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  • Writer's pictureDevesh Saxena

Karnataka RERA Orders Developer to Pay Interest for Delayed Possession and Revoke Cancellation [Read Order]


Karnataka Real Estate Regulatory Authority (RERA) has ruled in favor of a homebuyer, directing a developer to pay interest for delayed possession and revoke the cancellation of an allotted unit.

In a recent judgment, the Karnataka Real Estate Regulatory Authority (RERA) has ruled in favor of a homebuyer, directing a developer to pay interest for delayed possession and revoke the cancellation of an allotted unit. This decision highlights the importance of timely project completion and the rights of homebuyers under the Real Estate (Regulation and Development) Act, 2016. The homebuyer, represented by S&D Legal Associates, successfully sought justice through the Karnataka RERA.

The Case at a Glance

The case involved a homebuyer who had invested in the GM Global Techies Town Project in Bangalore. The developer, M/s. Gulam Mustafa Enterprises Pvt. Ltd., had failed to deliver possession by the agreed date of October 10, 2021, despite collecting approximately 95% of the consideration amount from the buyer.

Key Issues Addressed

  1. Delayed Possession: The primary concern was the developer's failure to hand over possession of the unit as per the agreed timeline. This delay caused significant inconvenience and financial strain to the homebuyer.

  2. Unilateral Cancellation: In response to the complaint filed before Karnataka RERA, the developer attempted to unilaterally cancel the allotment through a legal notice dated January 25, 2024. This action was challenged by the homebuyer as unreasonable and arbitrary.

Verdict by Karnataka RERA:


After careful consideration of the facts and relevant legal precedents, the Karnataka RERA bench ruled in favor of the homebuyer. The key points of the judgment are:


  1. Possession Handover: The developer has been directed to hand over possession of the allotted unit to the homebuyer within 60 days of the order.

  2. Interest Payment: The builder must pay Rs. 9,92,465/- as interest for the delay period from October 10, 2021, to March 6, 2024, within 60 days of the order.

  3. Cancellation Revocation: The unilateral cancellation of the allotment has been deemed invalid, and the developer must honor the original agreement.


Legal Basis for the Decision

The Karnataka RERA bench based its decision on Section 18 of the RERA Act, 2016, which provides for compensation in case of delay in project completion. The bench also relied on the landmark judgment of the Supreme Court in M/s. Newtech Promoters and Builder Pvt. Ltd. v. State of Uttar Pradesh and ors., which set a precedent for such cases.

Implications for Homebuyers and Developers

This judgment serves as a reminder of the rights and protections available to homebuyers under the RERA Act. It emphasizes that:


  1. Developers must adhere to promised timelines for project completion and possession handover.

  2. Unilateral cancellation of allotments by developers is not permissible without valid reasons.

  3. Homebuyers are entitled to compensation for delays in possession.

Conclusion

The Karnataka RERA's decision reinforces the regulatory body's commitment to protecting homebuyers' interests and ensuring fair practices in the real estate sector. It sets a valuable precedent for similar cases and encourages developers to prioritize timely project completion and transparent communication with buyers.

For homebuyers facing similar issues, this case demonstrates the effectiveness of seeking recourse through RERA. It underscores the importance of being aware of one's rights and the legal options available in case of disputes with developers.

As the real estate landscape continues to evolve, such judgments play a crucial role in shaping a more accountable and consumer-friendly industry. Both homebuyers and developers should take note of this ruling and its implications for future real estate transactions.


 

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