Tamil Nadu Real Estate Regulatory Authority (TNRERA) ruled that 18% interest charged by a builder from a home buyer for delay in payment was unfair and one-sided and slashed it to 10.20%.
According to complain filed by T. Ananthi, she had agreed to buy a flat in a project ‘Viha Apartments’, developed by G.K.S. Technology Park Ltd in Anna Nagar. A construction and sales agreement was entered into between the buyer and developer in September 2016 and the total sales consideration was about ₹1.50 crore, excluding the registration cost, according to the proceedings before the Authority.
T. Ananthi moved the TNRERA seeking relief in terms of the high interest charge for the delayed payment, among others. In its response, the developer said on October 12, 2017, about 95% of the milestones had been completed and therefore on that date, the buyer ought to have paid about ₹1.29 crore. From then till January 18, 2019, no payments were made, it said. The developer had also told the buyer that it would charge 18% interest for the delayed payment as per the construction agreement.
TNRERA noted that there was a huge difference between what the builder charged the buyer for a delay in payment and what it would offer as compensation for delays on its part, as per the agreement.
“Under clause-5 of the construction agreement it has been provided that developer shall compensate the allottee by paying a sum of ₹12 per sq.ft per month of delay. This works out to ₹144 per sqft per annum. ₹10,850 per sq ft has been adopted by the developer for the cost of the apartment, the compensation rate works out to less than 1.5% per annum,” it said.
Therefore, the compensation and interest in Clause-5 and Clause-13 respectively was extremely unfair and one-sided and fall within the definition of ‘unfair trade practice’ under Section-2(r) of the Consumer Protection Act, 1986 following the dictum laid down by the Supreme Court and the National Consumer Redressal Commission, New Delhi, it added.
Therefore, the Authority directed that the interest rate of 10.20% prescribed by it under the Real Estate (Regulation and Development) Act 2016, shall be adopted by the builder for delayed payment by the buyer. It told the developer to rework the interest as per its direction and home buyer to pay the balance amount.
