Five-Year Delay in Possession: Punjab RERA Directs Omaxe Chandigarh Extension to Pay Interest to Homebuyer
Pranav B Prem
The Punjab Real Estate Regulatory Authority has held Omaxe Chandigarh Extension Developers liable to pay statutory interest to a homebuyer for a delay of more than five years in handing over possession of a flat in its residential project “The Lake.” The Authority found that the prolonged delay constituted a violation of Section 18(1) of the Real Estate (Regulation and Development) Act, 2016 and ruled that the allottee was entitled to interest from the promised date of possession until a valid offer is made after obtaining the occupation certificate.
The dispute arose from an allotment made in January 2015, under which the homebuyer was allotted a flat for a total consideration of ₹66.12 lakh. The buyer paid ₹48.92 lakh—over 80 percent of the total cost—while the builder was obligated under Clause 40(a) of the Allotment Letter to hand over physical possession within 42 months of signing, i.e., by July 2018. Despite the substantial payment, possession was not handed over even after more than five years from the due date, leading the buyer to approach the Authority seeking statutory interest for the period of delay.
The builder opposed the complaint and contended that the matter was not maintainable in view of an arbitration clause contained in the Allotment Letter. It also argued that the agreement did not provide for interest in the event of delay and therefore no compensation could be granted beyond the contractual terms agreed between the parties. The Authority rejected both arguments. Relying on the Supreme Court’s decision in Emaar MGF v. Aftab Singh, it reiterated that the presence of an arbitration clause does not oust the jurisdiction of the Consumer Fora or RERA authorities. It further remarked that the Allotment Letter cannot override statutory protections available under the RERA Act, especially when the right to interest for delayed possession is guaranteed by Section 18(1) irrespective of contractual stipulations.
The Authority also took note of Clause 40(g) of the Allotment Letter, which permitted compensation in the event of delay, and observed that the Supreme Court has previously held unfair and one-sided clauses in builder-buyer agreements to be unenforceable, particularly in Pioneer Urban Land and Infrastructure Ltd v. Govindan Raghavan. It stressed that contractual silence on interest could not defeat the statutory objective of protecting homebuyers from indefinite delays.
Concluding that the builder had clearly failed to fulfil its obligation to deliver the flat within the committed timeframe, the Authority declared the homebuyer entitled to statutory interest. It directed Omaxe Chandigarh Extension Developers to pay interest at the prescribed rate of MCLR plus two percent on the amount paid by the allottee from the promised date of possession until a valid offer of possession is issued after securing the required occupation certificate. The Authority further held that the homebuyer remains free to seek any additional reliefs in case possession continues to be delayed even after compliance with the order.
Cause Title: Bhupinder Singh Dhillon & Others vs. Omaxe Chandigarh Extension Developers Pvt. Ltd.
Case No: Complaint No. RERA/GC/0190/2023
Coram: Shri. Arunvir Vashista (Member, RERA, Punjab)
