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Upholds Arbitral Award of 15% Interest Against for Delayed Possession
The has dismissed two appeals by real estate developer , affirming an arbitral award that granted 15% per annum interest to homebuyer Asha Saini for the delayed possession of two flats. The Division Bench of Justice V. Kameswar Rao and Justice Manmeet Pritam Singh Arora upheld the award and imposed costs of ₹1 lakh on Omaxe in each appeal.
The Case in Brief
Asha Saini booked two flats in Omaxe’s ‘North Avenue’ project in Bahadurgarh, Haryana, in . She paid the entire base price between and under a construction-linked plan. However, the formal Builder-Buyer Agreements (BBAs) were executed only in . Omaxe claimed the 30-month possession period began from the BBA execution, while Saini argued the contract was concluded from the 2006 booking. Possession was eventually offered in , nearly five years after the payment was completed.
Saini approached a civil court, which referred the dispute to arbitration. The sole arbitrator, appointed by the , ruled in that the contractual relationship began in 2006, not 2012. The arbitrator awarded Saini compensation at 15% interest on her investment for the delay from , along with , refund of overcharged interest, and litigation costs. Omaxe challenged this before a commercial court, which upheld the award. The company then appealed under .
Builder’s Arguments Rejected
Omaxe contended that the arbitrator ignored the BBA’s express terms, which stipulated that the possession period would start only from the agreement’s execution in 2012. It argued that Saini herself delayed signing the BBA by raising objections. The builder also claimed that compensation should be limited to ₹5 per square foot per month as per the BBA, and that Saini had not proved actual loss. Further, Omaxe argued that since Saini accepted possession and executed sale deeds, she was from claiming damages.
The court rejected these arguments, noting that the arbitrator had found the BBA was executed under . By the time of signing, Omaxe had already received almost the entire sale consideration, and Saini had no choice but to sign to get possession. The court observed that “the learned Sole Arbitrator has returned a categorical finding that the BBAs were executed by the Respondent under … the Appellant cannot insist upon enforcement of the clause in the BBA limiting compensation to a meagre Rs. 5 per sq. ft. per month.”
Arbitration Remedy Valid Despite Other Fora
One of Omaxe’s key arguments was that the same relief could not be granted through arbitration, as it was available under the Consumer Protection Act or . The High Court dismissed this distinction outright. It held:
“Merely because the Respondent elected to invoke the arbitration agreement instead of pursuing remedies under the or , it cannot be deprived of compensation otherwise legally payable for delayed possession. The substantive right to claim such compensation is founded in , while the and statutes provides additional forums and statutory mechanisms for enforcement of that right.”
The court noted that the arbitrator’s finding that the BBA was signed under compulsion meant the nominal compensation clause was unenforceable. The award of 15% interest was reasonable, especially given that consumer forums had granted 18% in similar cases.
Decision and Costs
Finding no or ground for interference under Section 37, the High Court dismissed both appeals. It imposed costs of ₹1 lakh each, payable to Asha Saini within two weeks. The court also disposed of pending applications.
The judgment reinforces that homebuyers can seek compensation through arbitration even when statutory remedies like or consumer complaints are available. It also affirms that one-sided contractual clauses limiting compensation for delay will not be enforced if they are executed under .
