Published on: October 5, 2023 at 11:21 IST
The Kerala High Court, in a recent judgment delivered by Justice A. Badharudeen, has offered clarification regarding the rate of interest payable in real estate disputes.
The ruling, dealt with two separate cases against NBCC (India) Limited, formerly known as the National Building Construction Corporation Ltd.
These cases were appeals against the orders of the Kerala Real Estate Appellate Tribunal, Ernakulam, and the Kerala Real Estate Regulatory Authority, Thiruvananthapuram, respectively.
The primary question before the court was whether the Kerala Real Estate Authority is obligated to follow the provisions of Rule 18 of the Kerala Real Estate (Regulation and Development) Rules, 2018, regarding the rate of interest payable when an allottee wishes to withdraw from a project and seek a refund.
In the judgment, Justice A. Badharudeen cited the relevant legal provisions and stated, “The annual rate of interest payable by the promoter to the allottee or by the allottee to the promoter, as the case may be, shall be the State Bank of India’s Benchmark Prime Lending Rate plus two percent and shall be computed as simple interest.” This clarification provides a clear framework for determining interest rates in real estate disputes in Kerala.
Furthermore, the court addressed the issue of whether a claimant can receive interest exceeding the amount claimed. The appellants had argued that if a complainant claims a lower interest rate than the statutory rate, they should not be entitled to the statutory interest rate.
However, the court held that the statutory interest rate is still applicable, regardless of the amount claimed. Justice A. Badharudeen stated, “A claim for a lesser amount as interest shall not bar the allottee from receiving the statutory interest.”
The judgment relied on a precedent set by the Supreme Court in the case of Newtech Promoters and Developers Pvt. Ltd v. State of U.P., which emphasized that the legislative intent and mandate are clear in ensuring the rights of allottees to receive interest in cases of project delays.
CASE TITLE: NBCC (INDIA) LIMITED FORMERLY NATIONAL BUILDING CONSTRUCTION CORPORATION LTD Vs JOSHY VARGHESE