Entitlement to Interest for Delayed Possession Under RERA:
Ishat Pal Singh v. Sukhm Infrastructure Pvt. Ltd.

Introduction

The case of Ishat Pal Singh v. Sukhm Infrastructure Pvt. Ltd. was adjudicated by the Real Estate Regulatory Authority (RERA), Punjab on July 28, 2021. The complaint, filed under Section 31 of the Real Estate (Regulation and Development) Act, 2016 (RERA Act), addressed significant delays in the handing over of possession of industrial plots in the Integrated IT Township 'Yellowstone Landmark Infocity.' The primary parties involved were multiple complainants, including Ishat Pal Singh, and respondents Sukhm Infrastructure Pvt. Ltd., Aeropolis Infrastructure Pvt. Ltd., and Manohar Singh and Co.

Summary of the Judgment

The RERA bench examined nine complaints collectively, all pertaining to delays in the possession of plots despite substantial payments by the buyers. The respondents justified the delays citing withdrawal of government subsidies and delays caused by local authorities, which affected the project's financial viability and completion timeline. The court recognized these external factors and extended the possession deadline by two years, acknowledging the impact of government actions. However, the Authority held the respondents liable for paying interest on the delayed possession from the extended due date until actual possession is handed over. The judgment dismissed complaints against certain respondents who were merely booking agents without involvement in project development.

Analysis

Precedents Cited

The judgment referenced several key precedents that influenced its decision. Notably, the High Court's Civil Writ Petition No.5213 of 2015 and prior rulings by the State Consumer Disputes Redressal Commission, Chandigarh, were pivotal. These precedents established that government-induced delays could be a valid reason for extending project completion timelines. Additionally, previous RERA decisions allowing interest for delays up to the revised completion dates provided a framework for awarding compensation in the current case.

Legal Reasoning

The court's legal reasoning centered on balancing the interests of both the investors and the buyers. Recognizing that the respondents faced unforeseen governmental hurdles that delayed project completion, the Authority granted a two-year extension beyond the original possession date. This extension was in line with existing legal precedents that allow flexibility in timelines due to external factors. However, the court also emphasized the buyers' rights to timely possession, leading to the decision to award interest for the period of delay beyond the extended due date. The Authority determined that while possession could still be forthcoming, the buyers had incurred losses due to the prolonged waiting period, warranting financial compensation.

Impact

This judgment reinforces the obligations of real estate developers under RERA to compensate buyers for undue delays in possession. By awarding interest from the extended due date, RERA ensures that buyers are financially protected against prolonged project delays, even those caused by governmental actions. This decision sets a precedent for future cases where developers might face delays due to external factors, ensuring that buyers are not left uncompensated. Additionally, the dismissal of complaints against purely booking agents clarifies the liability scope, emphasizing that only those directly responsible for project execution and possession are held accountable.

Complex Concepts Simplified

Section 31 of the RERA Act

Section 31 of the RERA Act deals with the maintenance of a public register by the Authority, which includes details of all the complaints received, their status, and orders passed. In this case, the complaints were filed under this section, indicating procedural adherence by the complainants.

Buyer's Agreement

A Buyer's Agreement is a contractual document between the buyer and the developer outlining the terms of sale, including the timeline for possession, payment schedules, and obligations of both parties. In these complaints, the agreement stipulated possession within 18 months, extendable by six months, which the court acknowledged in extending the due date.

Interest Calculation

Interest was calculated at 9.30% per annum, derived from the prevailing rate of 7.30% plus an additional 2% as per the State Bank of India's Highest Marginal Cost of Lending Rate. This interest compensates buyers for the financial inconvenience caused by the delay in possession.

Conclusion

The RERA judgment in Ishat Pal Singh v. Sukhm Infrastructure Pvt. Ltd. underscores the regulatory body's commitment to safeguarding buyers' interests in the real estate sector. By mandating the payment of interest for delays in possession, RERA enforces accountability among developers, ensuring that financial hardships faced by buyers due to prolonged project timelines are duly compensated. This decision not only provides immediate relief to the complainants but also establishes a clear legal expectation for developers to adhere to possession timelines or face financial repercussions. The dismissal of unrelated respondents further clarifies the boundaries of liability, promoting transparency and fairness in real estate dealings.