Bombay High Court Upholds Homebuyer’s Right to Delay Interest Despite Accepting Possession in Delayed Housing Project
Promoter Cannot Rely on Revised Timelines, Continued Payments or Section 55 of Contract Act to Defeat Statutory Interest for Delay
The Bombay High Court has held that a homebuyer who remains in a delayed real estate project and ultimately accepts possession does not lose the statutory right to claim interest for every month of delay under Section 18 of the Real Estate (Regulation and Development) Act, 2016.
Justice Sharmila U. Deshmukh ruled that Section 18 confers an unconditional and absolute right upon an allottee who chooses to continue with the project. This right cannot be defeated merely because the allottee did not object to revised possession dates, continued making construction-linked payments or failed to issue a separate notice reserving the right to claim compensation.
The Court dismissed a second appeal filed by CCI Projects Private Limited and upheld the Maharashtra Real Estate Appellate Tribunal’s direction requiring the promoter to pay interest from 1 March 2016 until possession was handed over.
Background
The homebuyers booked an apartment in the “Wintergreen” building forming part of the promoter’s Rivali Park project in Borivali, Mumbai.
The allotment letter dated 1 October 2011 initially mentioned 30 June 2015 as the possession date, with a six-month grace period. A registered agreement executed on 26 March 2013 subsequently required the promoter to hand over possession by February 2016.
The total consideration for the apartment was approximately ₹1.82 crore. The allottees had paid nearly the entire consideration, apart from substantial amounts towards stamp duty, registration charges and applicable taxes.
When possession was not handed over, the allottees approached MahaRERA in May 2018. They sought possession with interest at the prescribed rate from 1 March 2016 until actual delivery.
MahaRERA Initially Deferred the Interest Claim
MahaRERA directed the promoter to complete the project and hand over possession with an occupancy certificate before 31 December 2019. It granted the allottees liberty to demand interest under Section 18 at an appropriate stage.
The homebuyers challenged that order before the Maharashtra Real Estate Appellate Tribunal.
The Tribunal held that there was no reliable evidence showing that the allottees had accepted the revised possession dates or waived their right to interest. It directed the promoter to pay interest at the State Bank of India’s highest Marginal Cost of Lending Rate plus 2% from 1 March 2016 until possession was handed over.
The promoter then approached the Bombay High Court.
Promoter Relied on Homebuyers’ Silence and Continued Payments
The promoter argued that the homebuyers had been informed through several communications that the possession timeline had been extended—first to March 2018, then December 2018 and eventually December 2019.
According to the promoter, the allottees did not object to these revised dates and continued making payments under the altered construction schedule.
It contended that their conduct amounted to acceptance of delayed performance.
The promoter relied on Section 55 of the Indian Contract Act, 1872, which provides that where a promisee accepts delayed performance, compensation for the delay cannot ordinarily be claimed unless the promisee gives notice, at the time of acceptance, of an intention to seek compensation.
Since the homebuyers had not issued such a notice, the promoter argued that they were not entitled to interest for the earlier period of delay.
Section 18 Gives Homebuyers an Independent Statutory Right
The High Court rejected the promoter’s argument.
It held that Section 18 of RERA creates two distinct remedies where the promoter fails to hand over possession by the date specified in the agreement:
- the allottee may withdraw and seek refund with interest and compensation; or
- the allottee may remain in the project and receive interest for every month of delay until possession is handed over.
The second remedy expressly permits the allottee to accept delayed possession without surrendering the right to interest.
The Court observed that the right under Section 18 is statutory and arises immediately upon the promoter’s failure to hand over possession by the agreed date.
It does not depend upon proof of actual financial loss, a prior protest or a notice reserving the right to claim interest.
RERA Overrides Inconsistent Conditions Under Contract Law
The Court found a clear inconsistency between Section 18 of RERA and the third paragraph of Section 55 of the Contract Act.
Section 55 places a condition on the recovery of compensation after delayed performance is accepted: the promisee must give notice of the intention to claim it.
Section 18, however, gives the allottee who remains in the project an unconditional right to interest for every month of delay.
The Court held that applying the notice requirement under Section 55 would impose a restriction that the RERA legislation does not recognise.
Since RERA is a special consumer-protection legislation governing the real estate sector, it prevails over the Contract Act, which is a general law. Section 89 of RERA gives the Act overriding effect over anything inconsistent in another law.
Accordingly, a homebuyer need not issue a notice under Section 55 to preserve the right to delayed-possession interest under Section 18.
Revised Dates Were Unilateral and Not Binding
The Court also upheld the Tribunal’s factual finding that the allottees had not accepted the revised possession dates.
The promoter’s communications merely informed the buyers about the delay and expressed an intention to complete the project by revised dates. They did not establish a mutually agreed amendment of the possession clause.
The Court further noted that the payment schedule was linked to stages of construction rather than fixed calendar dates.
Payments made when particular construction milestones were achieved could not be treated as consent to postpone the contractual possession date.
Even assuming that the allottees had accepted delayed performance, the Court held that Section 18 expressly entitled them to do so without waiving their right to interest.
Agreement Date Remains Sacrosanct
The High Court held that the date specified in the registered agreement for sale remains the controlling date for calculating delay under Section 18.
The promoter had agreed to hand over possession by February 2016. Therefore, the liability to pay interest commenced from March 2016.
A promoter cannot unilaterally replace the contractual date through later correspondence or by entering a revised completion date on the RERA registration portal.
For an ongoing registered project, any extension must be sought in accordance with the mechanism prescribed under Section 6 of RERA.
COVID-19 Moratorium Did Not Help the Promoter
The promoter also sought exclusion of the COVID-19 moratorium period while calculating interest.
The Court rejected this contention because the contractual possession date had expired in February 2016, several years before the pandemic.
A subsequent force majeure event cannot excuse a default that had already occurred.
The Court relied on an earlier Bombay High Court ruling holding that where possession was due before the pandemic, a promoter cannot use the COVID-19 lockdown to avoid liability for delayed-possession interest.
Decision
The Bombay High Court dismissed the promoter’s second appeal and affirmed the homebuyers’ entitlement to interest at SBI’s highest MCLR plus 2% from 1 March 2016 until possession was handed over.
The Court held that:
- acceptance of delayed possession does not waive the allottee’s right to interest under Section 18;
- no separate notice reserving the right to claim interest is required;
- unilateral revised possession dates do not amend the registered agreement;
- Section 18 of RERA prevails over inconsistent restrictions under Section 55 of the Contract Act; and
- COVID-19 force majeure relief is unavailable where the promoter was already in default before the pandemic.
The promoter’s request to temporarily defer execution proceedings was granted for four weeks from 24 June 2026.
Key Legal Principle
A homebuyer who chooses to remain in a delayed project is statutorily entitled under Section 18 of RERA to interest for every month of delay from the possession date specified in the agreement until actual delivery.
Continued participation in the project, payment of construction-linked instalments or acceptance of possession does not amount to waiver of that right.
Why the Judgment Matters
The ruling prevents promoters from treating a homebuyer’s patience or continued financial compliance as consent to indefinite delay.
It clarifies that homebuyers are not required to repeatedly object to revised timelines or reserve their legal rights through formal notices.
The contractual possession date remains binding, and the promoter’s liability for interest continues until lawful possession is handed over.
Case Details
Case: CCI Projects Private Limited v. Rajesh Kumar Chaudhary & Others
Court: Bombay High Court
Case Number: Second Appeal No. 479 of 2021
Judge: Justice Sharmila U. Deshmukh
Date: 18 June 2026
Result: Promoter’s second appeal dismissed; delayed-possession interest upheld
