Emaar INDIA Limited vs. Kaushal Pal Singh @ Kushpal Singh

Facts

These connected appeals by Emaar India Limited (formerly Emaar MGF Land Limited) challenge orders from the Haryana Real Estate Appellate Tribunal, which upheld decisions by the Real Estate Regulatory Authority (RERA). The RERA had directed the appellant to pay interest at 10.20% per annum on the amount paid by home buyers for delayed possession of their units. The delay in possession in the lead case was from the agreed date of 17.11.2013 to the offer of possession on 07.03.2019, a period of over 5.5 years. The appellant's primary contention was that statutory amounts like H-VAT, GST, and EDC deposited by home buyers with the developer should not attract interest, as these amounts are paid to the government and the promoter derives no benefit from them. The home buyers argued that these amounts form part of the total price paid and interest is payable on the entire sum for the period of delay.

Held

The Court held that the statutory amounts like H-VAT, GST, and EDC deposited by the home buyer with the developer are liable to carry interest when the promoter is ordered to pay interest for delayed possession. The Court reasoned that Section 18(1) proviso of the 2016 Act mandates interest for every month of delay on the entire amount paid by the allottee, and this is in the nature of damages or compensation for the delay. The appellant failed to point to any statutory provision prohibiting the payment of interest on these amounts. Furthermore, the Tribunal correctly observed that this plea was not raised by the appellant before the RERA or the Tribunal. The Court also noted that the second issue raised by the appellant did not arise in these cases, as the allottees had not withdrawn from the project and were only seeking interest for delayed possession under Section 18(1) proviso of the 2016 Act. The interest is payable from the agreed date of delivery of possession until the date possession was delivered. The Court found no grounds to interfere with the orders of the Tribunal and RERA.

Key Issues

1. Whether statutory amounts such as H-VAT, GST, and EDC, deposited by a home buyer with a developer, are liable to carry interest when the promoter is ordered to pay interest on delayed delivery of possession of a property? This issue turns on the interpretation of Section 18(1) proviso of the Real Estate (Regulation and Development) Act, 2016 (the 2016 Act). The appellant argued that interest should not be awarded on these amounts as they are paid to the government and the promoter derives no benefit. The respondent argued that these amounts constitute the price of the apartment and interest is payable on the total amount paid by the allottee as compensation for delay. 2. In cases where the agreement requires staggered payments, whether interest on delayed possession is payable from the date of deposit or from the agreed date for delivery of possession? The appellant's counsel restricted arguments to the first issue, stating the second issue did not arise as the allottees had not withdrawn from the project and sought only interest for delayed possession as per Section 18(1) proviso of the 2016 Act.