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IN THE KARNATAKA REAL ESTATE APPELLATE TRIBUNAL,

BENGALURU

DATED THIS THE 30TH DAY OF JUNE, 2025

PRESENT

HON’BLE SRI SANTHOSH KUMAR SHETTY N.

JUDICIAL MEMBER

AND

HON’BLE SRI MAHENDRA JAIN,

ADMINISTRATIVE MEMBER

APPEAL NO. (K-REAT) 61/2023

BETWEEN:

M/S. Sobha Limited,

A Company incorporated
under the provisions of
the Companies Act, 1956,
Having it s Registered Office
at: “Sobha” Devarabisanahlli,
Sarjapur-Marathalli Outer Ring Road,
Bellandur Post, Bengaluru-560 103.
Karnataka State, India.
Represented by its Authorized Signatory
Sri Prasad M.S, …APPELLANT

(By Sri. Vinayaka S Pandit, Advocate)

AND

1. Karnataka Real Estate

Regulatory Authority,
No.1/14, 2nd Floor, Silver Jubilee Block,
Unity Building Backside, CSI Compound,
3rd Cross, Mission Road,
Bengaluru-560 027.
Represented by its Secretary.
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2. Mr. Sudhir Pillai,

3. Mrs. Rama Pillai,

Both are
Residing at 3037,
Casa Paradiso, Block-3, Sobha City,
Bengaluru-560 064. : RESPONDENTS

(By Sri. I.S Devaiah, Advocate for 1st Respondent-RERA

By Smt Niharika Mallan, Advocate for R2 & R3)

This Appeal is filed under Section 44 of the Real Estate

(Regulation and Development) Act, 2016, praying to set aside the
impugned order dated 24.03.2023, passed by the 1st Respondent-
RERA in Complaint No.CMP/190112/0001852.

This appeal having been heard and reserved for Judgment,

coming up for pronouncement of Judgment, this day, the Hon'ble
Administrative Member delivered the following:

JUDGMENT

As averred in the Memorandum of Appeal, the 2nd & 3rd

Respondents-Allottees (hereinafter referred to as 'the Allottees' for

short) had entered into an Agreement of Sale/Construction

Agreement dated 21.07.2015 with the Appellant-Promoter

(hereinafter referred to as 'the Promoter' for short) to purchase a

residential apartment bearing No.A-2-4071, Block-4 (Block-16), in

a real estate project known as ‘Sobha City-Casa Paradiso Block 4’,

developed by the Promoter for total Sale Consideration of

Rs.1,40,60,180/-, and paid an amount of Rs.1,57,43,001/-. As per

the terms contained in Clause-5 of the Construction Agreement,

the Promoter agreed to complete the project and handover

possession of the Apartment by the end of 31.05.2018. Since, the

promoter has failed to complete the project and handover

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possession of the flat within the stipulated time, the Allottees filed

a complaint under Section-31 of the Real Estate (Regulation and

Development) Act, 2016 (hereinafter referred to as 'the Act' for

short) before the Karnataka Real Estate Regulatory Authority ('the

Authority' for short), seeking compensation by way of interest for

every month delay. By the impugned order, the Authority allowed

the complaint filed by the Allottees and directed the Promoter to

pay a sum of Rs.23,28,599/- towards delay period interest,

calculated at the rate of SBI MCLR + 2% for the period from

01.12.2018 till 23.06.2020. Being aggrieved by the same, the

Promoter has preferred this appeal.

2. We have heard Sri. Vinayak S Pandit, learned counsel for the

Promoter, Sri. I.S Devaiah, Advocate for 1st Respondent-RERA and

Smt Niharika Mallan, Advocate for Respondents No. 2 & 3, and

perused the materials on record.

3. It is relevant to note that, the Authority on an earlier

occasion, by its order dated 16.03.2020 allowed the complaint filed

by the allottee and the operative portion of the earlier order is

extracted hereunder:-

“The complaint bearing No.CMP/190112/0001852 is

hereby allowed under Sec.31 of the Real Estate
(Regulation and Development) Act, 2016.

1. Registration of Sale Agreement: The promoter is

directed to register the sale agreement forthwith at the
cost of the promoter and no recovery shall be made from
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the allottee since the delay in registration of the sale

agreement is entirely attributable to the promoter. Since
this relief was sought in the initial stage of the hearing of
the complaint, the same is allowed to recognize the right
of an allottee to get the sale agreement registered even at
a later date.

2. Handing over Possession: Promoter is hereby

directed to handover possession of the apartment to the
allottee within two weeks from the date of this order, since
the Occupancy Certificate is obtained.

3. Registration of the Apartment: Promoter is hereby

directed to register the apartment in favour of the allottees
within four weeks from the date of this order.

4. Compensation: i) The allottee/s has furnished a

statement of computation of compensation on the basis of
which it is evident that the allottee/s are entitled for
compensation on the payments made by them, on account
of the fact that the apartment was not delivered for
possession for occupation as per the date committed by
the promoter in the sale agreement which is 31st May
2018.
ii) The interest payable by promoter to the
allottee/s is regulated in accordance with the Rule 16 of
the Karnataka Real Estate (Regulation and Development)
Rules, 2017. The submission of the allottee/s that the
respondent promoter has charged 11% interest on the
final payment due from the allottee is found to be
arbitrary. The allottee is liable to make the final payment
only at the time of the delivery of possession for
occupation and therefore any levy of interest and any
deduction/recovery of any such amount from the
compensation payable to the complainant allottee is not
permissible. It is evident from the Memo submitted by the
complainant allottee that the final payment of
st
Rs.10,07,076/- has also been made by 1 February, 2020
itself without waiting for handing over possession of the
apartment. Having regard to the facts and circumstances
of the case, the promoter of the project is hereby ordered
to pay compensation in accordance with Rule 16 of the
Karnataka Real Estate (Regulation and Development)
Rules, 2017. Accordingly, the respondent is directed to
pay interest to the complainant-allottees @ State Bank of
India highest marginal cost of lending rate plus two per
cent computed from 01.06.2018 till the date of handing
over possession of the apartment. For the purpose of
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calculating the interest payable, the aggregate amount

paid by the allottee upto 31.05.2018 shall be considered as
the principal amount and the final payment of
Rs.10,07,074/- paid on 1st February, 2020 shall be added
to the principal amount, so as to consider the said amount
also eligible for interest w.e.f. 2nd February, 2020.

5. Completion of all Development works and

Amenities: The Respondent-Promoter is further directed to
ensure that all the pending development works are
completed as per the specifications and representations
made in the sale agreement; all the internal and external
developmental works are completed in accordance with the
approved plan of the project and all the requisite amenities
are provided and are functioning satisfactorily.”

4. Challenging the said order, on earlier occasion, the promoter

has preferred an appeal No. 259/2020 before this Tribunal and by

the judgment dated 06.12.2022, this Tribunal allowed the appeal,

set-aside the earlier order dated 16.03.2020, and remanded the

matter to the Authority for fresh consideration. The operative

portion of the earlier judgment dated 06.12.2022 reads as under:

(i) The reliefs granted at paragraphs 1, 2, 3 and 5 of the

operative portion of the impugned order have become
infructuous and they do not arise survive for
consideration;

(ii) The appeal is allowed and the impugned order dated

16.03.2020 passed by the Karnataka Real Estate
Regulatory Authority, Bengaluru in complaint
No.CMP/190112/0001852, insofar as to paragraph-4(i)
and (ii) of the operative portion of the impugned order is
hereby set aside and the matter is remitted to the
Authority only to the said extent, for fresh consideration,
in accordance with law and in the light of the
observations made herein above, after affording
opportunity to both the parties;

(iii) All the contentions of the parties are kept open to be

urged before the Regulatory Authority;
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(iv) As the matter pertains to the year 2015, the

Authority shall make an endeavor to dispose of the
complaint as expeditiously as possible and at any rate
within the outer limit of 45 days from the date of parties
entering appearance;

(v) Since the appellant-promoter and allottees-

respondents have appeared before this Tribunal through
their counsel, they are directed to appear before the
RERA on 19.12.2022 without expecting further notice
from RERA;

(vi) In the event if there is no sitting of the authority on

the said date, the matter may be taken up immediately
on the next date of sitting;

(vii) The Registry is hereby directed to release the

amount deposited by the appellant with this Tribunal
while preferring the Appeal in compliance of proviso to
Section 43(5) of the Act, along with interest, if any,
accrued thereon, by issuing either a cheque or DD in the
name of the appellant-company and shall hand over the
cheque or DD to the Authorized signatory of the
appellant-company who has signed the vakalath and
appeal memo, on furnishing necessary documents and by
following due procedure;

(viii) In view of disposal of the Appeal, all pending I.As. if

any, stand rejected, as they do not survive for
consideration;

(ix) The Registry shall comply with the provisions of

Section 44 (4) of the Act and return the records to RERA,
if any.

There is no order as to costs.”

After remand, the Authority passed the impugned order dated

24.03.2023, against which, the Promoter is before this Tribunal in

the present appeal in the second round of litigation.

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5. As urged in the Memorandum of Appeal, the learned counsel

for the Promoter contended that the Authority has failed to

consider the directions issued by this Tribunal in the earlier

Judgment passed in Appeal No.259/2020. Although there was no

fault on the part of the Promoter, the Authority awarded delay

compensation in favour of the Allottees without assigning proper

reasons. The Promoter received Occupancy Certificate on

24.01.2020 and sent offer of possession letter on 28.01.2020 and

hence, the Authority was not justified in awarding compensation

till 23.06.2020; As per Section-19(10) of the Act, the Allottees are

bound to take possession within two months from the date of

issuance of Occupancy Certificate and in fact, the Promoter had

offered possession through E-mail dated 28.01.2020. While

awarding compensation, the Authority failed to take note of

outbreak of COVID-19 which is a force majeure. The copy of the

Memo of Calculation filed by the Allottees has not been furnished

to the Promoter to refute the calculation made by the Allottees and

thereby the allottees have violated the principles of natural justice.

Further, as per terms contained in Clause-5.4 of the Construction

agreement, the time consumed by the statutory authorities for

issuance of clearances is required to be excluded. Though an

application for Occupancy Certificate was made to the BBMP on

23.10.2018 (02.11.2019 as noted in Occupancy Certificate issued

by BBMP), and the BBMP was required to consider or reject the

 7

application within 30 days, but the BBMP kept quiet for a period of

one year and hence, the delay in obtaining Occupancy Certificate

comes within Clause-5.4(c) of the Construction Agreement and

such delay was beyond the control of the Promoter and, therefore,

the Allottees are not entitled for compensation for the delay

caused by the BBMP. In spite of receipt of offer of possession letter

through e-mail on 28.11.2018, the allottees sent email dated

04.12.2018 stating that they do not intend to take possession prior

to issuance of Occupancy Certificate by Competent Authority. The

Allottees were also in default in payment of Sale Consideration as

per the Schedule of payments in the construction agreement and

the allottees were yet to pay a sum of Rs.1,06,037/-. The

Promoter, in fact gave discount of Rs.127 per sq.ft to the Allottees

and the Authority has failed to take note of these factors while

passing the impugned order. The Authority has failed to take note

of the provisions of Section-72 of the Act which spells out the

factors to be taken into account while adjudging the quantum of

compensation or interest under Section-71. On these grounds, the

Promoter prays for dismissal of the Appeal.

6. Per contra, learned counsel for the Allottees, filed their

Statement of Objections on 09.01.2025 and contended that the

Promoter has not approached this Tribunal with clean hands and

made false, misleading and vexatious averments in the Appeal by

suppressing various material facts and selectively placed a few

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documents which is nothing but abusing the process of law.

Indisputably, there was a delay in completing the project and

handing over possession as per the time stipulated in the

agreement. In response to the email dated 28.11.2018 of the

Promoter, the allottees responded to the same by email dated

04.12.2018 stating that without Occupancy Certificate they are

reluctant to take possession of the apartment. There was no

restriction on account of pandemic COVID-19 for the period from

28.01.2020 to 22.03.2020. Vide email dated 05.02.2020, the

Promoter put an undue pressure on the allottees, directing them to

withdraw the complaint No.1852 filed before the Authority that too

after receipt of entire payment. The request made by the Allottees

through email dated 05.02.2020 and 10.02.2020 for handing over

apartment went in vain, hence, the contention of the Promoter

that delay in handing over possession was on account of force

majeure cannot be accepted. The complaint filed by the allottees

was decided by the Authority on merits strictly with reference to

terms of direction issued by this Tribunal in Appeal No.259/2020

and there is no miscarriage of justice as alleged by the Promoter in

Paragraph-18 of the Appeal Memo. The Occupancy Certificate by

the Competent Authority was received only on 24.01.2020, the

Promoter sent an offer letter on 28.01.2020 for which, the

allottees replied through their mails dated 04.2.2020, 05.02.2020

and 10.02.2020 and hence, the Authority, considering the delay on

 9

the part of the Promoter to handover possession of the apartment,

rightly awarded compensation and no fault can be found with the

said order. Immediately after receipt of offer letter on 28.01.2020,

the allottees have paid the final payments within two days i.e., on

30.01.2020 and 01.02.2020 but it was the Promoter who

intentionally pressurised the allottees to withdraw the complaint

No.1852 and delayed handing over possession of the apartment

from 01.02.2020, the date on which the final payment was made

till 23.03.2020. The grounds urged by the Promoter at paragraphs-

23 to 48 are only based on assumption and does not stand legal

scrutiny. The allottees have invested their life time savings to

peacefully enjoy their retirement life in their permanent home and

the promoter, knowing the fragility of the health of the retired

persons and their financial capacity to withstand to long litigation,

is exercising a mind game and psychological stress on them only

with a view to indefinitely harass the allottees with an ulterior

motive. The Authority, after evaluating the materials on record and

after following due process of law, passed the impugned order

which does not call for interference from this Hon’ble Tribunal. The

allottees filed a memo dated 09.01.2025, 12.03.2025 along with

several documents, including the Statement of Accounts, to

substantiate the total amount paid by them and order dated

21.01.2023 passed by the BBMP, by which the Occupancy

Certificate issued in respect of the project has been cancelled by

 10

the BBMP on the ground that the Occupancy Certificate has been

obtained by furnishing false documents. Apart from this, the

Allottees filed written synopsis/arguments on 25.04.2025, inter

alia urging the same grounds as urged in the statement of

objections. On these grounds, the allottees pray for dismissal of

the appeal.

Oral arguments made by the Appellant/Promoter

7. In the oral arguments made by the counsel for the

Appellant/Promoter on 12.03.2025, they argued that the Sale

Agreement was signed on 21.07.2015 and the due date for

possession was 31.05.2018, with a rider in Clause-5.4 of the

Construction Agreement, the due date for delivery of the

apartment will be further subject to variation on account of various

factors narrated in Clause-(a) to (h) of Clause-5.4 of the

Construction Agreement, important one being delay in issue of

NOC/permission, Occupancy Certificate, sanction by the

Government and Statutory Authorities and also delay in providing

utility connections by various Authorities. The Completion

Certificate by the registered Architect was issued on 16.10.2018

and the Promoter submitted an application on 23.10.2018 for

issuance of Occupancy Certificate. An offer letter was sent by the

Promoter to the allottee on 28.11.2018 to which the Allottees

replied, that they do not wish to takeover possession prior to

issuance of Occupancy Certificate.

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8. The counsel for Promoter argued that, the Promoter wrote a

letter to BBMP on 25.10.2019 reminding about the issuance of

Occupancy Certificate and the Occupancy Certificate was

eventually issued on 24.01.2020. After the issuance of Occupancy

Certificate, the Promoter wrote a letter to the Allottees, along with

enclosing a copy of the Occupancy Certificate on 28.01.2020

asking for balance payment and to take over possession.

9. The Allottees still went ahead and filed complaint before the

Authority, which was allowed by the Authority on 16.03.2020,

against which the Promoter preferred an appeal in Appeal

No.259/2020 as per which the matter was remitted to the

Authority, insofar as, it relates to para-4(i) and (ii) of the operative

portion of the impugned order dated 16.03.2020 for fresh

consideration in accordance with law.

10. The Occupancy Certificate issued by the BBMP was cancelled

on 21.01.2023 on the grounds of false information,

misrepresentation of facts etc against which the Promoter

preferred an Appeal before the Karnataka Administrative Tribunal,

which is still pending for final adjudication.

11. The Authority passed the impugned order on 24.03.2023 in

which, rather than adjudicating upon the issues returned by the

Tribunal, they directed the Promoter to pay a sum of

Rs.23,28,599/- towards delay period interest. The interest

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calculation in the impugned order is incorrect, since from

28.01.2020, being the date on which Promoter sent offer letter for

taking over possession, the Promoter is not liable to pay any

interest, even if it is decided by Tribunal to pay for delay, if any.

12. The counsel further argued that the fact of COVID-19

pandemic will apply to the Promoter from March, 2020 onwards as

per Clause-5.4 of the Sale Agreement, since, these were factors

beyond the control of the Promoter.

13. Since, the Promoter had applied for the Occupancy

Certificate before the due date, under Section-310 of Municipal

Co-operation Act, he is entitled for the date of application being

considered as deemed Occupancy Certificate from one month after

the date of application of Occupancy Certificate being on

15.10.2018. The Authority has erred in awarding delay

compensation even after the Occupancy Certificate was issued on

the basis of Memo of Calculation given by the Allottees, without

considering the objections made by the Promoter. The Promoter

has been penalized for no fault of his and therefore, the impugned

order deserves to be set aside.

Oral arguments made by the Respondents/Allottees

14. The counsel for the Allottees argued that the Promoter has

only mentioned the dates which are convenient to suit his case and
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to give an example, he said that in the Occupancy Certificate

granted on 24.01.2020, the application for issuance of Occupancy

Certificate in the “Reference” part of the documents is shown as

02.11.2019, and there is no reference to the date of 23.10.2018

on which the Promoter has claimed to have even made an

application for issue of Occupancy Certificate. Further, the

Occupancy Certificate was cancelled by the Competent Authority

on 21.01.2023 on account of the documents submitted along with

the application for Occupancy Certificate containing false

information, misrepresentation of facts etc.

15. Counsel for the Allottees further argued that it was patently

illegal on the part of the Promoter to being everything under

Clause-5.4 of Construction Agreement for delay in completion of

the project, including things such as approvals and sanctions by

the Government and Statutory Authorities, non-availability of

construction material, labour etc., short supply of material, rain fall

above 25 mm, any other reasons beyond the control of the

Promoter, under the pretext of which the Promoter is claiming to

seek shelter for any amount of delay due to these factors which

are primarily the responsibility of the Promoter. Only the delay on

account of force majeure as defined in the Explanation Section-6

of the Act, for factors such as war, flood, drought, fire, cyclone,

earthquake or any other calamity caused by nature can be the

permissible grounds for delay in completion of the project.

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16. Insofar as, the Promoter’s claim the deemed Occupancy

Certificate is concerned, the Promoter, in his email dated

13.03.2019 to the Allottees, has himself stated that Occupancy

Certificate by BBMP for block-16 & 17 was pending due to new

guideline given by NGT and that the Supreme Court has passed an

order on 05.03.2019 for setting aside a portion of the condition

prescribed by NGT and therefore, they will follow up with the BBMP

for receiving the Occupancy Certificate. It clearly confirms that as

on March, 2019 there was no Occupancy Certificate in place. The

application for Occupancy Certificate was initiated by the Promoter

only after obtaining the consent order from KSPCB on 21.09.2019

which is much after the due date for giving possession.

17. The Promoter had also written a letter to Joint Director of

Town Planning of BBMP for issuance of Occupancy Certificate in

which they referred to the final Fire clearance certificate dated

01.10.2018, and the Consent for Operation dated 21.09.2019

requesting for issuance of Occupancy Certificate on the basis of

these documents. While the Promoter had applied for Occupancy

Certificate on 18.04.2017 for Partial Occupancy Certificate, it was

for Block-9, 10 & 12 and another application for Partial Occupancy

Certificate was submitted by the Promoter on 16.05.2016, but this

was for Block-2 to 6, 8 & 13. The application for Occupancy

Certificate for Block-16, in which the Allottees had purchased the

apartment, was filed only on 02.11.2019. This shows that the

 15

Promoter was actually not completed on the day submitted first

application for issuance of Occupancy Certificate on 23.10.2018

and the Occupancy Certificate issued by the Competent Authority

was not available with Promoter.

18. The allottees also submitted a memo on 09.01.2025 in which

they have submitted a copy of letter addressed to the Promoter

requesting to honour the provisions of Section-18 of the Act for

having failed to handover possession in terms of the Sale

Agreement. They have also submitted a copy of an email sent by

the Promoter to the Allottees on 05.02.2020 advising the Allottees

to take possession and get the Sale Deed registered subject to

withdrawal of the Complaint in 1852 filed by the allottees before

the Authority. This email was an attempt to exert pressure tactics

upon allottees that unless they withdrew the complaint, the Sale

Deed will not be registered. The Allottees stated that since their

request for possession was still pending, they did not withdraw

their complaint before the Authority and therefore, such

communication by the Promoter amounts to an unfair trade

practice on their part. The Allottees replied on the same date on

05.02.2020 to the Promoter saying that the Promoter had agreed

to process the handover of the apartment after the allottees makes

full payment and that in spite of this the allottees having made the

full payment, the Promoter has changed the stand and imposed

the condition of withdrawing the complaint before the RERA, as a

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condition precedent before handing over the possession, which is

blatantly illegal.

19. The Allottees stated that they are willing to accept interest

till 28.01.2020 being the date of offer letter sent from the

Promoter after issuance of Occupancy Certificate, in the interest of

amicable resolution of the dispute.

20. The Authority has rightly taken the relevant factors into

account while adjudging the quantum of compensation or interest

for the amount of loss caused as a result of the default by the

Promoter since, the allottees had to pay interest on the home loan

taken and also had to incur expenses for rent from 01.06.2018 till

the date of Sale Deed which was on 30.06.2021. The allottees

rented an apartment for Rs.35,000/- per month in the same block

for this period for which he had to shell out for Rs.22.23 lakhs

approximately.

21. He also argued that the photographs that he has produced in

his memo dated 12.03.2025 shows that the project was not

completed as on 07.11.2018.

22. He further stated that the Occupancy Certificate and all other

approvals were cancelled by the Authority in January, 2023 and all

the matter is still pending before the KAT, but the fact that the

Occupancy Certificate was cancelled by BBMP is undisputable.

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23. The allottees completed their arguments stating that the

appeal filed by the Promoter may be dismissed and the impugned

order may be confirmed in light of all these facts.

24. In view of the submissions made by the respective parties, the

points that would arise for our consideration are:

(i) Whether the Authority was justified in passing the

impugned order?

ii) What order?

25. We answer the above point No.(i) partly in the affirmative

for the following:

REASONS

26. To appreciate the nuances of the issues of this matter, it

would be relevant to recapitulate important facts of the case, and

grounds urged by the respective parties leading to the present

appeal. It is the case of the allottees that, they have entered into

Agreement for Sale/Construction Agreement dated 21.07.2015

with the Appellant-Promoter to purchase a residential apartment

bearing No.A-2-4071, Block-4 (Block-16), in a real estate project

known as ‘Sobha City-Casa Paradiso’, developed by the Promoter

for total Sale Consideration of Rs.1,40,60,180/-, and paid an

amount of Rs.1,57,43,001/- and the final installment of

Rs.10,07,074/- has been paid on 31.1.2020 and 03.02.2020

respectively. As per the terms contained in Clause-5 of the

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Construction Agreement, the Promoter agreed to complete the

project and handover possession of the Apartment by the end of

31.05.2018. The Promoter, without furnishing copy of the

Occupancy Certificate issued by the Competent Authority, sent

email to the Allottees to pay the balance amount through email

dated 28.11.2018 to which the allottees replied on 04.12.2018

stating that they are not ready to takeover possession of the

apartment without Occupancy Certificate and thereafter filed

complaint against the Promoter seeking delay period interest.

27. After receipt of Occupancy Certificate by the Competent

Authority on 24.01.2020, the Promoter again offered to hand over

possession to the Allottees subject to withdrawal of the complaint

filed by the Allottees, before registration of the Sale Deed. The said

complaint came to be allowed on 16.03.2020, granting delay

compensation at the rate of MRCR of SBI+2% for the period from

01.06.2018 till the date of handing over of possession.

(underlined for emphasis)

28. The Promoter, challenged the said order and filed Appeal No.

259/2020 before this Tribunal and by the Judgment dated

06.12.2022, the matter was remanded back to the Authority for

fresh consideration. After remand, the Authority, by order dated

24.03.2023, allowed the complaint and directed the Promoter to

 19

pay compensation of Rs.23,28,599/- towards delay period interest

from 01.12.2018 till 23.06.2020.

29. On the contrary, it is the case of the Promoter that the

project in question was completed on 01.10.2018 and after

securing Completion Certificate from the Architect on 16.10.2018,

they made an application for issuance of Occupancy Certificate

with the BBMP on 23.10.2018 which is required to be either

considered or refused by the BBMP within 30 days from the date of

application. Since, the BBMP has not considered the same, it

should be presumed that there was a deemed Occupancy

Certificate as per Section-310 of KMC Act.

30. Thereafter, based on the deemed Occupancy Certificate, the

Promoter sent communication to the Allottees on 28.11.2018

requesting them to take possession of the apartment. But the

Allottees failed to take possession and filed complaint before the

Authority. Since, the Promoter issued letter of offer on 28.11.2018,

they are not required to pay delay compensation to the Allottees.

However, after issuance of Occupancy Certificate on 24.01.2020,

the Sale Deed was executed in favour of the Allottees on

23.06.2020 and possession of the Apartment was handed over.

The Promoter contended that the Authority has failed to consider

the observations made by this Tribunal in the earlier Judgment

dated 06.12.2022, while passing the impugned order.

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31. The Allottees filed a complaint seeking compensation by way

of interest for every month delay, since the Promoter failed to

complete the project and hand over possession within the

stipulated period. By the impugned order, the Authority allowed

the complaint filed by the Allottees and directed the Promoter to

pay a sum of Rs.23,28,599/- towards delay period interest,

calculated at the rate of SBI MCLR + 2% for the period from

01.12.2018 till 23.06.2020. Being aggrieved by the same, the

Promoter has preferred this appeal.

32. It would be appropriate for this Tribunal to look into the

main grounds urged by the counsel for the Promoter against the

impugned order. The Promoter has argued mainly along the

following grounds:-

33. Firstly, he contended that the Promoter obtained Completion

Certificate from the registered Architect on 16.10.2018 and applied

for issuance of Occupancy Certificate which was received by the

Authorities on 23.10.2018, but the Authorities issued the

certificate only on 24.01.2020 and hence, it should be presumed

that there was a deemed Occupancy Certificate from the date of

application for issuance of Occupancy Certificate, as contemplated

under Section-310 of the KMC Act.

 21

34. Secondly, he contended that the delay in handing over

possession is on account of force majeure factors, as noted in (a)

to (h) of Clause-5.4 of the Construction Agreement and hence, the

Promoter is not liable to pay compensation by way of interest for

every month delay to the Allottees.

35. Thirdly, he contended that since the grace period of six

month is added, the Promoter is required to pay interest with

effect from 01.12.2018 and not from 01.06.2018, as contended by

the Allottees. Now, we proceed to determine the main issue

involved in the appeal,

36. Point No.(i):- Before adverting to the main points for

consideration formulated by us, it would be appropriate for us to

consider the three primary grounds urged by the learned counsel

for the Promoter. Insofar as, the first ground urged by the

Promoter, regarding “Deemed Occupancy Certificate” in the

case on hand, it is evident that as far as

“Sobha City Casa Paradiso-2” is concerned, the Promoter claims

that the Completion Certificate was issued by the Engineer/

Architect on 16.10.2018 and the first application for issuance of

Occupancy Certificate has been made on 23.10.2018. According to

the Promoter, the so-called ‘Deemed Occupancy Certificate’ will

take effect after one month of making the application for

Occupancy Certificate i.e. on 02.02.2019 and whereas the final

 22

Occupancy Certificate has been issued by the BBMP, the

Competent Authority as per Section-2 (zf) of the Act, on

24.01.2020. The only Occupancy Certificate pertaining to Block-16

which is available in the records was issued by the BBMP only on

24.01.2020. Apart from this, the Promoter, in his email dated

13.03.2019 to the Allottees, has himself stated as under:-

“As you are aware, BBMP were pending Occupancy

Certificate for Block-16 & 17 (Sobha City CP3 & CP4)
due to new set of guidelines defined by NGT. We are
glad to inform you that Supreme Court has passed order
(dated 5th March, 2019) by setting aside portion of
condition defined by NGT, the status quo ante is
restored as per the existing RMP 2015.

Please find enclosed the high Lights of the

Supreme Court Order in this regard. Sobha Limited will
follow up with KSPCB & BBMP for receiving the
Occupancy Certificate ASAP.”

37. The above admission of the Promoter clearly indicates that

the Occupancy Certificate by BBMP for block-16 & 17 was pending

due to new guidelines given by NGT and that the Supreme Court

has passed an order on 05.03.2019 for setting aside a portion of

the condition prescribed by NGT and therefore, they will follow up

with the BBMP for receiving the Occupancy Certificate. Added to

this, the NOC for fire clearance for Block No. 2 to 8 was given on

01.07.2020 with a caveat that for other Blocks, namely, 1, 9, 10,

11, 16 & 17, the Promoter shall apply for NOC after the installation

of necessary equipments. The NOC clearance for occupation of

Block-9, 10, 16 & 17 has been issued by the Competent Authority

 23

on 15.04.2021. These factors clearly confirm that as on March,

2019 there was no fire clearance or Occupancy Certificate in place.

The application for Occupancy Certificate was initiated by the

Promoter only after obtaining the consent order from KSPCB on

21.09.2019 which is much after the due date for giving possession.

The claim that the Promoter is entitled to seek the benefit of a

deemed Occupancy Certificate on 02.02.2019 is not backed by any

substantive argument to this effect.

38. At this juncture, it would be appropriate to bring some clarity

regarding the ambiguity pertaining to the issue of Completion

Certificate vis-a-vis Occupancy Certificate, Competent Agency vis-

a-vis Competent Authority which can issue the certificates. Before

the introduction of the concept of Occupancy Certificate, the

certificate issued by the Competent Authority, which necessarily

would have to be a Government established Authority, would

permit occupation of any building as provided under local laws,

would be the Completion Certificate.

39. This is perhaps the reason as to why under Section-2(zf) of

the Act, the definition itself says that ‘Occupancy Certificate’ means

the occupancy Certificate or such other certificate by whatever

name called, issued by the Competent Authority which permits

occupation of any building etc.

 24

40. In the Rule-4(1)(iv), a distinction seems to have been made

between a Competent Authority and Competent Agency. The

Completion certificate issued by the Competent Agency can be in

the form of a self certification by a registered Architect/Engineer,

but it cannot be considered as Completion Certificate as defined

under Section 2(q) of the Act, since, the Completion Certificate

which certifies that the Real Estate project has been developed

according to the sanctioned plan etc can only be issued by the

Competent Authority which as per Section-2(p) would be the

Competent Authority created or established by the Government,

which has powers to give the necessary permission for

development of such immovable property.

41. When such a Completion Certificate is issued by an Architect

or an Engineer, the Competent Agency for this purpose, it is by

way of a self certification. It has to be submitted to the

Government established Competent Authority, which has to inspect

the project and certify that indeed the project has been completed

as per the sanctioned plan and only then the certificate issued by

Competent Authority take the form of an ‘Occupancy Certificate’,

as defined in Section-2 (zf). Under Section 310 of Karnataka

Municipal Corporations Act, if a person applies for permission to

occupy the building upon completion of all works, and provides

necessary formalities for inspection of such building, and if the

Commissioner fails to intimate his refusal of the said permission

 25

within 30 days, he may occupy or permit to be occupied such

building. The onus of completing all the development works, and

having submitting the application with necessary documents, rests

with the applicant.

42. At this stage, it is relevant to note that the ‘Competent

Authority’, as defined under Section 2(p) is an Authority created or

established under any law in force by the Government. For ready

reference, the above two definitions are extracted hereunder:

2(p) “competent authority” means the local authority or

any authority created or established under any law for
the time being in force by the appropriate Government
which exercises authority over land under its
jurisdiction, and has powers to give permission for
development of such immovable property;

(q) “completion certificate” means the completion

certificate, or such other certificate, by whatever name
called, issued by the competent authority certifying
that the real estate project has been developed
according to the sanctioned plan, layout plan and
specifications, as approved by the competent authority
under the local laws;

43. From the BBMP Bye-Laws also, it is evident that after

completion of the project, a Completion Certificate or such other

Certificate by whatever name called, will be given by a Registered

Architect etc certifying that the project has been developed as per

the sanctioned plan and specifications, as approved by the

Competent Authority under the local laws, and the Competent

Authority, upon inspection of the project shall issue the Occupancy

 26

Certificate if the project is in accordance with the sanctioned plan.

The Completion Certificate as defined under Section 2(q) is

required to be issued only by an Authority created or established

by the appropriate Government and not by an Architect or by

Engineer or by any other similar non-Government Authority.

44. If indeed the Promoter seeks protection under Section-310 of

the Karnataka Municipal Co-operation Act, regarding ‘Deemed

Occupancy Certificate’ provision if the Competent Authority does

not issue the Occupancy Certificate within one month of filing of

the application, the Promoter is required by law under Section-19

(1) & (2) of the RERA Act, to disclose all material facts pertaining

to the project to the Allottee, including under Section-11(4)(b) of

the Act, specifically to make available the copies of Completion

Certificate, Occupancy Certificate etc., to the Allottees or to the

Association of Allottees as the case may be.

45. The Promoter in this case, has not even written to the

Competent Authority stating that since, they had filed an

application for issuance of Occupancy Certificate on 23.10.2018

and the Competent Authority has failed to either refuse or issue

the Occupancy Certificate and, therefore, they are proceeding with

the execution of the Sale Deeds on the basis of the provisions of

Section-310 of the Corporation Act, which provides for deemed

Occupancy Certificate. This amounts to suppression of material

 27

facts and information to the allottee, as the Promoter is duty

bound under Section-11(4)(b) of the Act, to disclose all relevant

information and documents to the allottees from time to time. The

said provisions reads as under:-

“11(4) The promoter shall—

(b) be responsible to obtain the completion certificate
or the occupancy certificate, or both, as applicable,
from the relevant competent authority as per local
laws or other laws for the time being in force and to
make it available to the allottees individually or to
the association of allottees, as the case may be.”

Similarly, under Section-19 (1) & (2) of the Act, the allottee is

entitled to know all information pertaining to sanctioned plan,

approvals, stage wise completion of the project and so on.

46. In response to the email dated 28.11.2018 of the Promoter,

referred supra, by which the Promoter requested the allottees to

take possession based on the deemed Occupancy Certificate, the

allottees responded to the same by email dated 04.12.2018 stating

that:-

“Please intimate date by which Occupancy Certificate

is expected such that I can pay balance due and
takeover the apartment. It is reiterated that I was
originally promised delivery in a sales pitch by Sept
2017. However, the date was deffered to 31 May
2018 in the Sale and Construction Agreement. The
grace period for delivery (and as registered under
RERA) has since expired on 01 Dec 2018. With
Occupancy Certificate not yet available (thus not
permitting takeover and occupation), I would request
that FPRL be issued only on receipt of Occupancy
Certificate i.e certification of project completion the
 28

authorities. I do not intend to takeover prior issue of

Occupancy Certificate.”

47. It is crystal clear that without the “Occupancy Certificate”

issued by the Competent Authority, it is improper on the part of

the Promoter to execute the registered Sale Deed in favour of the

Allottees. As such, the Allottees were well within their right to get

the Sale Deed registered only after issuance of Occupancy

Certificate issued by the Competent Authority and accordingly,

they rightly expressed their unwillingness to take possession of the

apartment. Hence, viewed from any angle, there is no substance

in the submission made by the learned counsel for the Promoter as

regards existence of the deemed Occupancy Certificate.

48. Insofar as, the second primary ground regarding the delay in

completion of the project due to Force Majeure factors is

concerned, it is just and necessary for this Tribunal to refer to the

terms/covenants contained in clause-5.1, 5.4 and 5.5 of the

Construction Agreement dated 21.07.2015 entered into between

the parties which are relevant to consider as to the existence of

‘Force Majeure’ conditions and also to reckon the date from which

the allottees are entitled to claim interest for the delay in handing

over possession. The said Clauses are extracted hereunder:

“5.1 The First Party shall complete and deliver

possession of the Schedule ‘B’ apartment to the
Second Party by the end of 31.05.2018. The date of
 29

completion of construction means the date declared

by the First Party as the date for completion.

5.4 The date stipulated for the delivery of the

Schedule ‘B’ Apartment (as per clause 5.1 of this
agreement) is subject to variation on account of

a) Force Majeure/Act of God

b) Government Orders/restriction/control

c) Delay in issue of NOC/ permissions,

Occupancy certificate sanction by
Government and Statutory Authorities
/Local Bodies.

d) Delay in providing electrical, water and

sewerage connections by various
authorities.

e) Non-availability, non-supply of
construction materials/labour etc,

f) Short supply of materials (viz, sand,

aggregates etc.)

g) Delay/default in payments but the Second

Party.
h) Any other reason beyond the control of
the First Party.

i) Rainfall of 25mm or above

j) Riots, Transportation strikes, Labour

strike etc.,

On happening of any of the above events, the

date of delivery of the apartment by the First
party to the Second Party may be varied to any
future date and the Second Party is not entitled
for any compensation for delay in
completion/delivery of the apartment due to
above reasons.
 30

5.5 In the event of there being any delay in

handing over the Schedule ‘B’ Apartment to the
Second Party for the reasons otherwise
than stated in clause 5.4 above the second
party is entitled to claim Rs 4/sft per
month on SBA as compensation from
01.12.2018 for such delay effective from
six months (grace period) from the date of
completion as per clause 5.1 herein above.
The calculation of compensation shall be
subject to the reason cited in clause 5.4 above
if the Second Party is entitled for any
compensation, the First party shall pay the
compensation to the Second Party at the time
of the Second party taking possession of the
apartment and registering the Sale Deed after
appropriating the amount due to the First Party
towards the said apartment/property. The
compensation payable under this clause is a
comprehensive final amount payable by the
First Party to the Second Party. The parties
hereto agree that the Second Party is not
entitled for any other claims of whatsoever
nature under this agreement.”

On careful perusal of the terms contained in Clause-5.5 of the

Construction agreement, there was no specific covenant as regards

a general grace period of six months for handing over possession.

49. As per the terms specified in Clause-5.5 of the Construction

Agreement, the allottees are entitled to claim Rs.4/-per square feet

per month on SBA as compensation from 01.12.2018 only in the

event of any delay in handing over possession of the flat for the

reasons otherwise than stated in clause-5.4 of the

construction agreement. On perusal of the above terms and

conditions, it appears that there is no clause/term contained in the

construction agreement regarding/about a general grace period of

 31

six months. The right conferred on the allottees to claim interest

for every month of delay, as provided under the proviso to sub-

section (1) of Section-18 is a statutory right, without prejudice to

any other remedy available to the allottees under the Act. The

promoter has failed to produce any cogent evidence either before

the Authority or before this Tribunal to establish that the delay in

completion of the project within the time stipulated under the

Construction Agreement was on account of the reasons otherwise

than stated in Clause-5.4 of the construction agreement. As noted

in the Explanation to Section-6 of the Act, the ‘Force Majeure’

means “a case of war, flood, drought, fire, cyclone, earthquake or

any other calamity caused by nature affecting the regular

development of the real estate project”. In view of the above, the

factors noted in (a) to (h) of Clause-5.4 cannot be

construed/termed as ‘Force Majeure’.

50. It is undisputed fact that the Promoter received the

Occupancy Certificate from the Competent Authority only on

24.01.2020. While it is a fact that various restrictions were

imposed by the Government of Karnataka on account of pandemic

COVID-19, it was only with effect from 24.03.2020, which is after

the due date for completion. There was no restriction on account

of pandemic COVID-19 for the period upto 28.01.2020, the date

on which offer of possession was made to the allottee. Despite the

same, vide email dated 05.02.2020, the Promoter offered to get

 32

the Sale Deed registered but put undue pressure on the Allottees,

directing them to first withdraw the complaint No.1852 filed before

the Authority by the allottees, that too after receipt of entire

payment before registration of the Sale Deed. The emails sent by

the Allottees through email dated 05.02.2020 and 10.02.2020

agreeing to withdraw the complaint if he is compensated as

required under the law went in vain, hence, the contention of the

Promoter that the delay in handing over possession was on

account of force majeure cannot be accepted. Under such

circumstances, the promoter cannot contend that the delay in

completion of the project was on account of ‘Force Majeure’.

51. It is also pertinent to note that, the counsel for the Allottees

filed a Memo dated 12.03.2025 along with the copy of the order

dated 21.01.2023 passed by the Joint Commissioner (Town

Planning-North) BBMP, by which the Occupancy Certificate dated

24.01.2020 and modified sanctioned plan issued in respect of the

project in question, has been cancelled on the ground that

Promoter had submitted false documents at the time of

application. The ‘Occupancy Certificate’ issued in respect of the

project was cancelled by the concerned Authority on 21.01.2023

and while the said order has been stayed by the Karnataka

Appellate Tribunal in Appeal No. 32/2023 vide interim order dated

01.02.2023, and the said interim order is in operation, hence, it

can be inferred that the Promoter had indeed tried to rush the
 33

Occupancy Certificate without necessary approvals. Still, one can

say that the Promoter had valid Occupancy Certificate as on the

date of registration of Sale Deed in favour of the Allottees, at least

till the final disposal of the matter in KAT, whenever that happens.

(Underlined for emphasis)

52. Now we proceed to deal with the third contention urged by

the learned counsel for the Promoter relating to entitlement of six

months grace period. As per Clause-5.1 of the Agreement of

Construction dated 21.07.2015, the due date for handing over

possession was on 31.05.2018, subject to variation on account of

the events mentioned at (a) to (h) of Clause-5.4 of the

Agreement. But there was no mention about the grace period of

six months either in Clause-5.1 or 5.4 of the Agreement. Apart

from this, while passing the previous/earlier order dated

16.03.2020, the Authority computed the interest payable to the

Allottees with effect from 01.06.2018. At paragraph-4 (ii) of the

said order, the Authority held as under:

“For the purpose of calculating the interest payable, the

aggregate amount paid by the allottee up to 31.05.2018
shall be considered as the principal amount and the final
payment of Rs.10,07,074/- paid on 1st February, 2020
shall be added to the Principal amount, so as to consider
the said amount also eligible for interest w.e.f. 2nd
February, 2020.”

53. However, after remand by this Tribunal, the Authority, at

Paragraph-17 of the impugned order has recorded the finding to

the effect that as per the agreement of sale dated 21.07.2015, the
 34

respondent-promoter was supposed to handover the said flat on or

before 31.05.2018 with six months grace period i.e., 01.12.2018.

In the absence of any specific covenant/terms either in the

Agreement for Sale or in the Agreement of Construction with

regard to the grace period of six months for handing over of

possession, the Authority, contrary to the terms contained in the

Agreement for Sale and Construction Agreement, allowed such six

months grace period while computing the compensation payable to

the Allottees. As such, we are of the considered view that the

Authority was not justified in allowing six months grace period

while passing the impugned order and we are constrained to hold

that there was no substance in the submissions made by the

learned counsel for the Promoter in this regard. Thus, it takes us

to the main issue relating to computation of compensation payable

to the Allottees.

54. Indisputably, the allottees and the promoter have entered

into a Construction Agreement on 21.07.2015. Under the said

Construction Agreement, the time stipulated for completion of

construction and handing over of the possession of the flat was on

31.05.2018. Admittedly, the promoter obtained the completion

certificate from the registered Architect on 16.10.2018 and applied

for Occupancy Certificate on 23.10.2018. But, in the Occupancy

Certificate issued by the Competent Authority (BBMP) on

22/24.01.2020, the date of application has been mentioned as

 35

02.11.2019 which was issued by the Competent Authority (BBMP)

on 22/24.01.2020 and thereafter, the promoter intimated to the

allottees on 28.01.2020 and executed a registered sale deed in

favour of the allottees and handed over the possession of the flat

on 23.06.2020. The due date for completion was 31.05.2018, the

Occupancy Certificate was issued on 24.01.2020 and the Sale Deed

was executed on 23.06.2020, hence, there is clear delay in

completion of the project and handing over possession.

55. Thus it takes us to the main issue with regard to the

computation of compensation payable to the Allottees and

reckoning of the starting and ending date for computation of

compensation.

56. At this juncture, it would be relevant for this Tribunal to refer

to the provisions of Section-18 and 19(10) of the which reads as

under:-

Section-18. Return of amount and

compensation.—

(1) If the promoter fails to complete or is unable to

give possession of an apartment, plot or building,—
(a) in accordance with the terms of the
agreement for sale or, as the case may be, duly
completed by the date specified therein; or
xxxx
xxxx
Provided that where an allottees does not
intend to withdraw from the project, he shall be
paid, by the promoter, interest for every month of
 36

delay, till the handing over of the possession, at

such rate as may be prescribed.

(3) If the promoter fails to discharge any other

obligations imposed on him under this Act or the rules
or regulations made thereunder or in accordance
with the terms and conditions of the agreement
for sale, he shall be liable to pay such
compensation to the allottees, in the manner as
provided under this Act.

19 xxxx

(10): Every allottees shall take physical

possession of the apartment, plot or building as the
case may be, within a period of two months of the
occupancy certificate issued for the said
apartment, plot or building, as the case may be.

Rule-16. Rate of interest payable by the

promoter and the allottees.- The rate of
interest payable by the promoter to the
allottees or by the allottees to the promoter,
as the case may be, shall be the State Bank of
India highest marginal cost of lending rate plus
two percent.

57. The important dates and events of the case on hand which

are noted in the table below:

Dates events

21.07.2015 Parties have entered into agreement for sale

and construction.
31.05.2018 Due date for delivery of possession of the flat.

16.10.2018 Promoter received completion certificate from

the Architect.
23.10.2018 Initially Promoter applied for occupancy
certificate on the basis of Completion
Certificate by Architect
02.11.2019 As noted in the Reference No.1 of Occupancy
Certificate dated 24.01.2020, the Promoter
made application for issuance of Occupancy
 37

Certificate.
22/24.01.2020 Promoter obtained occupancy certificate.

28.01.2020 Promoter intimated to the allottees along with

occupancy certificate and requested the
allottees to get the sale deed registered.
19.03.2020 Government imposed lockdown on account of
COVID-19
31.01.2020 & The allottees paid final installment of
03.02.2020 Rs.10,07,076/- (10,00,000+7,074)
23.06.2020 The promoter executed registered sale deed
in favour of the allottees and handed over
possession of the flat.
01.12.2018 The Authority computed the payment of
interest payable to the allottees for every
month delay in handing over possession of
the flat.
21.01.2023 The BBMP passed order, cancelling the earlier
‘Occupation Certificate’ on the ground that
the same was obtained by the Promoter by
furnishing false document.
01.02.2023 The Karnataka Appellate Tribunal in appeal
No. 32/2023 filed by the Promoter, granted
an interim order of stay, staying the
execution and operation of the order dated
21.01.2023 passed by the BBMP.

58. The provisions of sub-section (1) (a) of Section-18 of the Act

which have been extracted supra contemplates that if the

Promoter fails to complete or is unable to give possession of an

apartment, plot or building in accordance with the terms of the

agreement for sale or, as the case may be, duly completed by the

date specified therein and in the event of the allottee does not

intend/wishes to withdraw from the project, he shall be paid by the

Promoter, interest for every month of delay, till the handing over of

the possession, at such rate as may be prescribed. Sub-section

(10) of Section-19 of the RERA Act, contemplates that the allottees

 38

shall take physical possession of the apartment within a period of

two months from the date of issuance of Occupancy Certificate

issued for the said apartment. In the instant case, admittedly, the

Promoter had obtained the Occupancy Certificate on 22/24.01.2020

and conveyed/intimated to the Allottees along with the occupancy

certificate on 28.01.2020 and the allottees have paid the last

installment of Sale Consideration of Rs.10,07,074/- on 31.01.2020

and 03.02.2020 respectively which was payable at the time of

registration of Sale Deed on 01.02.2020. If two months time

stipulated under sub-section (10) of Section-19 for registration of

sale deed is excluded, the allottee is required to get the sale deed

executed on or before 28.03.2020. As there was lockdown imposed

by the Government with effect from 19.03.2020 up to the end of

May, 2020, the allottees have got the sale deed registered on

23.06.2020, which is understandable due to the lockdown.

59. Indisputably, the Occupancy Certificate by the Competent

Authority was received only on 24.01.2020, the Promoter sent an

offer letter on 28.01.2020 for which, the allottees replied through

their mails dated 04.2.2020, 05.02.2020 and 10.02.2020 and

hence, the Authority, considering the delay on the part of the

Promoter to handover possession of the apartment, rightly

awarded compensation and no fault can be found with the said

order. Immediately after receipt of offer letter on 28.01.2020, the

allottees have paid the final payments within two days i.e., on
 39

30.01.2020 and 01.02.2020 but it was the Promoter who

unnecessarily imposed the condition upon the allottees to withdraw

the complaint No.1852 and in the process, delayed handing over

possession of the apartment from 01.02.2020, the date on which

the final payment was made till 23.06.2020, the actual date of

execution of the Sale Deed.

60. At this stage, it would also be relevant for this Tribunal to

refer to the law laid down by the Hon’ble Supreme Court in the

case of M/S. Newtech Promoters and Developers Pvt. Ltd., -

vs- State of Uttar Pradesh and others (2021 SCC OnLine SC-

1044), the provisions of Section-18 (1) and 19 (4) of the Act

recognize right of an allottee two distinct remedies viz., refund of

the amount together with interest or interest for delayed handing

over possession and compensation. In paragraph-25 of the said

Judgment, the Hon’ble Supreme Court held as under:

“25. The unqualified right of the allottee to seek refund

referred under Section 18(1)(a) and Section 19(4) of the
Act is not dependent on any contingencies or stipulations
thereof. It appears that the legislature has consciously
provided this right of refund on demand as an
unconditional absolute right to the allottee, if the
promoter fails to give possession of the apartment, plot
or building within the time stipulated under the terms of
the agreement regardless of unforeseen events or stay
orders of the Court/Tribunal, which is in either way not
attributable to the allottee/home buyer, the promoter is
under an obligation to refund the amount on demand
with interest at the rate prescribed by the State
Government including compensation in the manner
provided under the Act with the proviso that if the
allottee does not wish to withdraw from the project, he
 40

shall be entitled for interest for the period of delay till

handing over possession at the rate prescribed”.

61. As regards the issue relating to the date from which the

allottee will be entitled to receive interest under Section-18, it is

clear that the Promoter has to pay interest for every month of

delay from the due date of hand over possession as per the

Sale/Construction Agreement till the date of actual hand over

possession of the Promoter. In this case, the due date for handing

over possession as per Sale Agreement is 31.05.2018 and the

actual possession was handed over on 23.06.2020. However it is

also an undisputed fact that the Promoter, after receiving the

Occupancy Certificate from the Competent Authority on

24.01.2020, sent the letter of offer to the allottees on 28.01.2020.

62. Therefore, this Tribunal is of the considered view that the

interest for delay in handing over possession may be computed

from the due date for handing over possession being on

31.05.2018, until 28.01.2020 being the date on which the

Promoter offered possession of the apartment, after receiving

necessary clearance from the Competent Authority. The interest

from the date of making the offer to the allottees on 28.01.2020 till

the date of possession was handed over on 23.06.2020 may not be

considered to be awarded to the allottees, as it was not due to the

fault of the Promoter.

 41

63. Thus, the date to be reckoned for calculation of interest for

every month delay in handing over possession of the flat is

immediately after the due date for delivery of possession i.e.,

01.06.2018 and not 01.12.2018, as determined by the Authority,

since there is no grace period of additional six months in the

Agreement. Having regard to the totality of the facts and

circumstance of the case, interest of justice would be met if the

compensation by way of interest for every month delay is awarded

from 01.06.2018 to till 28.01.2020 the date on which offer was

made to the allottees after receipt of Occupancy Certificate by the

Promoter, and the impugned order is liable to be modified to that

extent.

64. Further, as an additional ground, the Promoter contended

that as per the terms of the Construction Agreement dated

21.07.2015, the allottees are required to make payments

depending upon the progress of each stage of the construction of

the building. On perusal of the Statement of Objections filed by the

promoter before the Authority on 21.10.2019, it is seen that the

promoter has not specifically pleaded in which of the payments

made by the allottees, there was a delay and how much was the

delay in making such payment and there was no claim made by the

promoter seeking penal interest for alleged delay in making

payment of sale consideration. In view of that perhaps, the

Authority, in its impugned order dated 24.03.2023, also has not

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addressed this issue at all. Under such circumstances, the

contention of the learned counsel for the Promoter before this

Tribunal that there was a delay on the part of the allottees in

making payment of sale consideration is not sustainable.

,

65. For the foregoing reasons, we answer point No (i) partly in

the affirmative holding that the Authority was not justified in

reckoning the date 01.12.2018 as starting period for determining

the interest for every month of delay in handing over possession

and proceed to pass the following:

ORDER

(a) The appeal is partly allowed;

(b) The impugned order dated 24.03.2023 passed by the

1st Respondent-the Karnataka Real Estate Regulatory
Authority in complaint No. CMP/190112/0001852 is
hereby modified;

(c) In view of our finding recorded at Paragraph- 61 to

63, in modification of the impugned order it is
ordered that the Allottees are entitled to claim
interest for every month delay for the period from
01.06.2018 till 28.01.2020, the date on which offer
of possession was made;

(d) Both the parties are directed to file Memo of

Calculation determining the amount payable to the
allottees for the period from 01.06.2018 to
28.01.2020;
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(e) After filing the Memo of Calculation, the Registry is

directed to release the amount in favour of the 2nd
and 3rd Respondents-Allottees, including interest
accrued thereon by issuing the bankers cheque/DD
after the expiry of the appeal period and by following
the due procedure;

(f) The remaining amount, if any, shall be released in

favour of the Appellant-Promoter by issuing the
bankers cheque/DD in favour of the Appellant-
Company after the expiry of the appeal period and
by following the due procedure;

(g) In view of disposal of the main appeal, pending I.As.,

if any, shall stand disposed of, as they do not survive
for consideration;

(h) Registry is directed to comply with the provisions of

Section 44(4) of the Act and to return the records to
RERA, if any received.

There is no order as to costs.

Sd/-
HON’BLE JUDICIAL MEMBER

Sd/-
HON’BLE ADMINISTRATIVE MEMBER