In a significant ruling strengthening legal clarity under the Real Estate (Regulation and Development) Act, 2016 (RERA), the Punjab Real Estate Regulatory Authority (Punjab RERA) has held that homebuyers who choose to continue with a delayed housing project are entitled only to interest for delayed possession. Claims for rent reimbursement, mental harassment, litigation expenses, or additional damages are not permissible if the buyer does not withdraw from the project.
The ruling was delivered on December 10, 2025, and provides an authoritative interpretation of Section 18(1) of the RERA Act, which governs relief available to buyers in cases of delayed possession.
Legal Position Under Section 18(1) of RERA
Section 18(1) of the RERA Act gives a homebuyer two mutually exclusive remedies when a promoter fails to hand over possession on time:
If the buyer withdraws from the project, they are entitled to a full refund along with interest and compensation.
If the buyer continues with the project, the buyer is entitled only to interest for the period of delay until possession is handed over.
Punjab RERA clarified that a buyer cannot mix these remedies. Once a buyer opts to stay in the project, claims beyond interest are legally barred.
Background of the Dispute
The dispute arose from the booking of a residential flat in Chandigarh by a woman and her husband in February 2023. The Agreement for Sale, executed on February 15, 2023, promised possession by December 2023.
When possession was not delivered on time, the buyer repeatedly approached the developer. Initially, the developer claimed that Punjab RERA had granted a six-month extension, a statement that later turned out to be incorrect. No such extension had been approved by the Authority.
Faced with continued delay, the buyer filed two separate complaints before Punjab RERA.
First Complaint: Interest for Delayed Possession
In the first case, decided on August 14, 2025 (Complaint No. GCNo0223/2024), the buyer sought interest for delayed possession.
Punjab RERA examined the Agreement for Sale and confirmed that December 2023 was the committed possession date. The Authority rejected the promoter’s claim that the delay was caused by payment defaults, noting that:
No proper demand notices were issued
The payment schedule was not linked to construction milestones
The builder also attempted to rely on COVID-19 related disruptions. Punjab RERA rejected this argument, observing that the agreement was signed in February 2023, well after the pandemic relief period had ended.
Another objection raised by the promoter was that HDFC Bank, being a party to a tripartite loan agreement, should have been impleaded. Punjab RERA dismissed this contention, stating that the dispute concerned only delayed possession, and the bank had no role in it.
The Authority directed the promoter to pay interest at 11.10% per annum, calculated as SBI MCLR of 9.10% plus 2%, and awarded Rs. 8.28 lakh as interest compensation until possession is handed over.
Second Complaint: Claim for Additional Compensation Rejected
In the second complaint, decided on December 10, 2025 (RERA/AdC No. 0055 of 2024), the buyer sought:
Rs. 40,000 per month towards rent, harassment, and mental stress
Rs. 1 lakh towards litigation expenses
Punjab RERA rejected these claims, holding that once the buyer has chosen to remain in the project, the only relief available under Section 18(1) is interest for delay.
The Authority noted that the complainant had already been granted interest under the earlier order and had not withdrawn from the project.
Reliance on Supreme Court Judgment
Punjab RERA relied on the landmark judgment of the Supreme Court in M/s Newtech Promoters and Developers Pvt. Ltd. vs State of Uttar Pradesh (Civil Appeal Nos. 6745–6749 of 2021), which clearly held that compensation is payable only when the buyer exits the project.
Quoting the order, Punjab RERA stated:
“Keeping in view all these facts and circumstances, coupled with Section 18(1), since the complainant has not withdrawn from the project, she is not entitled to compensation.”
The complaint was dismissed without any order as to costs.
Impact on Homebuyers and Developers
This ruling reinforces a crucial legal principle under RERA: homebuyers must make a clear and informed choice when facing project delays.
Buyers who stay with delayed projects can claim only interest for the delay.
Buyers who withdraw from the project can claim refund, interest, and compensation.
The decision is particularly important because many buyers assume they can continue with a delayed project and simultaneously claim rent reimbursement or mental harassment damages. Punjab RERA has now made it clear that such expectations have no legal backing under Section 18(1).
