'Builders Cannot Hold Buyers' Money Indefinitely': Bombay HC Upholds Interest Relief For Runwal Infinity Homebuyers

Mumbai, June 9: Observing that a developer cannot indefinitely retain purchasers’ money while failing to deliver homes, the Bombay High Court has upheld orders directing Runwal Constructions to pay interest to homebuyers for delayed possession of flats in its Runwal Infinity (Runwal Sanctuary) project at Nahur, Mulund.

Justice Madhav Jamdar, on Monday, dismissed 10 appeals filed by the developer challenging a 2018 order of the Maharashtra Real Estate Appellate Tribunal (MahaREAT), which had directed payment of interest at 10.05% per annum from February 1, 2014, until possession is handed over.

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The court also imposed a cost of Rs 1 lakh each on the developer in two appeals and Rs 10,000 each in eight appeals, which is to be paid within four weeks.

Background of the case

The court noted that the allottees had booked their flats between 2005 and 2007, costing from Rs 36.32 lakh to Rs 60.75 lakh. They were promised possession between 2008 and 2010. However, even after nearly two decades, the flats had not been handed over.

Rejecting the developer’s challenge, Justice Jamdar underscored that homebuyers cannot be left at the mercy of builders who continue to retain substantial amounts paid by purchasers while delaying possession indefinitely.

“The promoter cannot be permitted to hold the money paid by the allottees and postpone handing over possession endlessly,” the court observed in a detailed 230-page judgment, while affirming the buyers’ entitlement to interest for the prolonged delay.

Substantial payments and prolonged delay

The judgment records that most purchasers had paid substantial portions of the sale consideration over 15 years ago, while one allottee had paid the entire amount. Despite this, they continued to wait for possession of their homes.

The court relied on provisions of the Real Estate (Regulation and Development) Act, 2016 (RERA), as well as Supreme Court rulings recognising the right of homebuyers to receive interest when a promoter fails to complete or hand over a project within the stipulated period.

Justice Jamdar observed that under Section 18 of RERA, an allottee’s right to seek interest for delayed possession is an “unqualified right” and is not dependent on contractual clauses or other contingencies.

Tribunal’s approach upheld

The court also noted that the MahaREAT had, in fact, taken a balanced approach by awarding interest only from February 2014, although the contractual possession dates were between 2008 and 2010. Therefore, the developer could not complain that the tribunal’s order was excessive.

The developer had questioned the jurisdiction of the Maharashtra Revenue Tribunal, which was functioning as the designated appellate tribunal under RERA at the relevant time. However, the HC rejected these objections and held that the tribunal had jurisdiction to decide the appeals until December 23, 2018.

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High Court judgment in favour of homebuyers

Dismissing all the appeals, the High Court held that none of the substantial questions of law raised by the developer merited consideration and upheld the tribunal’s decision in favour of the homebuyers.

The court also refused to stay its judgment, noting that the purchasers had already waited for years beyond the promised possession dates and were entitled to the relief granted under RERA.

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