The National Consumer Disputes Redressal Commission (NCDRC) has ruled that developers remain responsible for compensating homebuyers for delays in a housing project even after the buyers have received possession of their apartments. This responsibility continues until the developer obtains the occupancy certificate (OC).

Vahe Projects Private Ltd, a real estate company based in Bengaluru, has been instructed to provide compensation to the purchasers of Vahe Imperial Gardens. This compensation includes 6 percent interest to be paid to the buyers until they actually receive possession of their units. The project has experienced a delay of approximately seven years.

In a court order dated March 3, the court provided further clarification regarding its judgment issued on December 28, 2022. According to this clarification, the date of "actual possession" will be determined as the date when the occupancy certificate (OC) is issued. This definition remains applicable even if homebuyers have already moved into their apartments before the OC is granted.

“The homebuyers are entitled to claim compensation delay until the date of the actual possession or the date of OC”, the order states.
The Vahe Imperial Gardens project, located in Gunjur in eastern Bengaluru, was originally planned to be completed and handed over to buyers by 2015. The construction agreement for the project was signed in 2013. Currently, the project comprises two towers with a total of 139 apartments. The cost of each apartment in the project now begins at a price range of Rs 60-70 lakh.

The NCDRC order highlighted that the progress reports provided by the developer to the homebuyers did not mention or indicate any delays in the project
However, despite the absence of occupancy certificates, the homebuyers began moving into their respective units between 2016 and 2017.

Upendra Mishra, one of the initial homebuyers who chose to move into the project, explained, “I had already paid over 90 percent of the total amount for my apartment, and I was regularly paying the bank's EMI. We were renting a place at that time, and due to financial commitments, we felt compelled to move into our new apartment.”

Mishra further explained that when the homebuyers moved into the project, they encountered various issues. Essential services such as those provided by the Bengaluru Electricity Supply Company Ltd were not operational, and common amenities like the sewage treatment plant were also non-functional. Mishra pointed out that even to this day, they have not received access to amenities such as the clubhouse. Additionally, only one out of the two elevators in the building are currently operational, and there are pending no-objection certificates (NOCs) that need to be obtained for the project.

In 2018, the homebuyers filed a case with the National Consumer Disputes Redressal Commission (NCDRC), seeking compensation for the project's delays and a full handover of their apartments.

On December 28, the court issued an order in favor of the homebuyers, instructing the developer to provide compensation for the delay caused. This compensation was to be paid until the actual date of possession when the apartments would be handed over to the buyers.

Chandrachur Bhattacharyya, the advocate representing the homebuyers, explained that there was some ambiguity regarding the date of possession since the homebuyers had already moved into their apartments. To address this uncertainty, on March 3, the court provided further clarification, stating that the date of possession would be considered valid until the occupancy certificate (OC) has been officially issued.

The court's decision took into account a communication from the developer to the homebuyers in 2018, where the developer acknowledged that there were ongoing pending work and construction activities within the project. Based on this communication, the court concluded that the possession of the apartments was offered to the buyers in an unfinished and incomplete condition. This finding supports the homebuyers' claim that they were handed over their flats without essential work being completed, justifying their demand for compensation for the delays and incomplete state of their properties.

The court additionally took into consideration a notice from the Bruhat Bengaluru Mahanagara Palike (BBMP) to the developer. This notice pointed out that essential facilities in the high-rise building, such as electricity, sewerage treatment plant, drinking water, lift facilities, and other civil works, had not been completed as required.

During the initial proceedings, the developer argued that once the homebuyer takes possession of the property, they should no longer be considered consumers, particularly after two years from the execution of the sale deed.

However, the court disagreed with this argument and stated that the developer was responsible for the delay in providing possession of the apartments with a valid occupancy certificate (OC). As a result, in its December order, the court affirmed that the homebuyers had the right to claim compensation for the delay in receiving their apartments.

The court referred to a Supreme Court judgment in the case of Supertech Ltd vs. Rajni Goyal from 2018. In this reference, the court emphasized that the offer of possession by a developer is considered valid only when the developer has obtained the complete occupancy certificate (OC).

According to the order issued on March 3, in this particular case, the homebuyers have the right to claim compensation for the delay in the project until either the date of actual possession or the date when the occupancy certificate (OC) is obtained, whichever comes later.

The NCDRC has ruled that the developer is obligated to pay delayed compensation to the homebuyers at an annual interest rate of 6 percent until the actual possession of the apartments takes place.

Bhattacharyya emphasized that this judgment sets a precedent that prevents developers from holding homebuyers responsible for the incomplete possession of apartments. He noted that in delayed projects, the project will only be considered complete and the builder's interest liability will cease once the occupancy certificate (OC) has been issued.