Supreme Court Orders Refund to Homebuyer for prolonged delay in possession

CA Ramesh Agrawal

The Hon’ble Supreme Court (SC) in the case of Kolkata West International City Pvt. Ltd. v. Devasis Rudra passed a judgment stating that the homebuyers are allowed to claim refund from the defaulting builders/developers in case there is a prolonged delay in delivery of possession of homes.

In the said case, the builder had failed to hand over the possession of flat of the homebuyer within the stipulated time. Even after seven years of delay, the builder had failed to deliver the possession of the flat.

The apex court observed that a buyer can be expected to wait only for a reasonable period of time and further held that:

“It would be manifestly unreasonable to construe the contract between the parties as requiring the buyer to wait indefinitely for possession. By 2016, nearly seven years had elapsed from the date of the agreement. Even according to the developer, the completion certificate was received on 29 March 2016. This was nearly seven years after the extended date for the handing over of possession prescribed by the agreement. A buyer can be expected to wait for possession for a reasonable period. A period of seven years is beyond what is reasonable.”

According to the Real Estate (Regulation and Development) Act (RERA), 2016, the buyer has rights to cancel the allotment and claim a refund in case the builder fails to deliver the flat within the stipulated time.

The authority intervenes when the builder has no money to refund. In such cases, a recovery certificate is issued and is sent to the District Magistrate for necessary compliances.

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