Accepting Delayed Possession Does Not Bar Homebuyer From Claiming Interest: Allahabad High Court
The Lucknow Bench of the Allahabad High Court has held that a homebuyer does not automatically lose the right to claim interest for delayed possession merely because the buyer subsequently accepts the flat.
The Court also observed that the Real Estate (Regulation and Development) Act, 2016 (RERA) does not prescribe a specific limitation period for seeking interest on account of delayed possession. The ruling came while dismissing an appeal filed by Antriksh Developers and Promoters in connection with its Antriksh Golf View project in Sector 78, Noida.
Possession Delayed by Nearly Five Years
The dispute arose from a flat booked by homebuyer Shyam Sunder Agrawal in 2010. Under the agreement, possession was required to be handed over by November 2012.
However, the developer offered possession only in May 2017, nearly five years after the contractual deadline. The High Court also noted that the possession offer was made without the occupancy certificate and certain other documents required for a valid handover.
The Uttar Pradesh Real Estate Appellate Tribunal subsequently directed the developer to pay interest on the amount deposited by the allottee for the period between December 2012 and May 2017, calculated at one percentage point above the Marginal Cost of Fund-Based Lending Rate (MCLR).
Acceptance of Possession Does Not Amount to Waiver
The developer challenged the award of interest, contending, among other things, that the buyer's acceptance of possession affected the claim for compensation.
The High Court rejected the proposition that acceptance of possession, by itself, extinguishes the allottee's right to seek interest for the period of delay.
The ruling therefore makes an important distinction between accepting possession of the property and waiving a statutory claim arising from the developer's earlier default. A buyer who accepts the keys after a prolonged delay does not automatically forfeit the right to seek interest for the period during which possession remained delayed.
Developer's Reliance on NGT Restrictions Rejected for Entire Delay
The developer also relied upon restrictions imposed by the National Green Tribunal (NGT) in relation to construction and the grant of occupancy certificates within a 10-kilometre radius of the Okhla Bird Sanctuary.
The High Court, however, found that the restriction could not explain the entire period of delay.
The contractual deadline for possession was November 2012, whereas the relevant NGT restriction came into effect only in August 2013. The Court also took note of the developer's own position that construction had been completed in 2014 and that an application for the occupancy certificate had been made during that year.
'Zero Period' Cannot Erase Earlier Default
The ruling also addresses the concept of a “zero period”, under which a period affected by a regulatory restriction may, in appropriate circumstances, be excluded while calculating the developer's delay.
The Court's reasoning makes clear that such a benefit cannot retrospectively wipe out a default that had already occurred before the regulatory restriction came into force.
In other words, a developer relying upon force majeure or a regulatory restraint must establish a connection between the alleged event and the period for which the delay is claimed.
RERA Does Not Prescribe Specific Limitation Period for Delayed-Possession Interest
Another significant aspect of the judgment is the Court's observation that RERA does not prescribe a specific limitation period for a claim seeking interest on account of delayed possession.
The Court nevertheless considered the claim in the context of the particular facts, including the contractual possession date, the actual offer of possession and the circumstances surrounding the delay.
Implications for Homebuyers
The judgment provides an important clarification for homebuyers who accept possession after years of waiting.
Taking possession does not, by itself, close the door on a delayed-possession interest claim. However, the outcome of an individual case will depend on the agreement, possession records, correspondence, applicable approvals and whether the buyer has entered into any specific settlement or waiver concerning the delay.
The decision also reinforces that a developer seeking to rely on force majeure or regulatory restrictions must demonstrate that the claimed event actually caused the delay for the relevant period.
Key Takeaway
The Allahabad High Court's ruling reinforces that acceptance of delayed possession is not automatically a waiver of the homebuyer's claim for interest for the period of developer default.
At the same time, the judgment does not mean that every delayed-possession claim will automatically succeed. The contractual timeline, actual date and validity of possession, applicable approvals and any alleged force-majeure event must be examined on the facts of each case.
