Allottee’s Right To Interest For Delayed Possession Under Section 18 RERA Is Absolute; Not Fettered By Section 55 Contract Act: Bombay High Court

"Section 18 of RERA Act gives an unqualified absolute statutory right to claim interest unimpeded by any condition, whereas Section 55 of Contract Act lays fetters on that right making it subject to giving notice of intention to claim compensation," Bombay High Court, in a significant ruling, has held that the right of an allottee to seek interest for delayed possession under Section 18 of the RERA Act is an unqualified and absolute statutory right.

A single-judge bench of Justice Sharmila U. Deshmukh observed that this right remains unaffected by the provisions of Section 55 of the Indian Contract Act, 1872, even if the allottee accepts delayed performance without protest. The court emphasized that as a special enactment, the RERA Act overrides the general provisions of contract law regarding the waiver of compensation.

The appeal was filed by CCI Projects Private Limited (Promoter) challenging a Maharashtra Real Estate Appellate Tribunal order which directed payment of interest for delayed possession to allottees of the 'Wintergreen' project. While the agreement for sale fixed February 2016 as the possession date, the promoter unilaterally extended timelines multiple times, eventually offering possession only in April 2021. The promoter argued that by accepting the delayed performance and making payments as per revised schedules without issuing a notice of protest, the allottees had forfeited their right to compensation under Section 55 of the Contract Act.

The primary question before the court was whether the acceptance of delayed performance disentitled the allottees from claiming interest under the RERA Act in the absence of a notice of intention as contemplated by Section 55 of the Contract Act. The court was also called upon to determine if the provisions of Section 18 of the RERA Act override the general requirements of the Indian Contract Act and whether force majeure events like the COVID-19 pandemic could be ignored when the original default occurred pre-pandemic.

RERA Section 18 Codifies Summary Nature of Allottee Rights

The court noted that Section 18 of the RERA Act was specifically enacted to protect the interests of consumers in the real estate sector by imposing time-bound obligations on promoters. It provides a statutory option to the allottee: either exit the project with a full refund and interest or stay in the project and receive interest for every month of delay until possession is handed over. The bench emphasized that this right is "unqualified" and is not dependent on any contingencies outside the terms of the agreement.

Inconsistency Between RERA And Section 55 Contract Act

Under Section 55 of the Indian Contract Act, if a promisee accepts delayed performance in a contract where time is of the essence, they are disentitled from claiming compensation unless they give notice to the promisor of their intention to do so at the time of acceptance. However, the Court observed that Section 18 of the RERA Act provides an unfettered right to interest. Justice Deshmukh noted that the inconsistency between the two provisions is evident as the Contract Act lays down fetters that do not exist in the RERA framework.

RERA Overrides General Provisions Of The Contract Act

Relying on the Supreme Court's decision in Newtech Promoters and Developers, the bench held that RERA is a special enactment that must prevail over the general law of contracts. The court highlighted Section 89 of the RERA Act, which explicitly gives the statute an overriding effect over any other law for the time being in force. Therefore, the requirement to give a notice of intention to claim compensation under the Contract Act cannot be read into the statutory right conferred by RERA.

Date Specified In Registered Agreement Is Sacrosanct

The Court held that the date of possession mentioned in the registered agreement for sale is sacrosanct for the purpose of triggering Section 18. Any unilateral communication by the promoter revising the date of completion does not bind the allottee. The bench rejected the promoter's contention that the allottees' conduct in following a revised payment schedule amounted to an implied consent to a new possession date, noting that such payments were construction-linked and did not imply a waiver of statutory rights.

Force Majeure Relief Not Available For Pre-Pandemic Defaults

Regarding the COVID-19 pandemic and the RERA moratorium circulars, the Court held that the subsequent pandemic cannot aid a promoter who was already in default. Since the agreed possession date was February 2016, the promoter had failed to perform its obligation long before the 2020 pandemic. The bench clarified that a force majeure event cannot be used as a shield to escape liability for a delay that was not caused by that specific event.

Appellate Tribunal’s Direction For Interest Upheld

The High Court concluded that the Appellate Tribunal was correct in directing the promoter to pay interest from March 2016 until the actual date of handing over possession. It affirmed that allottees are well within their rights to stay with a project despite delays and claim interest for every month of that delay, as the legislative intent of RERA was to ensure that developers remain accountable to the timelines promised in the agreement.

In light of the answers to the substantial questions of law, the Court dismissed the Second Appeal filed by the promoter. The judgment reinforces that the beneficial provisions of the RERA Act cannot be diluted by applying general principles of contract law that were designed for different commercial contexts.

Date of Decision: 18th June, 2026