In a significant order, the Tamil Nadu Real Estate Regulatory Authority has ruled that a developer cannot demand arbitrary interest for delayed payments by homebuyers. The developers cannot exceed the rate of 10% interest fixed under TNRERA rules, it said.
In its order over complaints regarding delay in handing over apartments to 10 homebuyers, TNRERA termed a construction agreement between the buyers and the developer ‘one-sided’, favouring only the latter. ‘Brindhavanam’ at RE Nagar in Kavanoor near Kundrathur is developed by Sri Lakshmi Builders Pvt. Ltd. While the agreements were entered into in 2012, 2013 and 2015, construction had to be completed within 18 months of the date of the agreement and the flats delivered.
“A perusal of the construction agreement entered between the complainants (homebuyers) and the respondent (developer) reveals that terms are overwhelmingly one-sided and only in favour of the developer. Of the 39 clauses, there is not even one giving any right to complainants to claim compensation or damages for the delay on the part of the builder,” TNRERA adjudicating officer G Saravanan said. As per Clause 5, it provides for an interest at 24% for delayed payments by the allottees. “But, there is no provision for providing compensation, damages or interest on the delayed handing over of the flat by the promoter,” the order said. It cited a note made by the Supreme Court in another case that the builder could not seek to bind the buyer with one-sided contractual terms.
Denying the allegations, the developer said the failure to complete construction was due to the buyers’ failure to make the payment within the stipulated time. Noting that the complainants made payments with a huge delay, the developer said the complainants were not entitled to compensation and should be directed to pay the balance amount with interest.
TNRERA said the statement of accounts showed all homebuyers, barring one, paid 85%-100% of the total cost and are eligible to compensation for delay, metal agony and litigation cost. As per TNRERA rules, the rate of interest payable shall be the current highest marginal cost of the lending rate of interest of SBI and an additional 2% per annum. Hence, the complainants are entitled to be compensated at 10% on the amount paid to the developer.
The developer is also entitled to interest at the same 10% per annum on the delayed payments from the due date for payment till the promised date of delivery of flats. The developer can adjust the amount due payable against the amount of compensation payable by him to the complainants, the order added.
