News: Possession Doesn’t End Delay Interest Right: Bombay HC-13-08-2026
A homebuyer who accepts possession of a delayed flat can still claim interest from the developer for the period of delay, the Bombay High Court has held. In an order dated August 5, 2026, it dismissed a developer’s appeal and upheld the findings of the Maharashtra Real Estate Appellate Tribunal (MREAT).
The appeal was filed against homebuyers who had bought apartments in the free-sale component of the Patra Chawl redevelopment in Goregaon, Mumbai. Possession of the flat in dispute was contractually due by June 30, 2018.
The developer argued that, although there was a delay, the buyers later accepted possession without giving notice that they intended to claim compensation. Relying on provisions of the Indian Contract Act, it contended that they could no longer make such a claim.
The court rejected this, holding that the Real Estate Regulatory Act (RERA), 2016 overrides other laws. It said the allottee’s right to interest for every month of delay until possession is handed over under the agreement is an "independent and indefeasible right". In effect, a buyer does not give up delay interest merely by taking the keys, and Section 18 of RERA continues to apply where the promised date is missed.
The court noted that the buyers had paid 95% of the sale consideration by December 2017 and had sought inspection of the flat before taking possession. It upheld the finding that the developer defaulted on delivery in violation of Section 18. The provision is beneficial and meant to protect allottees, it said, and accepting the developer’s argument would defeat the purpose of the law.
About Patra Chawl
Patra Chawl, in the Siddarth Nagar area of Goregaon, was originally a barrack built by the British during the Second World War and used as a military camp. It had over 670 tenants, with housing units spread across 47 acres.
In 2008, MHADA took up its redevelopment and appointed Guru Ashish Construction Private Limited (GACPL), a sister concern of Housing Development and Infrastructure Ltd (HDIL), to rehabilitate the tenants and redevelop the locality. A tripartite agreement was signed between GACPL, the tenants’ society and MHADA. The tenants moved out by 2010 but, 14 years on, have yet to receive the promised homes.
Under the free-sale component, developers sold apartments to about 1,700 families. The firms that built these projects have been unable to hand over possession for want of an OC. Buyers had alleged that the delay stemmed from administrative issues and disputes between the developers and MHADA over alleged pending liabilities of around Rs 3,100 crore.
