Allahabad High Court Upholds Interest Rate for Delayed Possession in Yamuna Expressway Case

RERA Appellate Tribunal's Decision to Grant Interest at MCLR + 1% Affirmed; Pre-deposit Appropriation Guidelines Clarified

In a significant ruling, the Allahabad High Court has upheld the decision of the Uttar Pradesh Real Estate Appellate Tribunal regarding the grant of interest for delayed possession of residential plots along the Yamuna Expressway. The case, involving the Yamuna Expressway Industrial Development Authority (YEIDA) and Raj Kumar Goyal, revolved around the entitlement of allottees to interest due to delays in possession caused by land acquisition disputes and subsequent farmer agitations.

The court confirmed that allottees are entitled to interest at the rate of MCLR (Marginal Cost of Funds based Lending Rate) + 1% per annum, as prescribed under the Real Estate (Regulation and Development) Act, 2016 (RERA Act). This decision aligns with the circular issued under Section 37 of the RERA Act, reinforcing the legal framework supporting the allottees' claims.

Justice Pankaj Bhatia, presiding over the case, dismissed the appeals filed by YEIDA, which contended that external factors like farmer agitations should exempt them from paying interest. The court underscored that under Section 18 of the RERA Act, the promoter's failure to deliver possession within the stipulated period entitles the allottee to interest at the prescribed rate.

Additionally, the judgment addressed the nature of pre-deposits made under Section 43(5) of the RERA Act. The court clarified that these pre-deposits, required for the maintainability of appeals, can be appropriated towards adjudicated dues. Refunds are permissible only if the appeal succeeds, ensuring adherence to the statutory provisions governing pre-deposit usage.

The ruling also touched upon the powers of the Appellate Tribunal under Sections 43 and 44 of the RERA Act, affirming that the Tribunal can exercise the powers of the Regulatory Authority while deciding appeals, thus bypassing the need to relegate the matter back to the Regulatory Authority.

This judgment brings relief to numerous allottees who have been waiting for possession of their plots for years. It sets a precedent in real estate litigation, emphasizing the accountability of promoters in adhering to possession timelines and honoring financial commitments to allottees.

YEIDA, having launched the residential plots scheme in 2009, faced challenges due to litigation over land acquisition and subsequent government mandates for additional compensation to farmers. Despite offering options to allottees for withdrawal from the project, many chose to retain their allotments and seek compensation for delays.

The court's decision mandates YEIDA to comply with the directions within 45 days, ensuring timely execution of the judgment. Allottees are empowered to approach UP RERA for execution if YEIDA fails to meet the deadline.

This ruling is a pivotal moment in the enforcement of the RERA Act, reinforcing the rights of property buyers and setting robust guidelines for real estate developers in India.

Bottom Line:

Real Estate (Regulation and Development) Act, 2016 (RERA Act) - Appellate Tribunal's jurisdiction in granting interest for delay at the rate of MCLR + 1% upheld - Pre-deposit under Section 43(5) of RERA Act can be appropriated towards adjudicated dues and refunded if found excessive.

Statutory provision(s): Real Estate (Regulation and Development) Act, 2016, Sections 18, 43(5), 44, 37

Yamuna Expressway Industrial Development Authority v. Raj Kumar Goyal, (Allahabad)(Lucknow) : Law Finder Doc Id # 2810120