Maharashtra Tribunal Orders Developer to Pay Interest to Joint Property Buyers Denied Possession

The Maharashtra Real Estate Appellate Tribunal, Mumbai has provided a major relief to joint property buyers who had entered into an agreement for sale in 2006 to purchase an apartment in a Bandra-based project.

The developer had denied possession of the apartment, claiming that the project cost had escalated due to the cessation of construction work for 10 years. In response, the tribunal has ordered the developer to pay an interest of 2 per cent on the amount paid by the buyers, which is to be calculated from 2008 until the actual possession of the apartment. Additionally, the developer has been asked to pay Rs 20,000 to the buyers. The amount of interest can be adjusted at the time of possession against the balance amount to be paid by the homebuyers.

The project was issued a stop work notice by the Brihanmumbai Municipal Corporation in 2006 following directions of the forest conservator, as the land under the project was declared a forest. Despite the developer and other affected developers filing a plea in the Bombay High Court, no relief was granted, and they approached the Supreme Court. The apex court vacated the stay on the construction in 2014, and the developer resumed construction work in 2015-16. However, claiming that the price of the project had increased substantially due to the delay in construction, the developer asked the purchasers to pay an additional amount.

The homebuyers declined to pay the additional cost and demanded interest along with compensation for the delay in handing over the possession of the apartment. The appellate tribunal dismissed the developer’s plea, stating that it was the responsibility of the developer to have a clear title of the land before starting work and that the delay caused was beyond its control.

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