REAT Karnataka (2025.11.20) in Relationship Properties Pvt. Ltd. Vs. Veena Ravishankar and Anr.. [(2025) ibclaw.in 546 REAT, Appeal No. (K-REAT) 27/2025] held that;
However, we are of the considered view that Extension of RERA Registration of a project does not automatically mean that due date for completion are as per the signed Agreement also get extended. The Agreement for Sale and Construction Agreement are legally enforceable documents under Indian Contract Act, 1872 and the Promoters cannot unilaterally alter the due date for handing over unless both the parties agreed to change the due date of handing over possession.
Excerpts of the Order;
The captioned appeal arises out of the Order dated 14.11.2024 passed by the Karnataka Real Estate Regulatory Authority (hereinafter referred to as ‘the Authority’ for short) in Complaint No.CMP/220321/0009194, whereby the Authority allowed the Complaint filed by the Respondents No.1 /Allottee (hereinafter referred to as ‘the Allottee’ for short) against the Appellant-Promoter(hereinafter referred to as ‘the Promoter’ for short) for relief of interest on delay period and rental compensation upto 18% per annum.
# 2. The brief facts gathered from the pleadings, documents on record, and the impugned order reveal that the Promoter formulated a residential apartment complex in the name and style of ‘PARKWEST’ (hereinafter referred to as ‘Project’) and had obtained the Development Plan from the BDA, and building approval from the BBMP, and constructed the Project in accordance with law. During the course of construction, the Allottee had approached the Promoter and shown her interest to purchase the Unit T4-09-10 known as Maple-B0904, on the 9th floor of ‘Maple Tower’ in the said project, with the super built-up area of 1755 Sq.ft., with single car park, for total consideration of Rs.1,33,01,900/-, exclusive of applicable taxes and accordingly, allotment was made in favour of the Allottee on 01.08.2016. Pursuant to the allotment, the Promoter executed the Agreement of Sale for Rs.50,01,580.91 and Construction Agreement for Rs.83,00,319.09, both on 25.12.2016, out of which, the Allottee had paid Rs.1,02,03,088/-.
# 3. The Promoter was supposed to handover possession of the flat by 31.12.2019, with an additional grace period of 6 months, that is upto 30.06.2020 as per Clause-2 of the Construction Agreement, subject to Clause-10 of the said Agreement i.e. variation on account of Force Majeure. In the event of non-handing over the flat in time otherwise set out in Clause-10 of the Construction Agreement, the Promoter was required to pay a sum of Rs.5/- per Sq.Ft. per month as delay compensation till the registration of the said flat at the time of handing over the possession.
# 4. Further, in the Memorandum of Appeal, it is averred that, during the course of completion of the said project in the year 2020, the project got affected by COVID-19 pandemic, due to which the construction activity had to be stopped for several months. Due to the impact of COVID-19 pandemic, the Authority had extended the project completion date till 30.09.2022. After completion of the project, the Promoter filed application before the BBMP on 12.08.2022 to issue Occupancy Certificate. As there was a delay in procurement of Occupancy Certificate, the Promoter obtained further extension from the Authority upto 31.03.2023.
# 5. As there was a delay in completion of the subject Project, the Allottee lodged a Complaint No.CMP/220321/0009194 and sought for compensation & house rent with interest @18% p.a. till date; monthly compensation with 18% rate and monthly rental for further delay; no RERA extensions and no new tower to be registered without the consent of the Allottee.
# 6. In the Statement of Objections before the Authority, the Promoter has denied all the allegations made against it and contended that the Promoter has obtained Occupancy Certificate from BBMP on 25.01.2023 and initiated the process of handing over the possession to the Allottees. The Promoter never intentionally delayed the completion of the project but only due to several reasons which are beyond the control of the Promoter including Force Majeure due to COVID-19 which considerably impacted the project completion timeline. In the meantime, the Promoter requested the Allottee to forego the delay period interest due to COVID-19, but the efforts of Promoter went in vain. The Promoter has relied on the Judgment of the M/s.Newtech Promoters and Developers Pvt.Ltd. Vs. State of UP & Ors. and contended that granting of compensation at 18% & monthly rental compensation does not comes under the jurisdiction of the Authority to adjudicate.
# 7. In response to the Objections of the Promoter, the Allottee has filed written submission before the Authority stating that she has already paid 90% of the sale consideration. As the flat was not fully ready, the Allottee inspected the property on 04.07.2023 and was able to identify 108 defects, out of which 50 were major defects. The Carpet area also was found to be less by 61.31 Sq.feet and the said flat is not ready for registration. Further, the Allottee stated that the Promoter has not obtained Occupancy Certificate and only secured a Partial Occupancy Certificate before the Authority, subject to fulfillment of 20 conditions by the Promoter. But the Promoter has not produced any kind of proof before the Authority to have complied with the conditions imposed by the BBMP. However, on 06.02.2024, the Engineering team visited the Project and inspected the works done by the Promoter. The Engineering team was satisfied with the repair works completed by the Promoter as specified by the Allottee in the Complaint, which is seconded by the Allottee too.
# 8. After hearing arguments of Promoter as well as the Allottee, the Authority allowed the Complaint cited supra on 14.11.2024 which is as under:
The Promoter is hereby directed to pay interest on delay period on the amount paid by the Allottee i.e. Rs.1,02,03,088/- to the Allottee within 60 days from the date of this Order calculated at the rate of SBI MCLR plus 2% from 01.07.2020 to 06.02.2024. Further directed to handover possession by way of execution of Sale Deed of the flat bearing No.T4-09-10 known as Maple B0904, on the 9th Floor of Maple Tower project in favour of the complainant on immediate effect on receipt of balance sale consideration if any. With regard to prayer of the Allottee for rental compensation upto 18% per annum from the Promoter, the Allottee is at liberty to file a separate complaint before the Adjudicating Officer, KRERA. The Allottee is at liberty to enforce the said order in accordance with law if the respondent fails to comply with this order. No Order as to costs.”
# 9. Aggrieved by the said Impugned Judgment, the Promoter has preferred the present Appeal. The Promoter has further contended that as the Promoter has procured the Occupancy Certificate in the month of Jan-2023 and made the unit in liveable condition after having rectified the snags identified by the Allottee on 04.07.2023, hence, the question of paying delay period interest till 06.02.2024 i.e. the date of inspection of Allottee does not arise. The Promoter has contended that as the said Project is coming under the purview of RERA Act 2016, the Promoter is liable to pay interest on delay period from the month of delay as per Sec.18(1) of RERA Act, and, similarly, the Allottee also is liable to pay the interest on delayed payment of installments by her, as per Sec.19(7) of RERA Act, 2016. The Promoter has further contended that as the Promoter has already procured the Occupancy Certificate in the month of January-2023 and made the unit in liveable condition after having rectified the snags identified by the Allottee on 04.07.2023, the question of paying delay period interest till 06.02.2024 i.e. the date of inspection of Authority does not arise.
# 10. The Promoter further contended in the Appeal that, as the completion date of the said project falls during the period of COVID-19 pandemic, the Promoter was not able to complete the project due to lockdown and the resultant shortage of manpower, machinery and materials. Accordingly, request has been made to Allottee as well as Authority to deduct the delay period interest for 9 months, but they have not deducted the interest for 9 months. From April-2023 onwards, the Promoter has been requesting the Allottee to come forward for inspection and to take possession of the subject flat as per Sec. 19(10) of the RERA Act, but the Allottee has failed in her performance. The Impugned Order passed by the Authority is manifestly arbitrary manner, erroneous, which is contrary to law, facts of the case and accordingly prayed for following reliefs:
i) To allow the Appeal by setting aside the Impugned Order dated 14.11.2024 passed by the Authority;
ii) To modify the date of interest from 01.07.2020 till the date of offer of possession with invoice i.e. upto 22.07.2023 on the amount paid by the Allottee i.e. Rs.1,02,03,088/- in lieu of date of interest from the period 01.07.2020 till 04.02.2024 as decided by the Authority;
iii) To direct the Allottee to deduct the interest on delay period for 9 months as moratorium period under Covid-19 pandemic out of the interest accrued under prayer-ii;
iv) To give direction to Allottee to pay the interest on delay for the balance sale consideration amount of Rs.51,23,445/- from 22.07.2023 till the date of realization.
# 11. In response to the notice, the Allottee appeared before the Tribunal through her counsel and filed Statement of Objections to the Memorandum of Appeal inter alia contending that the appeal is not maintainable either in law or on facts and is therefore liable to be dismissed in limine. The Appeal is barred by limitation and the reasons assigned for delay, cannot be countenanced in law, hence the Appeal deserves to be dismissed at the threshold. The present Appeal is filed with an intention to delay the handover of the apartment unit and to cause annoyance to the Allottee.
# 12. Further, it is contended by the Allottee in her Statement of Objections that she is a senior citizen aged about 64 years, has invested her life savings for securing a residential dwelling for peaceful habitation. The Allottee has also obtained loan from State Bank of India to purchase the apartment and is compelled to pay the EMIs apart from incurring monthly rental losses. She has not denied entering Agreement for Sale and Construction Agreement on 25.12.2016 with respect to the subject apartment and conditions prevailed therein. The Allottee contended that a Force Majeure clause does not permit indefinite suspension of obligations, nor does it empower one party to unilaterally modify the terms of the Agreement.
# 13. Further, it is contended by the Allottee that the apartment was not ready in all aspects neither on the date the Occupancy Certificate was applied nor on the date when the partial Occupancy Certificate was issued. The Promoter has cured the defects pointed out by the Allottee only on 06.02.2024, except the carpet area. There is a shortfall to the tune of about 29.92 sq.ft. of carpet area after duly factoring the 5% allowable variation in terms of the Agreements, which ought to be compensated by the Promoter. The Allottee further contended that she was not allowed to conduct proper inspection with the necessary tools and was only allowed to conduct inspection using measuring tape and distometer.
# 14. Insofar as the contention of the Promoter that this Allottee did not come forward to take possession of the apartment, the Allottee submitted that since the proceedings before the Authority were still being heard and the Promoter at no point of time, informed the Authority that they were ready and willing to handover the possession of the apartment to the Allottee. Since the Appellant has not complied with the Order of the Authority, a Revenue Recovery Certificate dated 28.02.2025 was issued by the Authority for execution, however, the Promoter, with the sole intention to delay the execution of the said order, filed the present Appeal on 28.03.2025 with the sole intention to harass and arm twist this Allottee for a settlement. With these contentions raised in her Objections, the Allottee prayed this Tribunal to dismiss the Appeal, with exemplary costs; award costs of this proceeding and pass such other or further Order as deemed suitable.
The oral arguments submitted by the Appellant-Promoter on 27.03.2025:
# 15. The learned Counsel for the Promoter, more or less reiterated the points made in the Appeal Memo and further submitted hat his dispute with the Order of the Authority is with regards to the dates for calculation of interest since the Authority has awarded interest from 01.07.2020 to 06.07.2024, and 06.02.2024 is neither the date of Occupancy Certificate nor the date on which the Promoter intimated the Allottee to take over the possession, but the date of inspection by the Authority, which is not relevant for the purpose of calculation of interest.
15.1. He submitted that as per Clause-2 of Construction Agreement, the due date for completion was 30.01.2019 with a grace period of 6 months. The due date for completion, therefore, was right in the middle of COVID pandemic, and the Authority has extended the project completion date initially till 30.09.2022, and subsequently till 31.03.2023.
15.2. Learned Counsel for the Promoter stated that the Promoter received the Occupancy Certificate on 25.01.2023 and sent the e-mail to the Allottee on 04.04.2023 to submit necessary data for execution of Sale Deed. Since the Allottee wanted to get the inspection done by 3rd party which is not provided in the Construction Agreement, the Promoter asked the Allottee to come for the inspection on 29.06.2023.
15.3. The invoice was sent to the Allottee to pay the balance amount to get the Sale Deed executed. The total consideration was Rs.1.53 crores, of which the Allottee had paid Rs.1.02 crores leaving the balance of Rs.51 lakhs. The Promoter offered to give discount of Rs.23.76 lakhs towards compensation for the delay and asked to pay the net balance amount of Rs.27.46 lakhs. However, the Allottee refused to avail of this offer although, all other Allottees had agreed to similar proposal.
15.4. The Allottee insisted on a second inspection which was done in the month of December 2023 on 02.12.2023. The Promoter sent an e-mail to the Allottee on 11.12.2023 to release the balance payment. Since the Allottee had filed the complaint before the Authority in the mean time, the Authority offered to get the inspection done which took place on 06.02.2024 and the Authority confirmed at para No.27 of their Order that the unit was ready for possession and the Allottee also agreed and was satisfied with the finishing work and gave her consent in writing. The Promoter wrote to the Allottee by e-mail on 07.03.2024, 25.06.2024, 26.06.2024 to take over the possession but she still raised some issues pertaining to carpet area and did not come forward to take possession. The Promoter argued that once the Occupancy Certificate is issued and an Offer letter is made, he is not liable for any delay period interest, since the delay is on the part of the Allottee and therefore, for all delays beyond the first inspection on 04.07.2023, he is not liable to pay any compensation for delay after July 2023. The Promoter claims that the Allottee has not paid the balance amount towards the total sale consideration and requested that the delay period may be calculated on 31.07.2023 when the first inspection was made and that amount may be adjusted towards sale consideration.
15.5. The learned Counsel for the Promoter submitted a circular of Maharastra RERA dated 18.05.2020, Case Law pertaining to Balaji Construction Company Vs. Chintan Mahesh Sha in the Hon’ble High Court of Karnataka and an Office Order of U.P. RERA, in support of his arguments and prayed that his Appeal be allowed and the date of interest be modified from 01.07.2020 till date of Offer of Possession with invoice upto 22.07.2023 and to direct the Allottee to pay interest on delay on her part for balance sale consideration.
Oral arguments made by the Counsel for Allottee on 18.08.2025 :
# 16. The learned Counsel submitted that the Promoter has contended that the Allottee did not come forward to take over possession to which the reply of the Allottee is that the Occupancy Certificate is issued when the matter was pending before the Authority. The Promoter have stated in their argument that the interest was awarded by the Authority from 01.07.2020 to 06.02.2024 and that the Promoter is agreeable to pay interest till 31.07.2023, but is not agreeable to pay interest from 01.08.2023 to 06.02.2024. The Counsel further argued that due date for completion was pre-Covid which is 31.12.2019 with grace period additional six months, but the actual due date for handing over possession was 31.12.2019 and the additional six months period cannot be included while computing the due date for completion. The Counsel further argued that if there was any Force Majeure condition, the Promoter should have notified the Allottee about the same which he did not do. Also, that the Occupancy Certificate was issued on 25.01.2023 and Covid lockdown had not continued till that date, which goes to prove that indeed, there was delay in completing the Project.
16.1. The learned Counsel for Allottee also submitted that the Promoter sent e-mail to Allottee on 25.01.2023 informing about receiving Occupancy Certificate and again on 16.06.2023 to say that they are ready to handover property to the Allottee. Further, Allottee scheduled an inspection and three inspections were held and the defects were finally rectified beyond 26.06.2024. The Counsel disputed the stand taken by the Promoter that the Allottee had delayed the payment by stating that the Allottee has made all the payments as required, except for last installment, which was to be paid at the time of registration of the Sale Deed. The Allottee sent e-mail on 27.01.2025 offering to pay the final installment after deduction of interest on delay period. The Counsel further submitted that the Promoter has not complied with the Orders of the Authority to execute the Sale Deed and that Promoter has not given any reasoning for calculating interest till 31.07.2023.
# 17. Heard the arguments of learned counsel for the Promoter as well as Allottee. The Counsel for Promoter has a filed a Memo and produced the following documents:
i) Circular of MAHA RERA dated 18.05.2020 vide Order No.14/2020 wherein it is stated that the Force Majeure period will be treated as a “moratorium period” for the purpose of calculating the interest under Sec.12, 18, 19(4) and 19(7) of the Act.
ii) Order passed in Second Appeal No.731/2023 dated 20.02.2024 in the case of Balaji Construction Company Vs. Chintan Mahesh Shah by the Hon’ble High Court of Judicature at Bombay, wherein it is held that “While computing the interest payable to the Respondents at the time of delivery of possession, the period covered by the moratorium will have to be excluded. Thus, the amount of interest during moratorium period is not payable by the Appellant even in future”
iii) Order dated 18.08.2021 vide No.7225/U.P. RERA/Extension /Compliances /Order /LKO/2021-22 wherein in the representation of the CREDAI and NAREDCO, two confederations, requested that, Complete waiver of refund/interest/penalties compensation pertaining to the extended period of projects and no benefits to be passed on to the homebuyers as provided under Clause 7 of the Agreement for Sale.
# 18. On the other hand the counsel for the Allottee filed a memo along with E-mails dated 25.01.2023, 16.06.2023, 10.07.2023, 22.07.2023 and 11.12.2023.
# 19. The points that would arise for our consideration are:
i) Whether the Appellant/Promoter is entitled for the relief claimed in the Appeal?
ii) Whether the Impugned Order dated 14.11.2024 needs to be set aside?
iii) What Order?
# 20. Our findings on aforesaid point No.(i)and (ii) is partly in the affirmative for the following:
REASONS
# 21. Point No.(i): To reiterate the essential facts briefly, the Allottee entered into an Agreement for Sale and Construction Agreement on 25.12.2016 to purchase Unit No. T4-09-10 on the 9th floor of ‘Maple Tower’ in the project named ‘PARKWEST’ developed by the Promoter for a total consideration of Rs.50,01,580.91 towards undivided share of the land area and Rs.83,00,319/- towards construction, totaling to Rs.1,33,01,900/-. As per the Construction Agreement, the Promoter was supposed to handover possession of the flat by 30.06.2020, which includes grace period of Six months, subject to Clause-10 of Construction Agreement regarding likely delay on account of Force Majeure. The Promoter would have to pay a sum of Rs.5/- per Sq. Ft. per month, if he failed to handover possession as per the Agreement till Registration of the said flat at the time of handing over possession.
# 22. It is the case of the Promoter that the project got affected by Covid Pandemic, as a result of which, he could file application to the BBMP for issue of Occupancy Certificate only on 12.08.2022 and the BBMP issued Partial Occupancy Certificate on 25.01.2023 after the Promoter had completed the project. The Promoter obtained extension of RERA Registration from RERA till 30.09.2022 which was further extended till 31.03.2023. As there was delay in completion of the project, the Allottee filed Complaint No.CMP/220321/0009194 and sought for delay compensation and house rent with interest @ 18% per annum. It is further case of the Promoter that delay was due to the factors beyond the control of the Promoter on account of Covid-19 and the Promoter requested the Allottee to forego the delay period interest due to Covid-19 but there was no resolution of the dispute between the Promoter and the Allottee in this regard.
# 23. The Allottee has claimed that she had almost paid 90% of the sale consideration, and eventually, when she received offer from the Promoter to inspect the property, and upon first inspection on 04.07.2023, she found several defects including some shortfall in the Carpet Area. The Allottee also argued that the Promoter had only secured Partial Occupancy Certificate, which was subject to fulfillment of 20 conditions by the Promoter. Two more inspections were done, one on 02.12.2023, and the final one on 06.02.2024 when the Engineering team from the Authority inspected the works, and the Team as well as Allottee were satisfied with the repair works undertaken by the Promoter.
# 24. Allottee’s Complaint before the Authority was allowed and the Promoter was directed to pay interest on delay period on the total amount paid by the Allottee to be calculated at the rate of SBI MCLR plus 2% from 01.07.2020, being the scheduled date of inspection, till 06.02.2024 being the date on which the Engineering Team inspected the work and reported that the repair works were satisfactorily completed, the Promoter was also directed to handover possession by executing Sale Deed immediately on receipt of balance sale consideration, if any. Aggrieved by this Judgment, the Promoter preferred the present Appeal before the Tribunal. The Promoter has contended that he obtained the Occupancy Certificate on 25.01.2023 and rectified the snags on 04.07.2023 and hence he is not liable to pay interest from 01.08.2023 till 06.02.2024. He also claimed that since there was delay in payment installment by the Allottee also, the Allottee also is liable to pay interest as per Section 19(7) of the RERA Act.
# 25. The reason given by the Promoter for delay in completion of the Project is that completion date of the project falls during the period of ‘COVID Pandemic’ and also that the Promoter has been requesting Allottee to come forward for inspection and to take possession of the flat as per Section 19(10) of the RERA Act but, the Allottee did not come forward to do so. The Allottee has also contended that Force Majeure clause does not permit indefinite suspension of the obligation on the part of the Promoter. The Allottee has also contended that the defects found out by the Allottee were rectified only on 06.02.2024, except the Carpet Area, which is still unresolved. The Allottee has submitted that since the Complaint proceedings were being heard before the Authority, she did not come forward to take possession till the matter was resolved before the Authority.
# 26. We therefore, need to examine whether the delay in completion of the project is covered under the valid grounds such as lockdown variation, etc., and if so, how much of the delay can be attributed to Force Majeure factors, and for how much delay does the promoter have to pay interest towards delay compensation. We have also need to examine with reference to Extension of RERA Registration for the project from time-to-time and whether Extension of the RERA Registration would automatically mean if due date of completion also needs extended by virtue of the Extension of RERA Registration.
# 27. We have examined Clause-19 of the Construction Agreement regarding Force Majeure in this regard. We find that in Clause Force Majeure, nine circumstances for Force Majeure have been laid down. In the said Clause, not only Force Majeure condition laid down in explanation of Section 6 of the RERA were included, but also factors such as non-availability of building materials, Labour, delays in grant of NOC from various authorities, any change in rules and regulations by any Authority, Labour strike etc., and also any other eventuality which is beyond the reasonable control of the Developer.
# 28. The Explanation at Section-6 defines “Force Majeure to mean a case of war, flood, drought, fire, cyclone, earthquake or any other calamity caused by nature affecting the regular development of the real estate project.’ The Covid Pandemic, undoubtedly, falls under the definition of Force Majeure as described in Explanation above, but for some of the other factors illustrated in Section-10, such as non-availability of men and materials, or obtaining permission and approval etc. from competent authorities are something which are the direct responsibility of the Promoter and cannot, in our considered view, be included in the Force Majeure condition to escape liability for payment of delay compensation due to these factors. Merely the fact that the Allottee has signed the Construction Agreement and Sale Agreement which included this Clause does not mean that the entitlement of the Allottee for getting delay period interest for factors which are not genuinely Force Majeure will get adversely affected. It is the direct responsibility of the Promoter to ensure availability of men and material and to get the necessary permissions, approvals and certificates within the stipulated time and he cannot take shelter from including these factors in the Agreement to be valid grounds for denying the delay period interest to the Allottee.
# 29. Next main issue that we need to examine is whether Extension of RERA Registration would tantamount automatically to extension in the project completion date as per the Sale and Construction Agreement. We have examined the extensions granted by RERA to this project as per which first Extension was granted on 08.01.2021 for a period of 9 months until 30.09.2021 and the second Extension for Registration was granted on 05.10.2021 for further period of 12 months till 30.09.2022. Section 6 of the RERA Act is relevant provision regarding Extension of Registration which reads as under:
“6. The registration granted under section 5 may be extended by the Authority on an application made by the promoter due to Force Majeure, in such form and on payment of such fee as may be specified by regulations made by the Authority:
Provided that the Authority may in reasonable circumstances, without default on the part of the promoter, based on the facts of each case, and for reasons to be recorded in writing, extend the registration granted to a project for such time as it considers necessary, which shall, in aggregate, not exceed a period of one year:
Provided further that no application for extension of registration shall be rejected unless the applicant has been given an opportunity of being heard in the matter.
Explanation.— For the purpose of this section, the expression “Force Majeure” shall mean a case of war, flood, drought, fire, cyclone, earthquake or any other calamity caused by nature affecting the regular development of the real estate project.”
# 30. It is clear that Registration can be extended by the Authority due to Force Majeure based on the facts of each case and that reasons for the same should be recorded in writing. We find that no such reasons have been recorded while granting Extension. However, this is a lapse on the part of the Authority for which the Promoter not be held responsible.
# 31. However, we are of the considered view that Extension of RERA Registration of a project does not automatically mean that due date for completion are as per the signed Agreement also get extended. The Agreement for Sale and Construction Agreement are legally enforceable documents under Indian Contract Act, 1872 and the Promoters cannot unilaterally alter the due date for handing over unless both the parties agreed to change the due date of handing over possession. We are of the view that the Registration of project forms the core and substance of RERA Act, as it provides a framework for regulation. Registration process ensures that complete and accurate information is available to the buyers, thereby enhancing the transparency and credibility, and justice to both Promoter & Allottees. Registration of project reduces the risk of asymmetry of information between Seller and the Buyer and provides preventative, curable measures to all stakeholders. The mere fact that the Unit purchased by the Allottee is ready for possession does not imply that Registration of the project can be dispensed with since the promoter is required not only to complete the works pertaining to the purchased property but also to ensure that all external and internal development works in the entire project as described in Section 2(w) and 2(zb) of the RERA Act are fully completed. RERA Registration or extension of registration also allows Promoters to not only continue the development work but also to market & sell unsold units in the project which otherwise could become challenging without the assurance of a valid RERA Registration. Registration of the project establishes the legal framework which not only regulates future development but also extends its reach retroactively to projects which were not complete in all respects. While RERA Registration and its Extension allows the Promoter to continue to complete the development works and market/sale the unsold units, but it does not automatically modify date of possession which is a contractual obligation to which Promoters have to adhere to unless there are Force Majeure circumstance, and if developers failed to deliver possession at the contractual date, Allottees can approach the RERA for compensation or refund unless the Extension is on account of Force Majeure circumstance.
# 32. This brings us to the consideration of the subject as to the dates of lockdown on account of Covid Pandemic issued by RERA or any other Court of law from time-to-time. We have perused the Circular of RERA dated 04.04.2020, where in projects for which completion date expires on or after 15.03.2020, the period of validity of Registration of such projects may be extended by six months by invoking Force Majeure clause. Therefore, since this project was due for handover on 30.06.2020 which is during the Covid period, due date for completion gets extended by three months to 30.09.2020. Further extension for completion of RERA project was issued by RERA on 18.12.2020 in view of the prevailing Covid situation under which, the completion period was extended for a further period of three months. Therefore, completion period of this project on account of Force Majeure stands extended to 31.12.2020. RERA also issued another Notification dated 18.12.2020, as per which the due date of completion was extended for a further period of three months by invoking Force Majeure clause. Therefore, the due date of completion gets extended for a total period of 9 months till 31.03.2021.
# 33. The reason for extending the due date for completion from 31.06.2020, as agreed in the Construction Agreement, and not from 15.03.2020 being date of first RERA Circular as per which the validity of Registration was extended by invoking the Force Majeure clause due to Covid Pandemic, is that if the extended period permitted by the RERA Circular is computed from 15.03.2020, then the Promoter will get no additional time to complete the project on account of Covid, although the Covid Pandemic occurred during the agreed period allowed for completion of the project to the Promoter as per the Agreement. The Promoter hence is liable to pay interest to the Allottee as per RERA Act from 31.03.2021 till the date of issuance of Occupancy Certificate and intimation of the same to the Allottee for taking over possession.
# 34. It is admitted fact that the Occupancy Certificate was issued on 25.01.2023 and the Allottee was asked to come forward for inspection of the property on 29.06.2023. First inspection was conducted on 04.07.2023 in which several observations were made with regard to snags. The second inspection was undertaken on 02.12.2023 in which some of the unsolved problems were noted, after which the snags were rectified and it was noted on 06.02.2024 i.e. in the third inspection report, that all the repair works were completed to the satisfaction of the inspection team as well as the Allottee.
# 35. The report regarding Carpet area inspection was also submitted as per which the Carpet area is shown as 1232 sq.ft. as per the Agreement, but the actual measurement was found to be 1170.69 sq.ft., the difference being 61.31 sq.ft. We notice that in the order of the Authority, no direction has been given with regard to this issue and shortfall in the carpet area.
# 36. While it is admitted fact that Occupancy Certificate was given by BBMP on 25.01.2023 and the Promoter sent Email to Allottee to come for inspection on 29.06.2023 and communication was sent by the Promoter to the Allottee even after 06.02.2024, on 07.03.2024, 25.06.2024 & 26.06.2024 but the Allottee still raised some issues and did not take possession of the property. The Promoter has contended that once Occupancy Certificate is issued, though he is not liable to pay interest from the date he asked on 29.06.2023 to the Allottee to come for inspection and take possession. He is, however, agreeable to pay interest till 31.07.2023 after the first inspection report on 04.07.2023 when he claimed that he rectified the defects.
# 37. We are of the considered view that once Occupancy Certificate has been issued, and the intimation has been sent by the Promoter to the Allottee informing her about the same, it is the responsibility of the Allottee to take the possession and if the Allottee has any grievance with regard to defects etc. she can claim compensation for the defects but, cannot indefinitely delay in taking over possession for one reason or the other. An Allottee cannot refuse to take possession of a property solely on the grounds of snags or defects once the Occupancy Certificate has been issued. The Occupancy Certificate is considered as conclusive proof of project completion under RERA and while the Allottee is entitled to claim compensation for the defects or deficiencies but cannot claim interest for delay in handing over possession once the Occupancy Certificate is issued and intimation is sent to the Allottee to take over the possession.
# 38. In this case, however, since several defects which were pointed out in the First Inspection Report which were subsequently rectified to the satisfaction of the inspection team and the Allottee on 06.02.2024, we consider it acceptable to make an exception and held that the Promoter is liable to pay interest for the delay period from 31.03.2021 till 06.02.2024. With regard to the Carpet area, since no finding has been given by the Authority in its Order, the Allottee may approach the Authority for compensation in this regard if she wishes to do so.
# 39. We have considered Citations given by the Promoter regarding RERA Circulars for treating Force Majeure period as moratorium period for the purpose of calculating interest and the decision of the Hon’ble High Court of Bombay where it is laid down that the ‘moratorium period’ will have to be excluded while computing interest. We are of the view that the above Citations are relevant to the matter at hand.
# 40. With the above observations, we answer the point (i) & (ii) partly in the ‘affirmative’ and proceed to pass the following:
ORDER
1) The Appeal is partly allowed;
2) The impugned order dated 14.11.2024 passed by the 2nd Respondent-Karnataka Real Estate Regulatory Authority in Complaint No.CMP/220321/0009194 is hereby set aside;
3) The Promoter is directed to pay interest on delay period on the amount paid by the Allottee of Rs.1,02,03,088/- at the rate of SBI MCLR plus 2% from 31.03.2021 till 06.02.2024.
4) The Registry is directed to release the amount entitled to be paid to the Allottee as per Direction No.3, from out of the amount of Rs.36,20,769/- deposited by the Promoter, by issuing bankers cheque/DD in favour of the Respondent No.1-Allottee, after the expiry of the appeal period and by following the due procedure;
5) The Registry is directed to release the remaining amount, if any, in favour of the Appellant-Promoter, by issuing the bankers cheque/DD in the name of the Appellant.
6) The Promoter is directed to handover possession by way of execution of Sale Deed in favour of the Allottee with immediate effect on receipt of balance sale consideration;
7) The Allottee is at liberty to file Complaint before the Authority with regard to the prayer for shortfall in the Carpet area and rental compensation;
8) In view of disposal of the main appeal, pending I.As., if any, shall stand disposed of, as they do not survive for consideration;
9) Registry is hereby directed to comply with the provision of Section 44(4) of the Act and to return the record to RERA, if received.
There is no order as to costs.
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