Possession Delayed? Section 18 of RERA Gives You Two Routes

When does Section 18 apply?

Section 18(1) addresses the position where a promoter fails to complete or is unable to give possession of an apartment, plot or building in accordance with the terms of the agreement for sale, or as the case may be duly completed by the date specified therein. It also covers a promoter who cannot give possession because of discontinuance of business as a developer on account of suspension or revocation of its registration.

The trigger is therefore the date in the agreement. That is why the possession-date clause matters so much, and why grace periods and broad force majeure language are worth negotiating before signing rather than arguing about later.

Section 18 sits within RERA, so it applies to projects within the Act: registered projects, including projects that were ongoing and required registration when the Act came into force in 2017. For a project outside RERA, the contract and consumer law carry more of the weight.

Route one: withdraw and take a refund

Where the allottee wishes to withdraw from the project, the section provides for return of the amount received by the promoter in respect of that apartment, with interest at the prescribed rate, including compensation in the manner provided under the Act.

Under Section 2(za), interest on a refund runs from the date the promoter received each amount until the date it is refunded. So a buyer who paid in instalments over four years earns interest on each instalment from its own date.

This route suits a buyer whose circumstances have changed, who has lost confidence in the project, or who can deploy the money better elsewhere. It also suits a buyer where the property value has not risen, since you are recovering money rather than acquiring an asset that has appreciated.

Route two: stay and claim interest

Where the allottee does not intend to withdraw, the proviso to Section 18(1) provides for interest for every month of delay until handing over of possession, at the prescribed rate.

This suits a buyer who still wants the flat, particularly where prices have risen since booking, since withdrawing would mean re-entering a more expensive market. It also suits a buyer far along a payment schedule for whom exiting is impractical.

The prescribed rate comes from your State's RERA rules. Many States use the State Bank of India's highest marginal cost of lending rate plus two per cent. Check the current rule and benchmark for your State.

What is each route worth in rupees?

Take a buyer in Gurugram who agreed to buy a flat for ₹80 lakh, has paid ₹60 lakh, and is now 30 months past the agreed possession date. Assume, for illustration only, a prescribed rate of about 11 per cent a year.

If she stays, delay interest on ₹60 lakh at 11 per cent is about ₹55,000 a month, or roughly ₹16.5 lakh over 30 months, and it keeps running until possession. She also gets the flat, which may now be worth ₹1 crore.

If she withdraws, she is entitled to the ₹60 lakh back with interest from each payment date, which on a payment history stretching back five years could add something in the region of ₹15 to ₹25 lakh, depending on when each payment was made, plus any compensation the adjudicating officer awards. She gives up the flat and any appreciation.

Neither number is certain. Both depend on the order made, the actual rates, and whether the promoter can pay. That is why the decision turns on more than the arithmetic. Run your own figures with your actual payment dates before deciding, and update them every few months while the delay continues.

Should you withdraw or stay?

How has the Supreme Court read Section 18?

In Newtech Promoters and Developers Pvt Ltd v State of UP (2021), the Supreme Court described the allottee's right to a refund under Section 18(1) as unconditional and absolute where the promoter fails to give possession within the time stipulated in the agreement, regardless of unforeseen events or stay orders that are not attributable to the allottee. The Court also held that the regulatory authority can direct a refund with interest, while compensation is a matter for the adjudicating officer.

That split matters in practice. Interest and refund are claimed before the authority. Compensation for loss beyond interest, for example extra rent or mental agony, is decided by the adjudicating officer under Section 71, applying the factors listed in Section 72.

Other routes worth knowing

The Supreme Court held in Imperia Structures Ltd v Anil Patni (2020) that the RERA remedy does not bar a homebuyer from approaching a consumer commission under consumer protection law. Some buyers choose the consumer route for its compensation powers, others prefer RERA for its speed in their State. You generally pursue one route for the same relief, not both.

Homebuyers are also treated as financial creditors under the Insolvency and Bankruptcy Code, 2016, but an application against a promoter needs a minimum number of allottees from the same project, either 100 or ten per cent of the total, whichever is less. Insolvency can freeze everything, so it is a collective decision best taken with an advocate.

The practical path

• Write to the promoter citing the possession date in the agreement and Section 18, and ask for a firm revised date in writing. Keep the reply.
• Collect the agreement, allotment letter, every payment receipt and bank statement, and the builder's construction updates.
• Check the project page on the State RERA portal for the declared completion date, extensions and quarterly progress.
• Visit the site and photograph progress with dates.
• Speak to other allottees. Under Section 31, a complaint can be filed by an association of allottees as well as by an individual.
• Decide on your route, then file a complaint with the State RERA authority, using an advocate familiar with that authority's procedure.

Mistakes that weaken a Section 18 claim

• Relying on phone calls and site-office assurances. Without written correspondence, it is hard to show when you raised the delay and what the builder said.
• Signing a revised schedule or addendum that moves the possession date, without recording that you do so without prejudice to your claim for delay interest.
• Stopping instalments without a written reason. If the agreement makes payment conditional on milestones, link any withholding to a missed milestone in writing, or the builder may treat you as the defaulter.
• Accepting possession and signing a letter that says you have no further claims.
• Losing payment proofs. Interest is calculated on what you paid and when, so receipts and bank statements are the foundation of the claim.
• Waiting for an informal promise that keeps moving. Each month of delay is recoverable as interest only if the claim is eventually made.

What goes into a RERA complaint?

Each State authority prescribes its own form and fee, usually filed online. The substance is similar everywhere: your details and the promoter's, the project name and registration number, the unit, the agreed possession date, the amounts paid with dates, what you are asking for (refund with interest and compensation, or delay interest), and copies of the agreement, receipts and correspondence.

State the relief precisely. If you want delay interest, say so and calculate it month by month on the amounts paid. If you want a refund, list each payment and its date, because interest runs from each one. A clear table of payments is often the most useful page in the file. Where compensation is sought, it is usually pursued separately before the adjudicating officer, so check how your State handles that application.

If the builder offers possession without an occupancy certificate

Some promoters offer possession to stop delay interest running, before the occupancy certificate has been issued. Authorities and courts have generally treated such an offer as not being valid possession, because you cannot lawfully occupy the flat. Ask for a copy of the occupancy certificate before accepting.

Once a valid offer is made with the occupancy certificate, Section 19(10) expects the allottee to take physical possession within two months. Do not let a valid offer sit unanswered, and record any defects or shortfalls in writing when you accept.

Accepting a valid offer of possession does not by itself end your right to interest for the delay that has already occurred. Say so in your acceptance letter, in one sentence, and refuse to sign any line stating that you have no claims against the promoter.