Bombay HC: Interest & Penalty Under RERA Recoverable as Land Revenue; Possession Through Civil Court

Aadrikaa Legal Services (ALS)- Law I Litigation I Arbitration

Date: 23.09.2026

Bombay HC: Interest & Penalty Under RERA Recoverable as Land Revenue; Possession Through Civil Court

The Bombay High Court at Goa has clarified the two distinct mechanisms contemplated under Section 40 of the Real Estate (Regulation and Development) Act, 2016 for enforcement of RERA orders—monetary directions for payment of interest, penalty or compensation are recoverable through the revenue machinery, whereas directions requiring a person to do or refrain from doing an act can be enforced in the manner prescribed for execution of such directions.

A Division Bench of Justice Valmiki Menezes and Justice Amit S. Jamsandekar dismissed petitions filed by M/s Sunstar Homes, finding that the complainants had followed the correct routes for enforcing the different components of a composite Goa RERA order. The Court, however, expressly declined to decide the constitutional/statutory validity of Rule 4 of the Goa RERA Rules, holding that the issue had become academic in the facts of the case.

Sunstar Homes Challenged Rule 4 of Goa RERA Rules

• The principal challenge raised by Sunstar Homes concerned the vires of Rule 4 of the Goa Real Estate (Regulation and Development) (Recovery of Interest, Penalty, Compensation, Fine Payable, Forms of Complaints and Appeal, etc.) Rules, 2017.
• Sunstar argued that Section 40 of RERA itself provides two different mechanisms for enforcing orders.
• According to the developer, Section 40(1) governs recovery of interest, penalty or compensation, while Section 40(2) deals with enforcement of orders directing a person to perform an act or refrain from performing an act.
• The developer contended that Rule 4 impermissibly prescribed a single method for executing both categories by treating RERA orders as if they were decrees of a civil court and providing for execution under the Code of Civil Procedure.

RERA Had Directed Possession, Penalty and Interest

• The dispute arose from a composite order passed against Sunstar Homes by the Goa Real Estate Regulatory Authority.
• The order contained three principal directions: the developer was required to hand over possession of certain premises, pay penalty, and pay interest to the complainants.
• Sunstar Homes challenged the order before the RERA Appellate Tribunal. However, the Tribunal dismissed its appeal, resulting in confirmation of the original RERA order.
• This created the central issue before the High Court: how should different parts of a composite RERA order be enforced when some directions are monetary and others require performance of an act?

Possession Order Executed Through Civil Court

• The complainants approached the Civil Court under Order XXI of the Code of Civil Procedure read with Rule 4 of the Goa Rules for enforcement of the portion of the RERA order directing delivery of possession.
• By the time the matter came before the High Court, that execution had already been completed.
• The Civil Court had handed over possession of the apartments to the concerned complainants, and therefore nothing further remained to be executed as regards the possession direction.

Interest and Penalty Recovery Taken Before Revenue Authorities

• The complainants followed a different route for the monetary component of the RERA order.
• For recovery of the interest and penalty, proceedings were initiated before the Mamlatdar under the Goa Land Revenue Code, 1971.
• The High Court recorded that the Revenue Authorities had quantified the interest and penalty amount and that those recovery proceedings were still pending.
• This distinction became decisive in the High Court’s assessment.

Section 40(1): Interest, Penalty and Compensation Recoverable as Arrears of Land Revenue

• The High Court explained that Section 40(1) deals with monetary liabilities such as interest, penalty and compensation.
• Such amounts are to be recovered through proceedings for recovery as arrears of land revenue.
• Accordingly, the proceedings initiated before the revenue authorities for recovery of interest and penalty were within the statutory mechanism contemplated by Section 40(1).
• The Court specifically found that the pending proceedings under the Goa Land Revenue Code were within the powers of the Revenue Authorities under Section 40(1) of RERA.

Section 40(2): Possession Direction Can Be Executed Through Civil Court

• The other component of the RERA order was materially different.
• The direction requiring Sunstar Homes to hand over possession was not merely an order for payment of money. It required the developer to perform an act.
• The High Court treated this as falling within Section 40(2).
• The complainants had approached the Civil Court and sought enforcement through the CPC, and the possession order had already been successfully executed.
• The Court held that the complainants had adopted the correct course by taking the possession component falling under Section 40(2) to the Civil Court, while pursuing the monetary component under Section 40(1) before the revenue authorities.

One RERA Order Can Therefore Require Two Different Execution Routes

• An important practical consequence of the judgment is that a single composite RERA order can contain directions that require different modes of enforcement.
• Where an order simultaneously directs a promoter to hand over possession and pay interest, penalty or compensation, the entire order need not necessarily be enforced through one forum or procedure.
• The nature of each direction determines its enforcement route.

Thus, in the present case:

Component of RERA Order	Relevant Provision	Enforcement Route
Handing over possession	Section 40(2)	Civil Court/CPC mechanism prescribed under the Rules
Payment of interest	Section 40(1)	Recovery as arrears of land revenue
Payment of penalty	Section 40(1)	Recovery as arrears of land revenue

The High Court found that this was precisely the course followed by the complainants.

High Court Does Not Decide Validity of Rule 4

• Although Sunstar Homes had mounted a direct challenge to the vires of Rule 4, the High Court did not adjudicate that larger question.
• This is an important qualification to the judgment.
• The possession portion of the RERA order had already been executed through the Civil Court, while the monetary recovery proceedings were validly pending before the Revenue Authorities under Section 40(1).
• Consequently, deciding the vires of Rule 4 would have been merely academic in the circumstances of these petitions.
• The Court therefore expressly left the validity challenge open to be considered in an appropriate future petition.
• Accordingly, the judgment should not be read as either upholding or striking down Rule 4 of the Goa RERA Rules on its merits.

Sunstar Homes’ Petitions Dismissed

• The High Court ultimately declined to entertain the petitions insofar as they challenged Rule 4 and dismissed all the petitions without costs.
• The Rule was discharged in each matter.
• Thus, the execution already completed for delivery of possession remained undisturbed, while the revenue proceedings concerning recovery of interest and penalty could continue.

Why This Judgment Matters for RERA Execution Proceedings

• The ruling provides useful guidance on a recurring issue in RERA litigation: the distinction between enforcement of monetary awards and enforcement of non-monetary directions.
• A RERA order may contain multiple forms of relief. The execution mechanism cannot necessarily be determined simply by calling the entire decision a “RERA order.” Instead, the nature of the particular relief being enforced must be examined.
• For promoters, allottees and practitioners, the decision indicates that Section 40(1) and Section 40(2) operate in different fields. Monetary recovery of interest, penalty or compensation travels through the land-revenue recovery mechanism, whereas a direction such as handing over possession may be executed through the mechanism applicable to non-monetary directions.
• At the same time, the judgment leaves an important legal question unresolved: whether Rule 4 of the Goa RERA Rules itself is valid in all its applications. The Bombay High Court deliberately left that question open for determination in a case where deciding it would have a live practical consequence.

Key Takeaway

The Bombay High Court’s ruling establishes, in the context of the Sunstar Homes dispute, that the complainants correctly used two separate enforcement routes for a composite RERA order: Civil Court execution for delivery of possession under Section 40(2), and revenue recovery proceedings for interest and penalty under Section 40(1). The Court did not adjudicate the vires of Rule 4 and therefore did not pronounce a general ruling validating or invalidating the Goa RERA execution rule.

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Source: Bombay High Court

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