Builder Delayed Your Flat? Refund and Interest Under RERA

If your builder fails to hand over the flat by the date in your agreement for sale, section 18 of the Real Estate (Regulation and Development) Act, 2016 (RERA) gives you a choice. You can withdraw from the project and demand your money back with interest and compensation, or you can stay in the project and claim interest for every month of delay until possession. The Supreme Court has called the refund right unconditional. You can also go to the Consumer Commission instead, because the Court has held that RERA does not take that remedy away.

This guide explains both options, who decides what, how to choose a forum, and the documents you need to put together.

When a project counts as delayed

The starting point is the possession date in your agreement for sale (often called the builder-buyer agreement). In Imperia Structures v Anil Patni (2 November 2020), the builder argued that the clock should run from the completion date it had declared when registering the project with RERA, which was later. The Supreme Court rejected that and held that the period is reckoned in terms of the agreement, not the registration.

Read your agreement for any grace period and for a force majeure clause listing events that extend the deadline. These clauses are not a blank cheque. In the same case the National Commission refused to accept demonetisation and labour shortage as excuses because the builder had produced no evidence that they actually caused the delay, and the Supreme Court upheld its order.

Also check the project's page on your State's RERA website. It shows the registration number, the declared completion date, any extensions granted, and the quarterly updates the promoter has filed. Print or save it; it is useful evidence.

Your two options under section 18

Section 18(1) says that if the promoter fails to complete or is unable to give possession in accordance with the agreement, or by the date specified in it, the promoter is liable on demand to return the amount received with interest at the prescribed rate, including compensation, if the allottee wishes to withdraw. The proviso covers buyers who want to stay.

Provided that where an allottee does not intend to withdraw from the project, he shall be paid, by the promoter, interest for every month of delay, till the handing over of the possession, at such rate as may be prescribed.

Section 18(1), Real Estate (Regulation and Development) Act, 2016

• Option 1, exit: a refund of everything you paid, with interest from the date of each payment, plus compensation decided under the Act.
• Option 2, stay: interest for every month of delay until the builder hands over possession, and you still get the flat.

In Newtech Promoters and Developers v State of Uttar Pradesh (11 November 2021), the Supreme Court said that the allottee's right to a refund under sections 18(1)(a) and 19(4) is an unqualified right that does not depend on contingencies or stipulations in the agreement, and applies regardless of unforeseen events or court stay orders that are not attributable to the buyer.

The interest rate is not fixed nationally. Each State's RERA rules prescribe it. Several States, Haryana among them, link it to the State Bank of India's highest marginal cost of lending rate (MCLR) plus 2 percent, so the actual figure changes over time. Under the definition of interest in section 2(za), the same rate applies when a buyer defaults on payments to the promoter, so check your own payment record before you file.

How the interest is worked out

For a refund, interest usually runs on each instalment from the date you paid it until the date the refund is made. For a buyer who stays, delay interest runs on the amount paid from the promised possession date (after any valid grace period) until possession is actually handed over. As an illustration only: if a buyer has paid Rs 60 lakh and the prescribed rate were 11 percent a year, delay interest would be about Rs 55,000 for each month of delay. The real figure depends on your State's rate, the dates of payment and the order passed.

Section 19(4) gives the same refund right in a wider set of situations: where the promoter fails to comply, or is unable to give possession, in accordance with the agreement, or because its business as a developer is discontinued on account of suspension or revocation of its RERA registration. So a project that collapses because its registration is revoked is also covered.

RERA Authority or adjudicating officer: who decides what

A complaint under section 31 goes to the State's Real Estate Regulatory Authority. Newtech clarified the split of work:

• The Regulatory Authority decides refund of the amount paid, interest on the refund, and interest for delayed possession.
• The adjudicating officer, a serving or retired District Judge appointed under section 71, decides compensation (and interest on compensation) under sections 12, 14, 18 and 19.

So a buyer who wants both a refund and a separate amount for mental agony or extra rent may need to approach both, in the forms their State's rules prescribe. Section 79 bars civil courts from hearing matters the Authority or adjudicating officer can decide. An order for interest or compensation that is not paid can be recovered as arrears of land revenue under section 40(1).

The Consumer Commission route

A homebuyer who bought the flat for their own use is a consumer under the Consumer Protection Act, 2019 (a purchase for resale or a commercial purpose is excluded). In Imperia Structures the Supreme Court held that section 79 of RERA does not bar a Consumer Commission, that section 88 says RERA is in addition to other laws, and that the buyer may choose between the remedies. The section 71 proviso, which let buyers with consumer cases pending when RERA began withdraw and move to the adjudicating officer, gives an option; it does not force anyone to switch.

Which Commission you go to depends on the amount you paid as consideration, under the 2021 jurisdiction rules:

• District Commission: up to Rs 50 lakh.
• State Commission: above Rs 50 lakh and up to Rs 2 crore.
• National Commission: above Rs 2 crore.

A consumer complaint must generally be filed within two years from the date the cause of action arises (section 69). Commissions can order a refund with interest, compensation and costs together. Interest is at the Commission's discretion; in Imperia, for example, the Supreme Court upheld a refund with 9 percent simple interest and costs. Our guide to consumer complaints and forums explains filing and jurisdiction in more detail, and LegalFirms has a separate walkthrough of filing a consumer complaint.

Choosing a forum

• RERA suits buyers in registered projects who want the statutory interest rate applied with little argument. Refund and interest are handled in a summary way, and appeals go to the Real Estate Appellate Tribunal.
• The Consumer Commission suits buyers who want refund, compensation and costs decided in one proceeding, or whose project was not registered with RERA.
• Both are open to a buyer of an ongoing project. Pick one forum for the same relief; running two cases for the same money invites objections and wastes time.
• If many buyers in the same project are affected, a joint or representative complaint can share the cost.

Think about appeals too. An order of a State RERA Authority or adjudicating officer can be appealed to the Real Estate Appellate Tribunal within 60 days under section 44, and then to the High Court. In the consumer system, an appeal from the District Commission lies to the State Commission within 45 days, and from the State Commission to the National Commission within 30 days. Builders frequently appeal, so a final recovery can take longer than the first order suggests.

Whichever forum you choose, the strength of your case rests on the same things: a clear possession date, proof of every payment, and a record of the builder's explanations. A buyer who has those in order is in a far better position than one who files first and gathers papers later.

Documents to collect before you file

• The builder-buyer agreement or agreement for sale, and the allotment letter.
• Every payment receipt and bank statement showing payments, including those made by your home loan lender.
• Demand letters, construction-linked payment notices, emails, WhatsApp messages and any letters explaining the delay.
• The project's RERA registration page and quarterly progress reports.
• Brochures or advertisements promising amenities or dates.
• Any offer of possession and the status of the occupancy certificate.
• If you are claiming compensation, proof of rent paid or extra EMI costs during the delay period.

Step by step: claiming refund or delay interest

1. Find the possession date and any grace period in your agreement, and work out how many months late the project is.
2. Check the project's RERA page for extensions, the declared completion date and the occupancy certificate status.
3. Send the builder a written notice stating the delay and what you want (refund with interest, or a firm possession date with delay interest). A consumer legal notice works for either forum and creates a record.
4. If the reply is unsatisfactory, decide whether you want to exit or stay. This decision shapes the relief you ask for.
5. File a RERA complaint on your State RERA portal, or a builder delay complaint before the Consumer Commission through e-Daakhil, attaching the documents above and paying the fee.
6. Attend hearings, file a rejoinder if the builder replies, and keep the payment calculation updated to the date of hearing.
7. If an order is passed and not obeyed, apply for execution: under RERA the amount can be recovered as arrears of land revenue, and Consumer Commissions have their own execution powers.

When possession is finally offered

Delay interest under the section 18 proviso runs until possession is handed over. Section 19(10) of RERA requires the buyer to take physical possession within two months of the occupancy certificate being issued, so do not ignore a valid offer of possession once the certificate exists. Inspect the flat, note defects in writing, and make sure the possession letter records the date of handover accurately, since that date fixes the end of the interest period.

Read every document handed to you at possession. If a form says you give up all claims for delay, you are not obliged to sign it to receive the keys, and you should take advice before you do. Our guide on completion and occupancy certificates explains what to check. If the builder disputes the delay or the sums are large, you can speak to a real estate lawyer about the forum and the calculation.