Bombay HC: Allottee’s Right to Interest for Delayed Possession Under Section 18 RERA Is Absolute and Unqualified

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

Date: 06.10.2026

Bombay HC: Allottee’s Right to Interest for Delayed Possession Under Section 18 RERA Is Absolute and Unqualified

In a significant ruling reinforcing the rights of homebuyers under the Real Estate (Regulation and Development) Act, 2016 (RERA), the Bombay High Court has held that an allottee’s right to receive interest for delayed possession under Section 18 of the RERA Act is “absolute and unqualified.”

The Court dismissed the second appeal filed by Aurangbad Holiday Resorts challenging orders directing it to pay the homebuyers simple interest at 10.75% per annum on ₹79,21,148 from 16 February 2016 until possession of the flat is handed over, along with ₹20,000 as costs. The original direction had been issued by Maharashtra RERA and subsequently affirmed by the Maharashtra Real Estate Appellate Tribunal.

Background of the Dispute

• The respondents had booked Flat No. 1004 in the “Jubilee Park” project at Warje, Pune, developed by the appellant. The agreed consideration for the flat was ₹83,38,050.
• Under the Agreement for Sale, possession was required to be handed over within 12 months, i.e. by 15 February 2016. However, possession remained pending long after the agreed date.
• The allottees had already paid ₹79,21,148 out of the total consideration of ₹83,38,050. The High Court took particular note that despite the passage of more than 11 years, the purchasers were still awaiting possession of their flat.

Developer Blamed Environmental Clearance Issues for Delay

• Aurangbad Holiday Resorts argued that the delay was caused by circumstances beyond its control.
• According to the developer, the Environment Department had issued a stop-work notice under the misconception that the project required environmental clearance. The developer relied upon a Maharashtra Government Circular dated 21 April 2015, which according to it clarified that construction on land measuring less than 20,000 sq. metres was not to be treated as a violation of the EIA Notification, 2006.
• The developer claimed that by 10 June 2015, approximately 95% of the project had already been completed, but further construction could not proceed because of the environmental clearance issue.
• It also relied upon an order of the National Green Tribunal dated 5 November 2024 in support of its contention that a project below 20,000 sq. metres did not require prior environmental clearance.
• Nevertheless, the developer subsequently obtained environmental clearance on 8 July 2025 and secured Consent to Operate from the Maharashtra Pollution Control Board on 23 March 2026 for the proposed extended project. On this basis, it argued that the delay was attributable to circumstances beyond its control.

Bombay HC Examines Section 18 of RERA

• The High Court was not persuaded that these circumstances could relieve the promoter of its statutory obligation to pay interest for delayed possession.
• Justice Sandeep V. Marne observed that Section 18 of RERA imposes an unqualified obligation upon a promoter to pay interest for every month of delay to an allottee who does not intend to withdraw from the project.
• In the present case, the allottees did not seek to withdraw. Instead, they intended to retain the flat and sought interest for the period during which possession had been delayed.
• This distinction is important because Section 18 protects both categories of purchasers: those who seek to exit after the promoter’s failure to deliver within the agreed timeline and those who choose to remain in the project but seek statutory interest for the delay.

Right to Interest for Delay Is “Absolute and Unqualified”

• The most important finding of the judgment is the High Court’s categorical treatment of interest for delayed possession.

The Court held:

• “The right of the allottee to receive interest in respect of delay period under Section 18 is absolute and unqualified.”
• It further characterised such interest as the “bare minimum” that a promoter must pay an allottee when possession has been delayed.
• Accordingly, mitigating circumstances available to a promoter cannot ordinarily eliminate the statutory liability to pay interest for the period of delay.

Mitigating Circumstances May Matter for Compensation, Not Interest

• The Court drew an important distinction between interest for delayed possession and a claim for compensation.
• According to the High Court, circumstances mitigating the promoter’s responsibility may assist it in defending an action for compensation. However, such circumstances do not wipe out the basic obligation to pay interest for delayed possession under Section 18.
• The Court stated that, as far as delayed-possession interest is concerned, it represents the minimum protection that RERA provides to an allottee.
• This finding is particularly significant for developers seeking to defend delayed-possession claims on grounds such as regulatory difficulties, governmental restrictions, environmental proceedings or other circumstances said to be outside their direct control.

Bombay HC Relies on Sanklecha Constructions

• The Court relied upon its recent judgment in Sanklecha Constructions Pvt. Ltd. & Ors. v. Nitin Madhukar Shewale & Ors., Second Appeal (St.) No. 8825 of 2025, decided on 28 September 2026.
• In Sanklecha Constructions, the Bombay High Court had discussed the nature of the rights conferred upon allottees by Section 18(1) of RERA and held that the statutory right is unqualified once the promoter fails to complete the project or deliver possession within the stipulated timeline.
• That judgment, in turn, considered the Supreme Court’s decision in Newtech Promoters and Developers Pvt. Ltd. v. State of U.P. The High Court reiterated that Newtech Promoters recognised the priority, immediacy and expediency attached to an allottee’s rights under Section 18.
• The judgment further records the principle that where possession is not delivered within the contractual timeline, the promoter’s statutory obligation under Section 18 can operate regardless of unforeseen events or court/tribunal stay orders not attributable to the allottee.

Maharashtra RERA’s 10.75% Interest Direction Upheld

• Applying these principles, the High Court found no valid ground to interfere with the concurrent orders of MahaRERA and the Maharashtra Real Estate Appellate Tribunal.
• The underlying order required the promoter to pay simple interest at 10.75% per annum on ₹79,21,148 from 16 February 2016 until the date possession is actually handed over, in addition to ₹20,000 in costs.
• The Court found that the appeal raised no substantial question of law and accordingly dismissed the Second Appeal.

High Court Also Refuses to Continue Interim Protection

• After the appeal was dismissed, counsel for the developer requested continuation of the ad-interim relief that had earlier been granted on 20 March 2023.
• The allottees opposed the request.
• Considering the findings recorded while dismissing the Second Appeal, the High Court declined to continue the interim protection and rejected the developer’s request.

Why This Judgment Is Important

• The ruling strengthens the statutory protection available to homebuyers facing prolonged delays in possession.
• Most importantly, the judgment distinguishes the promoter’s liability for interest from a separate liability for compensation. A developer may have mitigating circumstances that are relevant when a claim for compensation is examined, but those circumstances do not necessarily provide a defence against the statutory obligation to pay interest for the delayed period.
• The judgment also indicates that a promoter cannot automatically avoid Section 18 liability merely by demonstrating that regulatory or environmental issues contributed to the delay. Where the allottee continues with the project rather than withdrawing, interest for the period of delayed possession remains a statutory protection.

Key Takeaway

The Bombay High Court has reaffirmed that interest for delayed possession under Section 18 of RERA is not merely discretionary relief dependent upon proving fault on the part of the developer. For an allottee who continues with the project, the obligation to pay interest for the period of delay is absolute and unqualified once possession is not delivered within the agreed timeline.

In Aurangbad Holiday Resorts, the developer’s reliance on environmental-clearance difficulties did not persuade the Court to interfere with the orders in favour of the homebuyers. The Second Appeal was dismissed, leaving intact the direction to pay 10.75% simple interest on ₹79.21 lakh from 16 February 2016 until possession is handed over.

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Source: Bombay High Court

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