Experts hail Bombay HC order upholding flat buyer’s right to raise claim on delay

The ruling allowing interest on delayed possession has been appreciated. File pic

Various state and national housing forums including the State Housing Federation have appreciated the recent Bombay High Court order which allowed the flat buyer to claim interest on the delay even after the buyer has taken possession. mid-day in its report ‘Now, flat buyers can claim interest for delay even after possession' (April 5), had highlighted how HC upheld the order (Park Xpress JV versus Sagar H Saboo) of MahaRERA dated March 22, 2024, which had ordered a promoter to pay interest to the flat buyer on account of delay.

Framing guidelines

"The Maharashtra State Co-op Housing Federation has decided to frame guidelines which are necessary to be followed at the time of handing over of the possession from the promoter to the flat purchaser after the building is completed. The real estate sector is experiencing a drastic change when it comes to amenities and completion. The promoters have to align themselves to the said change and prove their transparency and fair play in the business of the real estate sector," said advocate Shreeprasad Parab, expert director, the State Housing Federation.

Parab said, "At the time of booking of the flat the promoter promises a possession date to lure prospective buyers. Thereafter the possession date is incorporated in the agreement. The promoter also incorporates a clause for delay in the project due to natural calamities such as earthquake, flood etc., or delay due to any order of the government or due to non-availability of construction material."

Issue of concern

According to Parab, often at the time of handing over possession, the promoters collect an acceptance letter from the flat buyer which includes the clause of being satisfied with the amenities provided and also waive the rights to initiate claim against the promoter for any defect or delay in the project. The high court in its order has held that waiver shall be specifically pleaded by the promoter before the authorities during the adjudication process. Now this is a rising concern as often the flat buyer is forced to sign the acceptance letter before taking possession of the flat. This aspect of coercion or misrepresentation by the promoter could be highlighted by the flat buyer during the adjudication process. "Therefore, we appeal to all flat buyers to be aware of their rights before purchasing flats,"
said Parab.

MahaSEWA reacts

Ramesh Prabhu founder chairman of Maharashtra Societies Welfare Association (MahaSEWA) said, "This judgment has settled the legal position in respect of these aspects:

(1) If the flat buyer is not responsible for the delay in possession, then the promoter is liable to pay interest for the delay.

(2) The delay in possession due to reasons like stop-work notice issued by competent authority on account of accident at project site, shortage of sand, water, etc., does absolve the promoter from paying interest on delayed possession.

(3) In the interest of flat buyers, the complaint may be filed after receiving possession.

(4) The rulings of the apex court in M/s. Newtech Promoter and Developers Pvt Ltd versus State of Uttar Pradesh is applicable for payment of interest for delayed possession not only when buyers exit but also after taking possession.

"The flat buyers who have received delayed possession should file the complaint to claim interest. The promoters while handing over the possession also collect a letter of undertaking from the flat buyers. Notwithstanding such an undertaking, the flat buyers are still entitled to raise a claim," said Prabhu.

Expert view

Abhay Updhaya, president, Forum for People's Collective Efforts (FFPCE), Kolkata, said, "We welcome the order which has ensured that the home buyer will continue to get their right to raise a claim. This, on the other hand, will also bring an embargo on the mandatory declaration, which the promoter / builder collects at the time of giving possession, that the flat buyer has no legal claim or rights against the promoter. Such a declaration was used as an arm-twisting tactic."

Mar 22
Day MahaRERA passed order

Quote

‘The Maharashtra State Co-op Housing Federation has decided to frame guidelines which are necessary to be followed at the time of handing over of the possession from the promoter to the flat purchaser after the building is completed. The real estate sector is experiencing a drastic change when it comes to the amenities and completion. The promoters have to align themselves to the said change and prove their transparency and fair play in the business of real estate sector'

Advocate Shreeprasad Parab, expert director, State Housing Federation