HRERA Awards Rs 65 Lakhs Compensation for 9-Year Delay in Flat Possession

In a recent decision, the Haryana Real Estate Regulatory Authority (HRERA) has directed a builder to compensate a homebuyer with Rs 65 lakh for an inordinate delay of over nine years in handing over a flat in Gurugram.

The homebuyer had booked a flat in 2013, with the developer promising possession by 7th December 2015. However, the possession was delayed by more than nine years. The builder attributed the delay to unforeseen circumstances, including the COVID-19 pandemic, the demise of the chairman of the environmental impact assessment (EIA) committee, and inadequate water supply.

After reviewing the case, HRERA rejected the developer's justifications, deeming them insufficient to warrant such a prolonged delay. The authority emphasised that the reasons cited did not qualify as force majeure events that could absolve the builder of responsibility. Recognising the undue hardship faced by the homebuyer, HRERA ordered the builder to pay Rs. 65 Lakhs as compensation for the delay.

The interest compensation was calculated based on the amount paid by the homebuyer, the duration of the delay, and an annual interest rate. The homebuyer had paid Rs. 62,79,109, and the possession was due on 7th December 2015. The actual possession date was assumed to be 19th May 2025, resulting in a total delay of 9 years and 5 months. The interest rate was set at 11.1% per annum. Using the formula:

Rs. 62,79,109 × 11.1% × (9 + 5/12) Years

The final interest amount was calculated to be Rs. 65,63,237.79.

This decision underscores HRERA's commitment to holding developers accountable for project delays, reinforcing the rights of homebuyers to timely possession. The ruling provides clarity on what constitutes a force majeure event, indicating that internal company issues or infrastructural challenges like water supply do not fall under this category. The case also brings attention to the legality of auto-extension clauses in sale agreements, prompting a revaluation of such provisions in future contracts.

This case is part of a series of actions by HRERA to address delays in the real estate sector. In recent times, the authority has taken stringent measures against developers who fail to adhere to project timelines, ensuring that homebuyers' interests are protected. Such proactive steps by HRERA aim for greater transparency and accountability in the real estate market.

The Rs 65 Lakhs compensation awarded by HRERA serves as a significant reminder to builders about the importance of honouring commitments made to homebuyers. It also reinforces the regulatory body's role in safeguarding the rights of consumers in the real estate sector.