Court holds promoter absolutely liable to pay contractual interest of 9% p.a. on Rs. 5.51 crore for nearly 12 years' delay in possession; plea of force majeure and lack of locus dismissed.
In a significant ruling on October 23, 2026, the Bombay High Court, presided over by Mr. Justice Sandeep V. Marne, delivered a partial summary judgment in a long-pending commercial dispute concerning delayed possession of commercial units and completion of common amenities. The suit, filed by DNM Trustee Services Pvt. Ltd. against Victoria Enterprises Ltd. and others, revolved around an agreement for sale dated February 2, 2008, for two commercial units in "Pittie Chamber" near Bandra-Kurla Complex, Mumbai.
The plaintiff, trustee of the Lalwani Family Trust, alleged that despite paying the entire consideration of Rs. 5.51 crores, possession of the units was delayed by nearly 12 years - possession was promised by March 31, 2008, but handed over only on February 15, 2020. The plaintiff sought specific performance to complete common amenities such as separate electricity meter, lifts, and reception, and also claimed interest at 12% per annum for the delayed possession period.
The defendant admitted delay but disputed the claim on two grounds: the plaintiff lacked locus to sue as the agreement was with other parties, and force majeure events prevented timely completion. They argued that summary judgment was inappropriate and a full trial was necessary.
The court analyzed the provisions of Order XIII-A of the Civil Procedure Code, 1908, which permits summary judgment in commercial disputes where a defendant has no real prospect of successfully defending the claim, and no other compelling reason exists for a trial. The court held that the plaintiff's claim for completion of common amenities involved factual disputes requiring oral evidence and could not be summarily decreed. However, the claim for interest on delayed possession was different - it was a matter of "normal accretion on capital" and did not need evidentiary trial.
Relying on the Supreme Court precedents including Alok Shanker Pandey v. Union of India (2007) and Newtech Promoters & Developers v. State of Uttar Pradesh (2021), the court reaffirmed that the promoter's liability to pay interest for delayed possession under Section 18 of the Real Estate (Regulation and Development) Act, 2016 (RERA) is absolute and unqualified in principle. The court further held that the spirit of Section 18 applies even if the project was not registered under RERA at the relevant time, as in this case.
The court rejected the defendant's plea of force majeure - citing lack of documentary evidence and noting that rejection of plans by the municipal authority or introduction of RERA provisions do not constitute force majeure events that can absolve the promoter from paying interest. The court also dismissed the locus objection, noting that the plaintiff, as trustee of the family trust which included the original purchasers, had the requisite standing. The handing over of possession to the plaintiff further confirmed their status as allottee under RERA's broad definition.
Regarding the rate of interest, the court declined to grant the plaintiff's claimed 12% per annum, instead awarding contractual simple interest of 9% per annum as stipulated in Clause 8 of the agreement. The court directed the defendant to pay simple interest on the Rs. 5.51 crore from March 31, 2008, to February 15, 2020.
In conclusion, the court granted summary judgment partially in favor of the plaintiff - only on the claim for interest on delayed possession - while deferring the claim for completion of common amenities to a full trial. The order underscores the court's approach to streamline commercial disputes by summary adjudication where possible while preserving the right to trial for factual disputes requiring evidence.
This judgment reinforces the absolute liability of real estate promoters to pay interest for delayed possession and clarifies the limited scope of summary judgment under Order XIII-A CPC in commercial suits.
Bottom Line:
Commercial dispute - Summary judgment under Order XIII-A CPC - In suit for specific performance and delayed possession of commercial units, claim for completion of common amenities requires evidentiary trial and cannot be summarily decreed - However, where delay in handing over possession is admitted and promoter has no real prospect of defending claim for interest, Court can grant summary judgment for interest on paid consideration - Liability to pay interest for delayed possession held absolute in principle; promoter's pleas of lack of locus and force majeure rejected - Contractual rate of 9% simple interest awarded.
Statutory provision(s):
Civil Procedure Code, 1908 Order XIII-A, Real Estate (Regulation and Development) Act, 2016 Section 18
