Claim of Refund by Buyers & Stage of Construction


As far as the refund to the allottee is concerned, following provisions of the Real Estate (Regulation & Development) Act, 2016,(‘The Act’) need to be looked into which deals with the rights and obligations of the Allottee and Promoter;


Obligation of Promoter:


 Section 11 (4) The promoter shall— (a) be responsible for all obligations, responsibilities and functions under the provisions of this Act or the rules and regulations made thereunder or to the allottees as per the agreement for sale, or to the association of allottees, as the case may be, till the conveyance of all the apartments, plots or buildings, as the case may be, to the allottees, or the common areas to the association of allottees or the competent authority, as the case may be.


Rights of Allottee


Section 19 of the Act deals with Rights and Duties of Allottees.


 Sub-section 4 of Section 19 Read as under;


(4) The allottee shall be entitled to claim the refund of amount paid along with interest at such rate as may be prescribed and compensation in the manner as provided under this Act, from the promoter, if the promoter fails to comply or is unable to give possession of the apartment, plot or building, as the case may be, in accordance with the terms of agreement for sale or due to discontinuance of his business as a developer on account of suspension or revocation of his registration under the provisions of this Act or the rules or regulations made thereunder.




Section 18 (1)provides that “If the promoter fails to complete or is unable to give possession of an apartment, plot or building,—


in accordance with the terms of the agreement for sale or, as the case may be, duly completed by the date specified therein; or (b) due to discontinuance of his business as a developer on account of suspension or revocation of the registration under this Act or for any other reason, he shall be liable on demand to the allottees, in case the allottee wishes to withdraw from the project, without prejudice to any other remedy available, to return the amount received by him in respect of that apartment, plot, building, as the case may be, with interest at such rate as may be prescribed in this behalf including compensation in the manner as provided under this Act:


Provided that where an allottee does not intend to withdraw from the project, he shall be paid, by the promoter, interest for every month of delay, till the handing over of the possession, at such rate as may be prescribed.


If we read these provisions conjointly, the language of these provisions suggest that if the Promoter/developer fails to fulfil his obligations to handover the possession as per terms of the agreement, the allottee is entitled as a  right  to claim refund.


This right to claim refund and seeking of  compensation has been accepted and Consumer Courts have been widely following the norm, Apex Court has time and again come forward to protect the interest of buyers by upholding refund with exemplary compensation being awarded to homebuyers.  In a  recent judgement, NCDRC, in the matter of Puneet Malhotra Vs Parsvanath Developers Ltd, has directed refund with compensation upholding the right of the Allottee to claim refund due to delay in ‘offer of possession’ and change in plans by the Promoter.


Even under RERA , in large no of Projects wherein projects are complete only upto 50% and /or are substantially delayed and/or  there is no hope of completion of the project in near future.. Authority/ Adjudicating Authority has been  ordering refunds with prescribed rate of interest. 





To  quote a few instances , the adjudicating authorities has  allowed refund in matters  as referred herein below :  


Hon’ble HARERA Gurugram, in Mr. Sumit Kumar & Anr.  Vs. M/s Supertech Ltd.  passed an order directing the Builder to refund the amount paid by the Complainant along with prescribed rate of interest i.e. 10.75% per annum after deducting 10%  of total consideration as the due date of possession was 31.01.2019 whereas only 50% of the project was completed.

Pragmatic View in Projects at advance stage of Construction


However, the Authorities under the Real Estate (Regulation & Development) Act,2016  are  taking a balanced /pragmatic view as far as refund to the allottee of project is concerned wherein the projects are at a much more advance stage of development . Authorities are  considering the situation of allottees of a real estate project as well as status of the project i.e stage of construction , timelines for completion, tentative possible ‘offer date of possession’  from the developer/promoter, possible consensus of the Allotee in acceptance of possession within the possible new ‘offer date of possession’ etc.  


In the  Project which  are at advance stage of completion  i.e 70 % -80% complete and /or is about to  be offered for possession within 8 to 12 months , the Adjudicating Authorities are  allowing interest for delayed possession at prescribed rate of interest from the due date of handing over of the possession i.e as originally agreed ( as stated in Agreement to Sale)  till actual date of handing over the possession and failing which the Promoter is liable to refund the entire monies  paid by the Allotttee with prescribed rate of interest. Invariably, in such cases,  consensus of the Complainant is forthcoming and if not, is   being left to Appellate Levels.


For Example  :


The Hon’ble HARERA Panchkula,  in a matter titled as Ajay Gupta and Anr. vs. M/s Parsvnath Developers Pvt. Ltd.  refused the prayer of  refund considering the stage of the Project and allowed interest for the period of delay in handing over the possession. In para 3 of the said order the Hon’ble Authority has observed that, “ The Authority observes that refund of the amount at a stage when some of the towers are almost complete and the money collected from the non-complainant allottees of the Project along with that of the present complainant has been substantially utilized in the construction work and will not be proper. Such refund will in fact jeopardize the completion of project. So, the complainant’s request for refund is declined.”


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