Interest for Delay in Hose Possession is Automatic Under Section 18 RERA – Allahabad High Court

Allahabad High Court settled crucial questions on the scope of promoters’ liability, appellate powers under the RERA Act, and the nature of statutory pre-deposit. Justice Pankaj Bhatia held that once delay in handing over possession is admitted, interest under Section 18(1)(a) of the Real Estate (Regulation and Development) Act, 2016, follows automatically and requires no further inquiry. The Court dismissed all appeals by the builder and allottee, affirming the orders of the U.P. Real Estate Appellate Tribunal.

“Statutory Interest is a Mathematical Consequence – No Inquiry Required”

The Court emphasized that Section 18(1)(a) of the RERA Act is mandatory in nature. Justice Bhatia observed: “The normal consequence of admitted delay in delivery of possession results in automatic award of interest in terms of Section 18(1)(a). The phrase ‘as the case may be’ is confined only to the two contingencies within the section itself and cannot dilute the mandatory nature of the liability.”

The Tribunal had directed payment of interest from 01.01.2020 (the expected date of possession) until 13.10.2022 (date of offer of possession) at MCLR + 1% per month, excluding six months of COVID-19 force majeure. The High Court found no error in this mechanical computation.

“Appellate Tribunal Empowered to Award Interest”

Rejecting the promoters’ argument that only the Regulatory Authority could grant interest, the Court held that the Tribunal, vested with both appellate and revisional powers under Sections 44(6) and 53(1), was fully competent to substitute interest for compensation. “The Tribunal is not bound by the CPC but guided by natural justice. It can exercise the powers of the authority appealed against, particularly where only a mechanical exercise is required,” Justice Bhatia ruled.

The Court drew analogy from appellate powers under Order XLI Rule 24 CPC and reiterated that RERA’s object as a consumer-protection statute justified the Tribunal’s intervention to secure interest for homebuyers.

“Pre-Deposit Under Section 43(5) is Part of Liability, Can Be Released”

The Court clarified that the statutory pre-deposit made by a promoter for maintaining an appeal is not a mere formality but a part of the liability. Justice Bhatia noted: “Pre-deposit represents discharge of liability to the extent deposited and can be appropriated toward the allottee’s entitlement. Refund arises only if the deposit exceeds the adjudicated liability.”

Accordingly, the Tribunal’s direction to release the deposited amount in favour of the allottee, subject to verification of pending execution, was upheld.

“No Substantial Question of Law – Appeal Not Maintainable”

The Court stressed that under Section 58 RERA read with Section 100 CPC, appeals to the High Court lie only on substantial questions of law. Since the dates of agreement (22.01.2019), expected possession (December 2019), completion certificate (16.09.2022), and offer of possession (13.10.2022) were undisputed, the award of interest was purely statutory. “Once delay is admitted, no substantial question of law arises. Interest under Section 18 is a statutory mandate and not a matter of discretion,” the Court observed.

The allottee’s cross-appeal for compensation was also dismissed as no submissions had been made before the Tribunal.

Justice Pankaj Bhatia concluded: “All appeals filed by the promoter are dismissed as devoid of merit. The appeal preferred by the allottee is also dismissed. Tribunal’s orders are justified in law and fact. No substantial question of law arises.”

The ruling cements three principles: interest for delay is automatic, the Tribunal has ample power to enforce it, and pre-deposits are not procedural security but part of the promoter’s liability.

Date of Decision: 4 September 2025