Delayed flat possession: Accepting keys won't end interest claim, says HC

HC says buyers can claim interest despite accepting delayed possession; 'zero period' cannot erase earlier default.

A homebuyer can still seek interest for the period during which the developer delayed handing over the property, the Allahabad High Court has held. The ruling is relevant for buyers who accept possession after waiting for years but later want to pursue their claim for compensation for the delay.

 

The Lucknow bench of the court also held that the Real Estate (Regulation and Development) Act, 2016 (RERA) does not prescribe a specific limitation period for claiming interest for delayed possession. The court dismissed an appeal by Antriksh Developers and Promoters in a dispute involving its Antriksh Golf View project in Sector 78, Noida.

 

 

The case involved homebuyer Shyam Sunder Agrawal, who booked a flat in 2010. Possession was contractually due by November 2012, but the developer offered it only in May 2017. According to the court, the offer was made without the occupancy certificate and other necessary documents.

 

The RERA Appellate Tribunal had directed the developer to pay interest on the amount deposited by Agrawal for the period from December 2012 to May 2017 at 1 per cent above the Marginal Cost of Fund Based Lending Rate.

 

What the ruling means for homebuyers

Accepting possession does not automatically amount to giving up a claim for delayed-possession interest.

 

“The Allahabad High Court’s judgment reinforces an important protection for homebuyers,” said Tusi Kumar, partner, law firm Singhania & Co. “Accepting possession after a delay does not, by itself, waive the right to claim interest.”

 

Kumar said Section 18(1) of RERA allows an allottee who chooses to remain in the project to claim interest for every month of delayed possession. However, he cautioned that the outcome of an individual claim will depend on the documents, relevant dates and any settlement reached between the buyer and developer.

 

Rishabh Gandhi, a former judge and founder of Rishabh Gandhi and Advocates, said buyers often accept possession after waiting for years and that this should not automatically be treated as a waiver of their statutory remedies.

 

“What matters is whether possession was delivered within the agreed timeline and, if not, whether the delay was legally justified,” he said.

 

This means buyers should preserve the allotment letter or agreement, payment records, promised possession date, correspondence with the developer and possession-related documents.

 

Developer must establish the reason for delay

The case also deals with an important issue for buyers: When can a developer rely on external events to explain delayed possession?

 

Antriksh Developers argued that the delay was linked to an order of the National Green Tribunal (NGT) restricting construction and the grant of occupancy certificates within a 10-km radius of the Okhla Bird Sanctuary.

 

The High Court did not accept the argument for the entire period. It noted that the contractual deadline was November 2012, while the NGT restriction came into effect only in August 2013. The court also noted the developer's position that the project had been completed in 2014 and that an application for an occupancy certificate had been made that year.

 

“The developer must prove that any claimed force majeure or regulatory restraint actually caused the delay,” said Alay Razvi, managing partner, Accord Juris. He added that possession without an occupancy certificate or other mandatory approvals may not amount to valid possession in law.

 

Raheel Patel, partner, Gandhi Law Associates, said the ruling makes clear that a regulatory restriction can cover only the period during which the project was actually affected.

 

“Developers relying on force majeure will need to show that the restraint, and not their own delay, caused the late handover,” he said.

 

What is the ‘zero period’?

The dispute also involved the concept of a “zero period” arising from the NGT restrictions. In simple terms, a period recognised as being beyond the developer's control may be excluded while calculating the delay.

 

However, the High Court made an important distinction. The benefit could apply only to the period during which the project was actually affected by the restraint. It could not erase a default that had already occurred before the restriction came into force.

 

Shivam Kunal, senior associate, B Shanker Advocates LLP, said a developer cannot simultaneously argue that a project was completed and that its completion was prevented by an external restriction.

 

“External orders cannot wipe out a default or delay that had already occurred prior to those restrictions coming into force,” he said.

 

For homebuyers, this distinction is important because a force majeure event does not automatically wipe out the entire period of delay. The dates and circumstances have to be examined.

 

What buyers should check before accepting possession

The ruling does not mean every delayed-possession claim will automatically succeed. Buyers should examine:

 

• The possession date promised in the agreement.
• The actual date on which possession was offered.
• Whether the required occupancy or completion certificate was available.
• Whether the developer has cited force majeure or regulatory restrictions.
• Whether the cited event actually covers the period of delay.
• Whether the buyer signed any settlement or waiver while accepting possession.

Tushar Nair, advocate, Delhi High Court, said the ruling also reinforces the need for developers to comply with RERA orders and cautions against using appellate proceedings merely to delay compliance. He said the court's approach to the occupancy certificate and the balance between the interests of promoters and allottees is significant for homebuyers.

 

Accepting the keys to a flat after delay does not by itself, close the door on a claim for interest. But the claim still needs to be supported by the agreement, possession records and evidence establishing the actual period of developer default.