Housing regulator orders builder to compensate homebuyer for 3-year delay in project near Mumbai

The Maharashtra Real Estate Regulatory Authority (MahaRERA) ordered a builder recently to pay interest to the buyer for failing to hand over a flat to the buyer within the specified period of time.

The housing regulator overruled various reasons presented by the builder, Sathya Lifestyles Private Limited, for delays in the housing project in Palghar, near Mumbai.

The complaint, registered with MahaRERA by homebuyer Devendra Pratap Singh, stated that the builder had not provided any reasonable grounds for delaying its project Sathya Lifestyle Phase 2 for three years.

In his complaint, Singh said his sale agreement states the possession date to be December 31, 2014, with a grace period of six months. However, despite paying 90% of the money, and being willing to pay the remaining 10%, he has not got his apartment to date. Singh demanded that he be given the apartment and be compensated for the interest he has lost on his money owing to delayed possession.

In its defence, Sathya Lifestyles gave multiple reasons for the delay. It said that though the project was launched in 2011, it was initially delayed because of repeated amendments in the Development Control Regulations (DCR) in 2012-13, as a result of which the project plans got held up. In addition, it said the ban on extraction of sand resulted in shortage that caused the project to stall and led to financial trouble. It also pointed out that the current property market scenario — the slowdown of sales — has also affected the project.

After hearing both sides, MahaRERA said: “There is a delay in handing over the possession of flats to the complainant as per the registered agreement for sale executed between both parties.”

The April 20 ruling accepted that the DCR was amended in 2012, and that builders had to make project amendments as per the new policy. “However, the respondent could not explain which particular permission delayed the project by more than three years. The other reasons pointed out by the respondent, i.e, the restriction on sand extraction and the current market scenario etc., also do not provide reasonable grounds for delay,” it added.

In its final remarks, MahaRERA said the payment of interest on the money invested by the homebuyer is not a penalty but a type of compensation for the delay, as has also been clarified by the Bombay high court.