Controversy on SC 6% Interest for Project Delivery Delay

The Supreme Court order asking a developer to pay six per cent interest on a flat's cost to buyers for the delay in delivery of properties, will be an additional burden on the developers. The ruling came in the case of DLF Homes, directing the firm to pay six per cent interest on flat's cost for delay. Many in the industry said the implementation of the order is challenging as in RERA Act there is already penalty for delay in delivery of a project. While different states have different penalties under RERA anything additional will be a huge burden. Developers have said construction at sites were halted in April and May due to lockdown and projects would be delayed because of the lockdown. SC needs to evaluate force majeure events before making such calls. While it is give full benefit to the buyers there is no protection offered to developer which is unfair, developer’s lobby cited. However, experts are also of the view that the verdict sets a new benchmark of acceptable conduct in the real estate business as in the recent past, despite several RERA rulings favouring homebuyers across states, there was little actual on-ground action in terms of homebuyers getting back their penalty amounts or possession of their flats. This is essentially because RERA is not really an execution authority. This move by the Apex Court further strengthens the hand of homebuyers and sends out a firm signal to stakeholders to treat their customers fairly and not take them for granted.