Tribunal.

Therefore, Karnataka RERA directed the builder to pay the refund of Rs. 1,47,84,583 with 9% interest within 60 days.

Case – Sharath Kumar Mahajan Versus Mantri Technology Constellations Private Limited & others

Citation – Complaint No. CMP/220823/0009931