sample rera delay possesion interest judgement - Synopsis



An issue arose whether the interest on delayed possession can be awarded as per the Act & Rules prior to the Real Estate (Regulation & Development) Act,2016 coming into force. The  main issue arise whether awarding interest on delayed possession from the period prior to the Act coming into force is amount to rewriting the agreement between the parties or abrogating terms of the agreement entered into between the parties.


In this regard we have to look into judgments/order passed by Bombay High Court, Appellate Tribunals and Adjudicating authorities established under the Real Estate (Regulation & Development) Act, 2016.


This has been extensively dealt with by Hon’ble Bombay High Court in Neelkamal Realtors Suburban Pvt. Ltd. vs Union Of India and 2 Ors.


 I n para 122 of the Judgement observed as follows;


“122-We have already discussed that above stated provisions of the RERA are not retrospective in nature. They may to some extent be having a retroactive or quasi retroactive effect but then on that ground the validity of the provisions of RERA cannot be challenged. The Parliament is competent enough to legislate law having retrospective or retroactive effect. A law can be even framed to affect subsisting / existing contractual rights between the parties in the larger public interest. We do not have any doubt in our mind that the RERA has been framed in the larger public interest after a thorough study and discussion made at the highest level by os-wp-2737-17 & ors-RERA-JT.doc the Standing Committee and Select Committee, which submitted its detailed reports. As regards Article19(1)(g) it is settled principles that the right conferred by sub-clause (g) of Article 19 is expressed in general language and if there had been no qualifying provisions like clause (6) the right so conferred would have been an absolute one”  





In para 126 the Hon’ble High Court has Further observed that;


The another plea raised is as to why a promoter shall pay interest for the past contractual rights, in case of failure to complete the project after registration under RERA, till the possession is handed over. Under the scheme of the RERA it is clear by now that a promoter has to self assess and declare time period during which he would complete the project. But in case, inspite of making genuine efforts, a promoter fails to complete the project, then the concerned authorities, adjudicators, forums, tribunals would certainly look into genuine cases and mould their reliefs accordingly. We do not find that on that count the provisions of Section 18(1)(a) are to be declared as contrary and violative of Articles 14 and 19(1)(g). Considering the scheme of the RERA and the provisions of Section 18(1)(b), we are of the view that the same are not contrary to Articles 14 and 19(1)(g) of the Constitution. The provisions cannot be struck down on the ground of challenge that its operation is retroactive in nature. Neither the provisions of Section 18(1)(a) and (b) violate Article 20 os-wp-2737-17 & ors-RERA-JT.doc of the Constitution. The payment of interest under Section 18 is compensatory in nature. The provision of Section 18 must be read with Section 71 & 72, and section 72 provides for the Adjudicator to consider each case on its merit”

In para 127 & 128 the Hon’ble High Court has observed as below;

“127. It was submitted on behalf of the Union that MOFA provides for interest to be paid in certain cases (Section 8) and the constitutional courts too had granted interest to flat purchasers in case of defaults by the promoters.

The requirement to pay interest under Section 18 is not penal since payment of interest is compensatory in nature due to delay suffered by the flat purchasers (Alok Shankar Pandey vs. Union of India (Supra). Even assuming that the interest is penal in nature, levy of interest is not retrospective but is only based on antecedent facts; it operates prospectively.

The interest payable under Section 18 is as per the definition of “interest” under Section 2(za) Explanation (ii), the same interest that would have been payable by the flat purchaser for delay in payment. Therefore, the payment of interest payable cannot be said to be penal in nature.

128. The legislature has power to make laws with retrospective effect. Therefore, even assuming that RERA or any part thereof operates retrospectively, such retrospective operation would not render it unconstitutional, unless the retrospectivity is shown to be excessive or harsh which injuriously affects a substantive or vested right. The inhibition against retrospective construction of a statute is not a rigid rule and has been held not to apply to a curative statute or a law enacted for the benefit of the community as a whole, which may be held to be retrospective even in the absence of any provision: (Vijay vs. State of Maharashtra – (2006) 6 SCC 289 – paras 10, 12 and Virender Singh Hooda vs. State of Haryana – (2004) 12 SCC 588 – para 35. RERA is enacted to protect the interest of consumer in the real estate sector. It was enacted in the public interest”


C2RMTo Know More

Something Awesome Is In The Work









Sign-up and we will notify you of our launch.
We’ll also give some discount for your effort :)

* We won’t use your email for spam, just to notify you of our launch.

SAARTHTo Know More

Launching Soon : SAARTH, your complete client, case, practise & document management SAAS application with direct client chat feature.

If you want to know more give us a Call at :+91 98109 29455 or Mail