Category: RERA

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

Date: 26.09.2026

Punjab & Haryana HC: Development Authority Is a ‘Promoter’ Under RERA and Liable for Delayed Possession

The Punjab and Haryana High Court has held that a Development Authority falls within the definition of “promoter” under the Real Estate (Regulation and Development) Act, 2016 (RERA) and cannot escape the statutory consequences of delayed possession merely because a commercial site was auctioned on an “as is where is” basis or because the allotment terms contained a deemed-possession clause.

Dismissing two appeals filed by the Bathinda Development Authority, Justice Harkesh Manuja upheld the order of the Real Estate Appellate Tribunal, Punjab granting interest under Section 18 of the RERA Act to allottee Leela Gupta for delayed possession of two SCO sites.

Background: SCO Sites Purchased Through Auction and Transfer

• The dispute concerned two SCO sites situated at Civil Lines, Power House Road, Bathinda.
• Leela Gupta purchased SCO Site No. 1 through an open auction conducted by the Bathinda Development Authority on 5 August 2015. An allotment letter was issued on 1 December 2015 after payment of 20% of the principal amount along with 2% cancer cess.
• Under the allotment letter, possession was required to be delivered within 90 days.
• SCO Site No. 2 was not originally allotted to Gupta. She subsequently acquired it by transfer from the original allottees on 4 August 2017. Her grievance was that despite payment according to schedule, possession of the sites was not handed over in time because the necessary development work had not been completed.

Earlier Proceedings Before PUDA and RERA

• Gupta initially sought relief from the Estate Officer, Bathinda, contending that interest should not be charged for the period during which the sites were not ready for possession.
• After her representation was rejected, she approached the High Court through CWP No. 24881 of 2018. The High Court permitted her to submit an appeal-cum-representation to the Chief Administrator, PUDA for a speaking decision.
• The Chief Administrator subsequently rejected her claim for waiver of interest on instalments but extended the moratorium period for construction, noting that development works in the commercial pocket had been completed on 16 June 2017.
• Gupta thereafter approached the Real Estate Regulatory Authority, Punjab seeking three reliefs: refund of interest charged on instalments, extension of the non-construction period, and interest under Section 18 of RERA.
• The Authority dismissed her complaints. On appeal, however, she restricted her claim only to interest for delayed possession under Section 18.

RERA Appellate Tribunal Awards Interest for Delayed Possession

• The Real Estate Appellate Tribunal, Punjab allowed Gupta’s appeals on 12 May 2022.
• For SCO Site No. 1, it awarded interest for delayed possession from 1 March 2016 to 19 October 2017.
• For SCO Site No. 2, it awarded interest from 4 August 2017 to 19 October 2017 on the amount deposited up to that date, applying Rule 16 of the Punjab State Real Estate (Regulation and Development) Rules, 2017.
• Bathinda Development Authority challenged those orders before the Punjab and Haryana High Court.

Development Authority Questions Maintainability of RERA Proceedings

• The Authority argued that the dispute arose from allotments governed by the Punjab Regional and Town Planning and Development Act, 1995 (PRTPD Act).
• According to it, after the Chief Administrator passed the order dated 27 May 2019 in exercise of appellate powers under Section 45 of the PRTPD Act, Gupta’s appropriate remedy was to file a revision before the State Government under Section 45(8) rather than initiating proceedings under RERA.
• The High Court rejected this contention.
• It noted that Gupta had relinquished her other claims and restricted the dispute before the RERA authorities to the statutory remedy of interest under Section 18 of RERA. Her claim was therefore independently founded on the RERA Act.
• The Court also noted that the maintainability objection had not been raised by the Development Authority before either the RERA Authority or the Appellate Tribunal and was being advanced for the first time at a belated stage.

Section 18 RERA Creates Statutory Right to Interest for Delay

• The High Court examined Section 18 of the RERA Act, which provides remedies where a promoter fails to complete or give possession of an apartment, plot or building according to the agreed terms.
• Where the allottee does not wish to withdraw from the project, the proviso to Section 18(1) requires the promoter to pay interest for every month of delay until possession is handed over, at the prescribed rate.
• The issue therefore turned on whether Bathinda Development Authority was a “promoter” and whether there had actually been delay in making the sites ready for possession.

Development Authority Expressly Covered by Definition of ‘Promoter’

• The High Court referred to Section 2(zk)(iii) of the RERA Act, which expressly includes a development authority or other public body within the definition of “promoter” in relation to specified buildings, apartments and plots.
• The Court therefore held that there was “no doubt” that Bathinda Development Authority was covered within the statutory definition of promoter.
• This finding is important because it confirms that a public development authority cannot seek exemption from RERA’s promoter obligations merely because it is a statutory or State authority rather than a private developer.

‘As Is Where Is’ Clause Does Not Excuse Delayed Development

• Bathinda Development Authority relied heavily on two provisions in the allotment letter.
• First, the plot had been offered on an “as is where is” basis. Second, the allotment letter stated that possession would be given within 90 days and, if the allottee did not take possession within that period, possession would be deemed to have been handed over on the due date.
• The High Court was not persuaded.
• It reasoned that if the “as is where is” clause completely absolved the Authority from carrying out development, there would have been no reason for the Authority itself to spend resources and time undertaking development work.
• The record showed that development of the site was, in fact, the Authority’s responsibility.

The Court importantly observed that:

• “Mere physical possession without any basic amenities would serve no purpose”
• because construction and commercial activity could not practically be carried out without the necessary basic infrastructure.

Electricity Is a Basic Amenity; Site Was Ready Only on 19 October 2017

The date on which the sites could genuinely be treated as ready for possession became a central issue.

An RTI response showed that:

• civil and public health works were completed on 16 June 2017;
• electrical works were completed on 28 April 2017;
• transformers were installed on 1 March 2017; and
• electricity supply became available only on 19 October 2017.
• The Chief Administrator had treated 16 June 2017 as the completion date, apparently without treating actual electricity supply as essential.
• The High Court disagreed.
• It held that electricity was a basic amenity necessary for construction activity, particularly because machinery used at a construction site requires power. It therefore affirmed the Appellate Tribunal’s conclusion that the sites were actually ready for possession only on 19 October 2017.

Extension of Construction Moratorium Was an Indirect Admission of Delay

• The Court also identified what it considered an inconsistency in the Authority’s stand.
• The Chief Administrator had extended the three-year moratorium period for construction on the ground that the commercial pocket became ready only after development work was completed.
• According to the High Court, if there had genuinely been no delay on the Authority’s part, there would have been no need to extend the construction moratorium.
• The extension was therefore treated as an indirect admission through the Authority’s own conduct that delay had occurred.

Allottee Cannot Face Penalty for Delay While Promoter Faces No Consequence

• The High Court also addressed the imbalance that would arise if the Authority’s interpretation were accepted.
• It observed that an allottee could be required to pay penalty charges for failing to complete construction within the stipulated period. It would therefore be anomalous if there were no corresponding consequences for the promoter’s delay in providing possession, especially when Section 18 of RERA expressly provides a statutory remedy for such delay.

Supreme Court’s Arifur Rahman Khan v. DLF Southern Homes Applied

The High Court relied on the Supreme Court’s judgment in:

Wg. Cdr. Arifur Rahman Khan and Aleya Sultana v. DLF Southern Homes Pvt. Ltd., (2020) 16 SCC 512.

• The Court referred to the Supreme Court’s recognition that agreements between developers and purchasers often do not operate on an equal footing: stringent obligations imposed on purchasers are frequently not mirrored by equivalent obligations on developers to meet timelines.
• Bathinda Development Authority argued that Gupta had participated in the auction with her “eyes wide open.”
• The High Court rejected this reasoning, observing that participation in an open auction could not mean that the allottee should have anticipated that the Authority itself would delay development work.
• The fact that the site had been allotted through an auction did not confer any right upon the Authority to delay development. Once delay occurred, the statutory consequences under RERA had to follow.

State Development Authority Cannot Claim Preferential Treatment Over Private Promoter

• The High Court made another significant observation concerning public development authorities.
• It held that no concession could be claimed by a State Development Authority merely because it was a public body rather than a private promoter.
• Indeed, the Court observed that the obligation upon the State was greater because it was itself a law-enforcement agency, particularly where it had maximised revenue by disposing of property through an open auction.
• The ruling therefore places public development authorities squarely within the accountability framework established by RERA where the statutory definition of promoter is attracted.

Earlier PUDA Order Did Not Bar Section 18 Claim

• The Authority further argued that the Chief Administrator’s order dated 27 May 2019 had never been challenged and continued to remain in force.
• The High Court rejected this objection because the earlier proceeding concerned a different relief.
• The Chief Administrator had rejected Gupta’s request that interest should not be charged on her instalments during the development period.
• The RERA proceedings, by contrast, concerned her affirmative statutory entitlement to receive interest from the promoter for delayed possession under Section 18.
• The two issues were therefore legally distinct.

Other Allottees Taking Possession Earlier Does Not Defeat Statutory Right

• The Authority also claimed that similarly situated allottees had taken possession earlier.
• The High Court noted that no material had been placed on record to substantiate this assertion. More importantly, even assuming it to be factually correct, the conduct of other allottees could not extinguish Gupta’s rights arising from the statutory provisions.

Final Decision: Bathinda Development Authority’s Appeals Dismissed

• The Punjab and Haryana High Court found no reason to interfere with the Real Estate Appellate Tribunal’s order.
• Both RERA Appeal No. 6 of 2023 and RERA Appeal No. 12 of 2023 filed by Bathinda Development Authority were dismissed.

Consequently, Leela Gupta succeeded, and the Appellate Tribunal’s award of delayed-possession interest remained intact:

SCO Site	Period for Which Interest Was Awarded
SCO Site No. 1	1 March 2016 to 19 October 2017
SCO Site No. 2	4 August 2017 to 19 October 2017

• The interest was to operate on the deposited amount in accordance with the applicable RERA framework and Rule 16 of the Punjab State Real Estate (Regulation and Development) Rules, 2017.

Key Takeaway

The judgment establishes three important RERA principles. A Development Authority is expressly covered within the definition of “promoter” under Section 2(zk); an “as is where is” or deemed-possession clause cannot automatically defeat the statutory entitlement under Section 18 where the site was not practically ready for possession; and essential infrastructure such as actual electricity supply may be relevant in determining when a commercial site became genuinely ready for possession.

Most importantly, the High Court made clear that State development authorities cannot claim a more favourable standard than private promoters when RERA obligations apply.

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Source: Bombay High Court

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