Promoter can’t charge interest for delayed payment: TNREAT

CHENNAI: While hearing an appeal filed by promoters, the Tamil Nadu Real Estate Appellate Tribunal (TNREAT) has observed that promoters cannot charge interest for the delayed payment by Allottee before discharging his obligations.

Homebuyer (allottee) T Aananthi was allotted a flat in the real estate project situated at VOC Colony in Anna Nagar East developed by GKS Technology Part Ltd. A sale agreement in respect of the UDS portion and a construction agreement was executed in April 2017. As per the construction agreement, the builder should complete the construction by October 2017 with a grace period of three months.

The builder claimed that the construction was completed in August 2017 and the same was communicated to the respondent. But, the allottee failed to make payments as per the schedule and had paid only 40 per cent of the amount and there was an outstanding of Rs 79 lakh. Earlier, both of them entered into a tripartite agreement with State Bank of India for loan.

The builder also contended that as per the terms of the construction agreement, the builders are entitled to charge interest against the outstanding amount and demanded 18 per cent interest per annum. But the allottee expressed her inability to pay the balance amount with interest and asked to cancel the booking. Later, she gave up her idea of cancellation and came forward to continue in the project, the builder contended.

Meanwhile, she filed a complaint with TNRERA claiming compensation on the ground of delay in handing over the possession and for mental agony. After hearing the sides, the Adjudicating Officer awarded compensation by way of interest at the rate of 10.35 per cent per annum on the total amount of Rs. 1.42 crore.

However, the builder filed an appeal against the TNRERA order and claimed interest for delayed payments. Hearing the appeal, Leena Nair (Administrative Member) and R Padmanabhan (Judicial Member) of the Tribunal observed that the builder, knowing fully well that it was the State Bank of India making payments on behalf of the respondent as per the tripartite agreement, had sent several emails and letters demanding payments with interest.