Authored By: Swaroop Rajpurohit
Law College Degradun, Uttaranchal University
ABSTRACT
The Real Estate (Regulation and Development) Act, 2016 was enacted with the promise of timely possession and fair compensation for homebuyers. However, delays in project completion remain rampant, raising serious concerns about the adequacy of remedies under Section 181of the Act.
This article critically examines whether the compensation provisions truly safeguard the interests of allottees or fall short in both scope and execution. It analyses inconsistencies in interest computation, procedural delays in enforcing RERA orders, and practical hurdles in obtaining recovery certificates. Drawing from case law, authority rulings, and comparative perspectives across Indian states, the article highlights the systemic gaps that dilute RERA’s intended relief framework. The piece also explores potential reforms to ensure that RERA evolves from a declaratory statute into an effective mechanism for real justice in the real estate sector.
INTRODUCTION
The Real Estate (Regulation and Development) Act, 2016 (hereinafter referred to as the ‘Act’ or ‘RERA’) was a landmark legislative step aimed at restoring balance in the real estate sector by introducing regulatory oversight and accountability mechanisms. One of its most significant contributions has been the imposition of a statutory duty on developers to deliver possession of properties within the agreed timelines, failing which they are liable to face legal consequences as prescribed under the Act and corresponding Rules.
Prior to RERA’s enactment, there existed no comprehensive legislation that addressed project delays or established a specialized adjudicatory framework. Aggrieved homebuyers were left to pursue remedies through consumer forums, civil courts, writ petitions, arbitration, or even criminal proceedings, routes often marked by protracted timelines and limited enforceability. The advent of RERA filled this legislative void by creating a dedicated regulatory authority to ensure greater transparency, fairness, and protection of buyer interests.
Its necessity became especially apparent amidst the growing number of unilateral agreements favouring developers, leaving buyers contractually bound yet without effective remedies. There have been instances where developers, despite securing completion This article aims to critically evaluate the effectiveness of the RERA in addressing delays in possession, with a specific focus on the adequacy of compensation granted to homebuyers and the practical challenges in enforcing such rights. It seeks to identify the legislative and procedural gaps that weaken the Act’s implementation and proposes reforms to strengthen RERA’s role as a reliable and time-bound remedy for aggrieved allottees.
WHAT IS DELAY IN GETTING PROPERTY POSSESSION?
A homebuyer cannot be made to wait endlessly. Builders must be held accountable. 2 Possession delay refers to the failure of a real estate developer or builder to deliver the allotted property to the homebuyer within the time frame agreed upon in the builder-buyer agreement. These delays are a common grievance in the Indian real estate sector and may stem from multiple factors, such as:
a) Financial mismanagement or liquidity crises faced by the builder.
b) Delay in obtaining necessary approvals and clearances from local development authorities or regulatory bodies.
c) Construction halts due to shortage of labour, raw materials, or disruption in the supply chain.
d) Legal disputes related to land titles, environmental violations, or third-party claims.
e) Shifting project priorities or diversion of funds to other ventures by the developer.
Such delays not only breach contractual obligations but also cause severe hardship to buyers who may already be paying EMIs, rent, or both. In many cases, buyers make life decisions, such as school admissions, job relocations, or family planning, based on the promised possession date. Delayed possession thus has both financial and emotional consequences and is precisely the issue that legislations like RERA aim to address through timely enforcement and fair compensation mechanisms.
COMPENSATION FOR DELAYED POSSESSION UNDER RERA
The Real Estate (Regulation and Development) Act, 2016 provides a structured compensation mechanism to safeguard the interests of homebuyers affected by delayed possession. The framework aims to ensure timely relief, either through refunds or monetary compensation.
- Compensation for Delay
Under Section 18(1)(a)3of RERA, if a promoter fails to hand over possession as per the agreement for sale, the allottee is entitled to:
a) Refund of the Paid Amount: The homebuyer may withdraw from the project and claim a full refund along with interest at the prescribed rate, typically SBI’s highest marginal cost of lending rate (MCLR) plus 2%.
b) Interest for Delayed Possession: If the buyer chooses to stay invested, the promoter is liable to pay monthly interest on the amount paid, from the date of delay until possession is handed over.
This provision ensures that the financial burden of delay does not fall on the allottee.
Right to Withdraw and Cancel the Agreement
In cases of prolonged delay (generally exceeding 6 months or more), the buyer can terminate the agreement unilaterally. The builder is then legally obligated to refund the entire amount within 45 days. If the refund is delayed, the buyer is further entitled to interest on the delayed refund.
- Mandatory Disclosure of Delay
Promoters are under a legal duty to inform allottees of any anticipated delay in project delivery, backed by reasons. This requirement promotes transparency and helps buyers make informed decisions, including whether to continue or exit the project.
- Force Majeure Exceptions
The promoter may seek an extension in case of force majeure events, such as natural disasters, war, or government-imposed restrictions. However, even in such situations, the promoter must notify the buyer in writing and obtain approval from the RERA authority. Arbitrary or vague use of the force majeure clause is not permitted.
- Penalties for Non-Compliance
Failure to comply with RERA provisions, including delays in possession or refund, may result in:
- a) Monetary penalties up to 10% of the project cost
- b) Additional daily fines for continued non-compliance
- c) In serious cases, imprisonment up to 3 years under Section 59 of RERA Such penalties are intended to deter negligent and unscrupulous builders.
Dispute Redressal Mechanism
Buyers have the right to approach the State RERA Authority or the Adjudicating Officer for resolution of disputes related to delay or compensation. RERA authorities are empowered to:
a) Direct refunds and compensation
b) Order specific performance (i.e., compel builder to complete and deliver the project)
c) Initiate recovery proceedings under Section 40, treating unpaid compensation as arrears of land revenue
LEGAL FRAMEWORK: STATUTORY AND CONSTITUTIONAL BACKDROP 1. The Real Estate (Regulation and Development) Act, 2016 (RERA)
RERA is the primary legislation enacted to bring accountability, transparency, and efficiency to the real estate sector, especially in relation to timely possession of properties.
Key provisions related to delay and compensation:
a) Section 18(1)(a): If the promoter fails to complete or is unable to give possession of the apartment in accordance with the terms of the agreement for sale, the allottee has the right to:
Withdraw from the project and receive refund of the entire amount paid along with prescribed interest; or Continue with the project and claim interest for every month of delay until possession.
b) Section 18(2): In case of defective title of the land, the promoter is liable to pay compensation to the allottee, irrespective of possession status.
c) Section 31: Grants the right to file a complaint before the RERA Authority or Adjudicating Officer by any aggrieved person for violations including delay in
d) Section 71: Adjudicating Officer is empowered to determine compensation, including for loss of opportunity, mental agony, and other factors.
e) Rule-Making Powers: States have framed their respective RERA Rules under Section 84, prescribing the rate of interest, procedure for complaint, and compensation guidelines.
Other Supporting Legislations
a)Consumer Protection Act, 2019
Real estate services fall within the ambit of “services” under the CPA.
Homebuyers can file complaints for deficiency in service, including delayed possession, before Consumer Commissions.
b) Indian Contract Act, 1872
Section 73: Entitles an aggrieved party to compensation for loss or damage caused by breach of contract.
Delay in handing over possession is a contractual breach, entitling the buyer to damages under this section as well.
c) Insolvency and Bankruptcy Code, 2016 (IBC)
Section 5(8)(f) includes homebuyers as financial creditors, giving them representation in the Committee of Creditors.
However, remedies under IBC are collective and insolvency-driven, often frustrating RERA-based compensation claims when the developer is insolvent.
JUDICIAL PRECEDENTS
In Bangalore Development Authority v. Syndicate Bank4, a Coordinate Bench of this Court held that when possession of the allotted plot/flat/house is not delivered within the specified time, the allottee is entitled to a refund of the amount paid, with reasonable Interest thereon from the date of payment till the date of refund.
1 The Real Estate (Regulation and Development) Act, 2016, § 18.
2 Pioneer Urban Land v. Union of India, AIR 2019 SC 1779 (2019) (India).
3 The Real Estate (Regulation and Development) Act, 2016, §18(1)(a).
4 Bangalore Development Authority v. Syndicate Bank, AIR 6 SCC 711 (2007) (India).
In Lucknow Development Authority v. M.K. Gupta,5the Court held that when a person hires the services of a builder, or a contractor, for the construction of a house or a flat, and the same is for a consideration, it is a “service” as defined by Section 2 (o)6of the Consumer Protection Act, 1986. The inordinate delay in handing over possession of the flat clearly amounts to deficiency of service.
In Fortune Infrastructure and Anr. v. Trevor D’Lima and Ors.,7 the Court observed that an individual cannot be expected to wait endlessly for possession of the allotted flat and is entitled to claim a refund of the amount paid, along with appropriate compensation.
In Imperia Structures Ltd. vs. Anil Patni and Ors.,8the Court held that under Section 18 of the RERA Act, if a promoter fails to complete or hand over possession of the apartment by the agreed date, the allottee has the right to demand a refund of the amount paid. This right is unconditional and does not affect any other legal remedy available to the allottee. If the buyer chooses to withdraw from the project, the promoter must return the entire amount received, along with the prescribed rate of interest. Alternatively, if the allottee decides to remain in the project, the promoter is obligated to pay interest for each month of delay until possession is handed over. The allottee has the discretion to opt for either of these remedies under Section 18, confirming that RERA provides a clear legal recourse for both refund and compensation in cases of delayed possession.
LATEST SC VERDICT ON REAL ESTATE DELAYS
For many homebuyers in India, few things are more frustrating than endless delays in getting possession of their dream home. The burden of paying both EMIs and rent, while the promised handover keeps getting pushed back, can be overwhelming, both financially and emotionally.
However, a recent Supreme Court judgment (June 2025) has brought some much-needed clarity. It answers two crucial questions: What compensation can a homebuyer legally claim when there’s a delay? And just as importantly, what cannot be claimed?
Key Takeaways from the Judgment
- Your Agreement Is the Final Word
The court made it clear: whatever compensation is written in your builder-buyer agreement will be enforced, no more, no less. For example, if the contract states ₹5 per sq. ft. per month as delay penalty, that’s exactly what you’ll receive. Courts will not go beyond this.
- Loan EMIs and Interest Not Automatically Refundable
If you’re paying EMIs on your home loan, don’t expect the builder to cover them unless there’s a specific clause in your agreement stating the builder will do so. Without such written commitment, courts will not impose that liability on the developer.
Why This Ruling Is Important for Homebuyers
∙ It removes ambiguity around what buyers can legally expect in case of delayed possession.
∙ It discourages false hopes of large payouts unless clearly promised in writing.
∙ It promotes faster and clearer dispute resolution through RERA and consumer forums.
Karnataka RERA awards 70 Lakh to Homebuyer after 3-Year Possession delay
In a significant ruling on July 1, 2025, the Karnataka RERA Tribunal directed a builder to compensate a Bengaluru homebuyer for a prolonged delay in handing over possession. The Tribunal ordered the builder to refund ₹51 lakh—the full amount paid for the property, along with an additional ₹19 lakh as interest for the three-year delay. The builder has been ordered to pay ₹70 lakh in compensation within 60 days. This decision highlights the effectiveness of RERA in ensuring accountability and protecting buyer rights.
CONCLUSION
The Real Estate (Regulation and Development) Act, 2016 was a landmark reform aimed at restoring trust in a sector riddled with delays, misinformation, and asymmetrical power. While RERA has undoubtedly empowered homebuyers and introduced a semblance of order, its real success depends not merely on the existence of rights but on their effective enforcement.
The recent Supreme Court ruling rightly emphasizes the sanctity of contracts, but it also exposes the harsh reality of imbalance in builder-buyer agreements, where compensation for delay often amounts to little more than a token gesture. Without legislative correction, this judicial clarity may inadvertently cement the very inequities RERA was meant to dismantle.
Therefore, it is time for policymakers and regulators to move beyond procedural compliance and focus on substantive justice. The law must rise to meet that reality, with stronger compensation, faster redressal, and meaningful accountability.
Justice delayed in possession must not become justice denied in compensation.
REFERENCE(S):
1 The Real Estate (Regulation and Development) Act, 2016, § 18.
2 Pioneer Urban Land v. Union of India, AIR 2019 SC 1779 (2019) (India).
3 The Real Estate (Regulation and Development) Act, 2016, §18(1)(a).
5 Lucknow Development Authority v. M.K. Gupta, AIR 1 SCC 243 (1994) (India).
6 The Consumer Protection Act, 1986, § 2(o).
7 Fortune Infrastructure and Anr. v. Trevor D’Lima and Ors., AIR 5 SCC 442 (2018) (India).
8Imperia Structures Ltd. vs. Anil Patni and Ors., AIR 70 SCC (2020) (India
