Builder offered possession without OC. HARERA still ordered interest for delay.

Two years late, no occupation certificate: HARERA tells builder to pay up

Babu Lal Gupta and his wife Madhu Gupta did what thousands of homebuyers in Gurugram do. In 2011, they booked a ground-floor apartment in a project called 'Sovereign Floors at Alba, Esencia' in Sector 67. They paid nearly the entire sale consideration — about Rs.1.07 crore. The builder, M/s New Look Builders and Developers Pvt. Ltd., promised possession within 30 months plus a six-month grace period from the date of the agreement or building plan approval, whichever was later. The plans were approved in December 2012. That made the deadline December 2015.

The builder missed it. Then missed it again. When an offer of possession finally came in June 2016, there was no occupation certificate. That certificate only arrived in January 2017. The Guptas never got physical possession. They approached the Haryana Real Estate Regulatory Authority in Gurugram in 2022, seeking delayed possession interest. The Authority, in a detailed order by Shri Vijay Kumar Goyal, found the builder in violation and directed payment of interest at 10.85% per annum from December 2015 to March 2017. It also ordered the complainants to take possession within 30 days.

The stakes were straightforward: a couple had paid almost the full price for a home they never received, and the builder had offered possession without the legal certificate that makes a building habitable. The question was whether HARERA would enforce the builder's obligation to compensate for the delay — and at what rate.

What the agreement actually said

The flat buyer's agreement was signed on 23 August 2011. It promised possession within 30 months plus six months grace from the date of the agreement or building plan approval, whichever was later. The building plans were approved on 31 December 2012. That made the due date of possession 31 December 2015 — 36 months from plan approval.

The builder sent an offer of possession on 5 June 2016. But here's the catch: the occupation certificate from the competent authority was obtained only on 4 January 2017. The Authority noted that an offer of possession made before obtaining the occupation certificate is "bad in the eyes of law and becomes redundant." The Guptas never received actual physical possession.

The builder's limitation defence that failed

The builder raised a preliminary objection: the complaint was barred by limitation under the Limitation Act, 1963. The argument was that the offer of possession was made in June 2016, and the complaint was filed in August 2022 — well beyond the three-year period under Article 54 of the Limitation Act.

The Authority rejected this squarely. It relied on M/s Siddhitech Homes Pvt. Ltd. vs Karanveer Singh Sachdev and others (Appeal No. 006000000021137, Maharashtra REAT, decided 27.01.2022), which held that RERA nowhere provides any timeline for availing reliefs, and that the Limitation Act provisions are rendered subservient to RERA by virtue of the non obstante clause in Section 89. The Authority observed that where possession is yet to be handed over, the project remains ongoing and the promoter's liability continues. No limitation period applies.

THE PLAY: If you are an allottee who has not received possession, the Limitation Act does not bar your RERA complaint — the project remains ongoing and the builder's liability continues until possession is handed over.

The occupation certificate gap

The core of the dispute was the gap between the offer of possession and the occupation certificate. The builder argued that the offer was valid because the occupation certificate was obtained later. The Authority disagreed. It held that an offer of possession without an occupation certificate is invalid. The occupation certificate is the document that certifies a building is fit for occupation. Without it, the builder cannot legally hand over possession.

The Authority also noted an important distinction: a project shall be regarded as an 'on-going project' until receipt of the completion certificate, not merely the occupation certificate. Since the completion certificate was yet to be obtained, the project remained ongoing under RERA. This observation, while not strictly necessary for the decision, signals that builders cannot escape RERA's jurisdiction simply by obtaining an occupation certificate.

The interest calculation: from due date to OC plus two months

The Authority then turned to the question of compensation. Under Section 18(1) of RERA, where the promoter fails to deliver possession by the due date, the allottee who does not intend to withdraw from the project is entitled to interest for every month of delay at the prescribed rate. The prescribed rate under Rule 15 of the Haryana RERA Rules is the State Bank of India highest marginal cost of lending rate (MCLR) plus 2%. At the relevant time, this worked out to 10.85% per annum.

The Authority computed the period of delay from the due date of possession (31 December 2015) to the date of the occupation certificate (4 January 2017) plus two months — the statutory period given to the allottee under Section 19(10) to take possession after the certificate is obtained. That gave a cut-off date of 4 March 2017. The builder was directed to pay interest at 10.85% per annum on the amount paid by the complainants, from 31 December 2015 to 4 March 2017.

The equal rate principle

The Authority also addressed a recurring issue: what rate of interest can the builder charge the allottee for defaults in payment? The builder's agreement often prescribes a higher rate for the allottee's default than what the builder pays for delayed possession. The Authority held that under Section 2(za) of RERA, the rate of interest chargeable from the allottee by the promoter for default must be equal to the rate of interest the promoter pays the allottee for delayed possession. Both rates must be the same — 10.85% per annum in this case.

This is a significant clarification. It prevents builders from using asymmetric interest rates to penalise allottees while paying less themselves.

Holding charges barred; maintenance from OC plus two months

The builder had also sought to levy holding charges on the complainants. The Authority rejected this, relying on the Supreme Court's decision in Wg. Cdr. Arifur Rahman Khan and Aleya Sultana and Ors. v. DLF Southern Homes Pvt. Ltd. (Civil Appeal No. 3864-3899/2020, decided 14.12.2020), which held that a promoter is debarred from claiming holding charges from allottees even if such charges are part of the apartment buyer's agreement.

On maintenance charges, the Authority directed that they be levied from the date the allottee was obligated to take possession — which it fixed as the occupation certificate date plus two months, i.e., 4 March 2017. The builder was also directed not to charge anything not part of the floor buyer's agreement.

The operative order

The Authority directed the respondent builder to:

• Pay delayed possession interest at 10.85% per annum from 31 December 2015 to 4 March 2017 on the amount paid by the complainants.
• Issue a revised account statement within 30 days after adjusting the delayed possession interest.
• The complainants to pay outstanding dues after adjustment and take physical possession within 30 days.
• The rate of interest chargeable from allottees by the promoter for default shall be 10.85% (same as the delayed possession rate) per Section 2(za).
• The respondent shall not charge anything not part of the floor buyer's agreement.
• No holding charges to be levied; maintenance charges from 4 March 2017.

Why this matters in practice

For advocates, this judgment is a clean template for arguing delayed possession claims under RERA. The key takeaways are: (1) the Limitation Act does not apply to RERA complaints where possession is not handed over; (2) an offer of possession without an occupation certificate is invalid; (3) delayed possession interest runs from the due date to the occupation certificate date plus two months; (4) the interest rate for both parties must be equal; and (5) holding charges cannot be levied.

For CFOs and founders of real estate companies, the message is clear: do not offer possession without an occupation certificate. Do not charge holding charges. And do not try to impose a higher interest rate on allottees than what you pay for delayed possession. RERA will strike down all three.

The bottom line: If you are an allottee who has paid for a home and the builder offers possession without an occupation certificate, you are entitled to delayed possession interest from the due date until the certificate is obtained plus two months — and the builder cannot charge you holding costs or a higher interest rate.