Statutory Right to Withdraw
For many homebuyers in India, a stalled real estate project represents a significant financial burden, often involving simultaneous EMI payments and rental costs. The Real Estate (Regulation and Development) Act, 2016 (RERA) provides a specific statutory remedy for such situations. Under Section 18(1), an allottee (homebuyer) has the right to withdraw from a project if the promoter fails to hand over possession in accordance with the terms of the agreement for sale or by the date specified in it.
Priya Gada, Advocate at D. M. Harish & Co. LLP, explains that if a buyer chooses to withdraw, the promoter is liable to return all amounts received, together with interest at the prescribed rate and compensation in accordance with RERA. This provision offers a choice of remedies: a buyer who does not wish to withdraw can instead continue with the project and claim interest for every month of delay until possession is handed over.
The Supreme Court reinforced this statutory choice in the 2022 case *Experion Developers Pvt. Ltd. v. Sushma Ashok Shiroor*, holding that the right to seek a refund is unqualified when Section 18 conditions are satisfied and the allottee elects to withdraw.
Factors Considered by RERA Authorities
A refund is not automatic in every case of delay. RERA authorities examine several factors before ordering a refund, including the agreement for sale, the committed possession date, the extent of the delay, and the actual status of construction.
Madhura Samant, Founder of Elarra Law Offices, notes that the circumstances surrounding the project are relevant. "A prolonged and unexplained delay can provide stronger grounds for the buyer to exercise this remedy," she said.
Shravanth Shanker, Managing Partner at B. Shanker Advocates LLP, adds that authorities may also consider the promoter’s compliance with RERA obligations, any extensions granted, and whether the delay is attributable to the promoter or the allottee. The primary consideration remains whether the promoter failed to deliver possession within the contractually stipulated period, along with the continuing nature of the delay. The applicable interest rate is generally governed by the relevant State RERA rules and regulations.
Impact of Revised Possession Dates
A common tactic by developers is to offer a new possession date. However, legal experts clarify that a unilateral revised possession date does not automatically take away a buyer’s rights under Section 18, particularly where the original contractual date has expired and the buyer has elected to withdraw.
The situation becomes more nuanced if the buyer voluntarily agrees to a revised timeline by signing an amendment, supplementary agreement, or consent letter. Gada advises buyers to carefully consider the consequences before signing any document that purports to extend the possession date or waive claims arising from the delay.
Steps for Buyers Facing Refusal
If a buyer decides to exit a delayed project, the decision should be communicated clearly and in writing to the developer, referring to the original agreement and possession date. It is crucial to preserve all relevant documents, including the agreement for sale, payment records, correspondence, delay notices, and documents showing the project’s RERA registration and status.
If the promoter refuses to refund the amounts despite a valid demand under Section 18, the buyer can approach the concerned State RERA Authority. Shanker notes that buyers can file a complaint before the appropriate RERA Authority under Section 31, seeking a refund with applicable interest. This legal pathway ensures that buyers are not forced to wait indefinitely for projects that have breached contractual timelines.