RERA Section 18 Interest For Delayed Possession Is An Unqualified Absolute Right; Notice Under Section 55 Contract Act Not Required: 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, held that the right of an allottee to claim interest for delayed possession under Section 18 of the RERA Act is an absolute statutory right that cannot be curtailed by the provisions of the Indian Contract Act.

A single-judge bench of Justice Sharmila U. Deshmukh observed that RERA, being a special enactment with an overriding effect under Section 89, prevails over the general provisions of the Contract Act regarding the requirement of notice for claiming compensation.

The appellant-promoter, CCI Projects Private Limited, challenged an order of the Maharashtra Real Estate Appellate Tribunal which directed them to pay interest for delayed possession to the allottees. The allottees had booked an apartment in the 'Wintergreen' project with a promised possession date of June 30, 2017. When the promoter failed to deliver, the allottees sought interest under Section 18 of the RERA Act. The promoter argued that the allottees had accepted revised timelines and payment schedules, thereby waiving their right to interest under Section 55 of the Contract Act.

The primary question before the court was whether the acceptance of delayed performance by an allottee disentitles them from claiming interest under Section 18 of the RERA Act in the absence of a notice as contemplated by Section 55 of the Indian Contract Act. The court was also called upon to determine if the provisions of RERA override the Contract Act and whether the COVID-19 pandemic could be treated as a force majeure event for a delay that occurred prior to the pandemic.

Interplay Between RERA And Indian Contract Act

The court analyzed the nature of Section 18 of the RERA Act, noting that it was enacted specifically to protect consumers in the real estate sector and infuse transparency. The bench observed that Section 18 codifies a summary mechanism that discharges the allottee from the onus of proving actual loss upon the promoter's failure to hand over possession by the specified date.

"The right given by Section 18 of RERA Act to continue with the project is nothing but permitting acceptance of delayed performance without foregoing the right to claim interest for every month of delay."

RERA As A Special Enactment With Overriding Effect

The Court emphasized that Section 89 of the RERA Act gives the statute an overriding effect over any other law inconsistent with it. Justice Deshmukh noted that while Section 55 of the Contract Act makes the right to compensation conditional upon giving notice of intention at the time of accepting delayed performance, Section 18 of RERA imposes no such conditionality.

"RERA Act being a special enactment will prevail over Contract Act, a general law. Section 89 of RERA Act gives it an overriding effect over anything inconsistent with the other laws."

Absolute Right To Interest Under Section 18

The bench relied on the Supreme Court's decisions in Newtech Promoters and Developers Pvt. Ltd. vs. State of UP and Imperia Structures Limited vs. Anil Patni to reiterate that the right to refund or interest under RERA is "unqualified" and "absolute." The court held that the legislature consciously provided this right to be triggered on demand if the promoter fails to deliver possession by the date specified in the agreement.

"The unqualified absolute right of the allottee stands statutorily recognized in Section 18 of RERA Act and the continuation with the project does not impact the unfettered statutory right to claim interest."

Unilateral Communications Do Not Constitute Contractual Addendums

Addressing the promoter's argument that the allottees accepted revised dates by following a revised payment schedule, the Court found that these communications were merely informative. The bench held that a statutory date mentioned in a registered agreement under MOFA or RERA cannot be altered by the mere conduct of parties or unilateral updates, as any such alteration must be in writing.

"The purported alteration based on conduct of parties cannot be accepted as an addendum to the main agreement. Primacy is given to the date specified in the agreement."

COVID-19 Not A Valid Defense For Pre-Existing Delays

The Court dismissed the promoter's plea regarding force majeure. It observed that the possession was due in June 2017, long before the onset of the COVID-19 pandemic. Following the precedent in M/s Pragatej Builders and Developers Pvt. Ltd. vs. Abhishek Anju Sukhadia, the court held that a subsequent lockdown cannot aid a promoter who was already in default.

"Where the possession was to be handed over before the Covid-19 pandemic, the subsequent lockdown cannot come to the aid of the promoter for claiming any relief for payment of interest."

Plea Of Parity Before Authority Is Not A Waiver Of Appeal

Finally, the Court dealt with the maintainability of the appeal. The promoter argued that the allottees had "invited" the original RERA order by asking for parity with another case, thus making it a consent order. The Court rejected this, stating that a plea for parity is not an express waiver or abandonment of the right to claim interest or the right to file an appeal.

"The request for identical order does not explicitly abandon the right to interest. There can be no estoppel against law."

The High Court concluded that the allottees were well within their rights to claim interest from the original promised date of July 1, 2017, until the actual handing over of possession. Finding no merit in the substantial questions of law raised by the developer, the Court dismissed the Second Appeal.

Date of Decision: 18 June 2026