Haryana RERA Orders Vatika To Pay Delay Interest And Execute Conveyance Deed In Favour Of Homebuyer

Background Facts

Homebuyer (Complainant) purchased a flat in the builder's (Respondent) project “High Street at INXT” located in Sector 83, Gurugram. The total sale consideration was Rs. 1.41 crore and in total the homebuyer paid Rs. 1.53 crore to the builder.

In August 2018, the builder issued an allotment letter in favour of the homebuyer. Clause 4 of the letter stated that the builder was liable to pay assured returns at the rate of Rs. 81.66 per sq. ft. per month as a minimum guaranteed rent for the first 36 months either from the date of completion of the project or until the unit was leased whichever occurred earlier.

Homebuyer alleged that the builder failed to fulfil his obligations, both those stated orally and those set out in the duly executed builder-buyer agreement.

Aggrieved by this, the homebuyer filed a complaint before the Authority seeking pending assured returns, execution and registration of the conveyance deed and delayed possession interest under Section 18.

Contentions of Vatika

Builder contended that the assured return agreement was signed in 2016 but later became unenforceable after the government enacted the Banning of Unregulated Deposit Schemes Act, 2019.

They argued that this law imposed a ban on such commitments made by builders. Relying on Section 2(j) of the Contract Act, the builder claimed that a contract which ceases to be enforceable becomes void. Therefore, they asserted that the assured return agreement no longer had any legal force.

Observation and Direction by Authority

Authority noted that the builder had initially paid assured returns but later refused by citing the Banning of Unregulated Deposit Schemes Act, 2019 and an earlier decision where such relief was declined.

Authority rejected this defence. It observed that when assured returns are part of the builder buyer agreement, allotment terms or related documents then they will remain enforceable in law. The 2019 Act does not bar such payments, since they are treated as advances against the allotment of immovable property and are protected.

Authority while deciding whether a homebuyer can claim both assured returns and delayed possession interest held that if assured returns are payable even beyond the due date of possession until actual handover then the homebuyer is entitled to either assured returns or interest under Section 18, whichever amount is higher.

Authority further observed that assured returns arose from the allotment letter but after the due date of possession, the homebuyer's interests are better protected through delayed possession charges under Section 18(1). In this case, delayed possession interest came to about Rs. 1,41,665 per month which was much higher than the assured return of about Rs. 90,234 per month.

Therefore, the Authority directed the builder to pay delayed possession interest at the rate of 11.10% per annum from the due date of delivery until two months after the occupation certificate is granted or until actual handover, whichever happens first. It also made clear that no separate payment of assured returns would be allowed, since the delayed possession interest already protects the homebuyer's interest.

Lastly, Authority directed builder to execute the conveyance deed of the flat in the favor of homebuyer within 3 months.

Case Title – Rajesh Kumar Batra & Anr Versus Vatika Ltd.

Citation – Complaint No. 2410 of 2023