Alert: No Interest on Dues for Delayed Projects

In a recent ruling, the National Consumer Disputes Redressal Commission (NCDRC) made a significant decision that impacted homebuyers and developers alike. The case involved Gurudarshan Singh, who had purchased a flat in Faridabad's The Pranayam for Rs 50.9 lakh with an expected handover date of December 2011. However, due to delays, the apartment was only ready for occupancy in 2013.

The NCDRC's verdict emphasised that developers cannot charge interest from homebuyers on outstanding payments if a project exceeds the agreed-upon handover date. This decision aligned with previous directives from the Supreme Court of India, aiming to protect homebuyers from financial penalties arising from project delays.

Despite this clear directive, some state real estate regulators have continued to issue conflicting orders. For instance, a recent case in Karnataka under the Real Estate Regulatory Authority (RERA) pushed a buyer to pay interest to the developer for delayed payments in a Prestige Group project in Bengaluru. This discrepancy underscores the inconsistent application of legal principles across different jurisdictions.

In another notable instance, the Supreme Court overturned an NCDRC ruling that allowed a developer to charge interest from a homebuyer for delayed payments. The court stated that such penalties were unjustified when the delay in possession was attributable to the developer.

These legal developments highlight ongoing challenges faced by homebuyers in India's real estate sector. Delays in project completion not only inconvenience buyers but also impose financial burdens. The rulings seek to balance the rights of homebuyers seeking timely possession with the obligations of developers to fulfil their contractual commitments.