Bombay High Court: Builder Liable to Pay Interest Till Lawful Possession — Conditional Occupation Certificate Doesn’t End RERA Liability
Pranav B Prem
The Bombay High Court, bench comprising Justice N. J. Jamadar, upheld the order of the Maharashtra Real Estate Appellate Tribunal (MREAT) holding Keyana Estate LLP liable to pay interest to homebuyers for delayed delivery of possession in its project Kalpataru Radiance. The Court held that under the Real Estate (Regulation and Development) Act, 2016 (RERA), a promoter’s obligation to pay interest continues until actual possession is handed over, complete with a valid Occupation Certificate (OC) and fulfillment of all mandatory conditions, including habitability requirements.
Background
Keyana Estate LLP, the developer of Kalpataru Radiance, launched the residential project in Mumbai. The respondents—homebuyers—booked flats in the project and executed an Agreement for Sale on December 29, 2014, stipulating delivery of possession by December 2016, with a grace period of six to nine months. However, construction was delayed following a stop-work notice issued by the Municipal Corporation of Greater Mumbai (MCGM). Subsequently, on July 18, 2017, the builder registered Wing “A” of the project as an ongoing project under RERA. When possession was not delivered within the agreed timeline, the allottees approached MahaRERA, which on September 28, 2020, ruled in their favour and directed the promoter to pay interest at 9% per annum from July 1, 2017, until delivery of possession.
Aggrieved by the order, the builder filed an appeal before the Maharashtra Real Estate Appellate Tribunal and deposited ₹52.10 lakh as per Section 43(5) of the RERA. During pendency of the proceedings, the builder obtained an Occupation Certificate (OC) on April 10, 2023, and offered possession in May 2023. The homebuyers initially did not take possession and sought enforcement of the MahaRERA order but eventually accepted possession on January 26, 2024. The Appellate Tribunal, by order dated June 24, 2025, dismissed the builder’s appeal and directed the release of the deposited amount to the allottees by July 16, 2025, prompting the present appeal before the High Court under Section 58 of RERA.
Contentions by the Builder
Appearing for the appellant, counsel Mr. Nimay Dave argued that the Tribunal erred in law by “going behind” the Occupation Certificate issued by the MCGM. It was submitted that once the OC is granted and possession is validly offered, the promoter’s liability to pay interest ceases. Relying on Section 19(10) of RERA, the builder contended that liability can extend only up to two months after the OC date and that the homebuyers’ continued refusal to accept possession disentitled them from further interest.
The appellant further claimed that there existed force majeure conditions which delayed completion, and that the allottees also contributed to the delay by not making timely payments. Reference was made to Linker Shelter Pvt. Ltd. v. Charmaine Chougule and Savita Homemakers LLP v. Mayur Akade, where the Court had clarified that once OC and possession are offered, the promoter’s liability under Section 18(1) ceases.
Submissions by the Homebuyers
Counsel Mr. Manish Gala appearing for the respondents, argued that the order of the Appellate Tribunal required no interference as it was based on clear factual findings. He contended that the offer of possession was merely on paper, since the builder failed to comply with the OC conditions, specifically the requirement under Section 270A of the Mumbai Municipal Corporation Act, 1888 (MMC Act)—which mandates that premises cannot be occupied until the Commissioner certifies adequate water supply. The respondents emphasized that they had paid 95% of the sale consideration by December 2017, along with accrued interest, but the developer still failed to hand over possession of a habitable flat. The Supreme Court’s ruling in Newtech Promoters and Developers Pvt. Ltd. v. State of U.P. was cited to underline that the allottee’s right to seek interest for delayed possession is unqualified.
Court’s Observations
Justice N. J. Jamadar examined whether the Appellate Tribunal erred in scrutinizing the conditions attached to the OC. The Court found that the OC dated April 10, 2023, was issued subject to obtaining a Certificate under Section 270A of the MMC Act, confirming adequate water supply before granting possession. The Court observed that the builder failed to establish compliance with this condition before offering possession. Only a water bill from April 2024 was produced, indicating that compliance occurred after possession was handed over. The Court noted that a mere offer of possession without meeting habitability conditions does not discharge the promoter’s obligation under RERA.
Quoting the order, the Court held: “A mere offer to deliver possession of the flat, without complying with the necessary conditions subject to which the Occupation Certificate has been issued, cannot be considered as compliance with the promoter’s obligation under the Act.” The Court further noted that the correspondence between the parties revealed that the homebuyers were consistently demanding possession in a habitable condition with essential facilities. Despite their payments, the builder had failed to provide a legally valid possession. The argument of force majeure was rejected, as no unforeseen event preventing completion was established.
The Court emphasized that RERA’s intent is to ensure that homebuyers are not burdened with interest and payments for flats unfit for occupation. Accordingly, since the OC itself was conditional, the builder’s liability to pay interest continued until actual, lawful possession was delivered.
The Bombay High Court held that the Appellate Tribunal rightly imposed liability on the builder for the delay, as possession was not validly offered in compliance with OC conditions. The Court found no substantial question of law arising from the appeal and concluded that the Tribunal’s order required no interference. Consequently, the Second Appeal No. 537 of 2025 filed by Keyana Estate LLP was dismissed, and the Tribunal’s direction for release of ₹52.10 lakh to the homebuyers was upheld. “Under RERA, interest on delayed possession continues until actual physical possession is handed over with all conditions of the Occupation Certificate duly complied with and the flat made fit for habitation,” the Court observed.
Appearance
Mr. Nimay Dave, with Kartik Joshi, i/b Wadia, Ghandy & Co, for the Appellant.
Mr. Manish Gala, with Khyati Bora, i/b Nilesh Gala, for the Respondents.
Cause Title: Keyana Estate LLP (Earlier Known as Kiyana Ventures LLP) Versus Paresh Parihar & Anr
Case No: Second Appeal No. 537 of 2025 With Interim Application No. 11757 Of 2025
Citation: 2025:BHC-AS:44637
Coram: Justice N. J. Jamadar
