The Uttar Pradesh Real Estate Appellate Tribunal (UP REAT) has held that once a project is registered under the Real Estate (Regulation and Development) Act, 2016 (RERA), the promoter is statutorily obligated to pay interest for delays at the prescribed rate, overriding any conflicting contractual agreements. The Bench, comprising Justice Suneet Kumar (Chairman), Sanjai Khare (Judicial Member), and Rameshwar Singh (Administrative Member), further ruled that the Tribunal can grant such statutory relief to a respondent in an appeal filed by the promoter, even if the respondent has not filed a separate appeal.
The Tribunal modified an earlier order by the Regulatory Authority to ensure the allottees received interest at the rate of MCLR + 1% for the entire period of delay, rather than a bifurcated rate based on the pre-RERA agreement.
Background
The case involved a residential project named ‘Antriksh Golf View II’ in Noida, developed by M/S Colorful Estate Private Limited (the Appellant). The respondents, Manoj Bhatnagar and Anita Bhatnagar, were allotted a 3BHK flat in February 2011. According to the allotment letter, possession was to be delivered within 30 months (subject to a 6-month grace period), making the due date February 13, 2014.
While construction was allegedly completed by February 2014, the Occupancy Certificate (OC) was only obtained on December 1, 2017. Possession was eventually handed over on October 21, 2018. The project was registered as an “ongoing project” under RERA on August 1, 2017. The Regulatory Authority had initially awarded interest for the delay, but bifurcated the rates: the contractual rate for the pre-RERA period and MCLR + 1% for the post-RERA period. The promoter challenged this order, claiming force majeure.
Arguments of the Parties
Appellant (Promoter): The promoter argued that the delay was due to circumstances beyond their control, specifically injunction orders from the National Green Tribunal (NGT) regarding projects near the Okhla Bird Sanctuary and delays by the competent authority in granting the OC/CC. They relied on Clause 39 of the allotment letter, which exempted them from penalties for delays caused by government or court orders. They also contended that the allottee could not seek higher interest in the promoter’s appeal without filing a cross-appeal.
Respondents (Allottees): The allottees contended that the NGT orders did not affect the entire project and that the promoter failed to prove any specific restraint on this unit’s construction. They asserted that the delay in obtaining the OC was due to the promoter’s own defaults in complying with regulatory requirements. They sought interest at the statutory rate for the entire duration of the delay.
Court’s Analysis
The Tribunal framed three primary questions regarding force majeure, statutory interest under Section 18(1), and the Tribunal’s power to modify orders in favor of a respondent.
On Force Majeure: The Tribunal rejected the promoter’s plea, noting that construction had actually continued and was completed during the alleged injunction period. It held:
“To fall within the ambit of ‘force majeure’ the fault cannot be the fault or negligence of the party seeking relief… A force majeure clause cannot act as a blanket override, and it must operate within the statutory framework without undermining legislative intent.”
On Statutory Interest: The Tribunal emphasized that Section 18(1) of the Act is unconditional and mandatory. It noted that RERA is retroactive, applying to all “ongoing projects” where the OC had not been obtained by the time the Act commenced.
“The adverse terms and conditions of the agreement to the extent being in conflict with the statutory provision would cease to be enforceable… The statutory provision to prevail over the rate of interest mandated under the agreement.”
On the Tribunal’s Power to Modify Orders: Citing Section 44(6) of the Act and principles from the CPC, the Tribunal held that it possesses both appellate and revisional powers. It observed that the Regulatory Authority erred in bifurcating the interest rates.
“The bifurcation of interest for different periods i.e., partly as per contractual rate and partly as per statutory rate appears to be against the legislative intent… The respondent allottee shall be entitled to delay interest at the rate MCLR+1 percent for the entire delayed period.”
The Tribunal also cited the High Court’s decision in Lucknow Development Authority vs. Sushma Shukla, affirming that “contractual terms cannot override the mandatory statutory obligations/rights created by the Act in favour of the allottee.”
Decision
The Tribunal disposed of the appeal by directing the appellant-promoter to pay interest at the rate of MCLR + 1% to the respondents from the original due date of possession (February 13, 2014) until the actual date of possession (October 21, 2018). This payment must be made within 45 days. The order of the Regulatory Authority stands modified to this extent.
Case Details:
- Case Title: M/S Colorful Estate Private Limited Vs. Manoj Bhatnagar & Anita Bhatnagar (and substituted legal heirs)
- Case No.: Appeal No. 461 OF 2021
- Bench: Justice Suneet Kumar (Chairman), Sanjai Khare (Judicial Member), Rameshwar Singh (Administrative Member)
- Date: 17.04.2026
