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Introduction:
The Real Estate (Regulation and Development) Act, 2016 (hereinafter referred to as RERA) was promulgated to protect homebuyers from the abuses of the real estate developers and ensure particular and timely delivery of possession. Section 18 of the RERA Act states that when a builder fails within the period stipulated in the agreement to complete the project or to give possession, the homebuyer shall have an unqualified right to claim possession with interest or to withdraw from the project with full refund along with interest. Even after these clear provisions of law, disputes are still raised over delayed possession, refund timelines, and, in some instances, the scope of the builder's liability. Recently, some landmark judgments have given a new clarity on these issues, balancing the rights of homebuyers with respect to the contractual stipulations between the parties.
Related: Homebuyers' Right To RERA: Overriding Arbitration Clauses In Real Estate Disputes
This blog examines two of the most recent decisions which illustrate the manner in which the judicial forums are sculpting the legal landscape on refund and delay disputes. The first being the Hon'ble Supreme Court judgment, GMADA vs. Anupam Garg, in which the scope of refund and liabilities has been clarified; the second being the Karnataka RERA order, Abhishek Reddy Gujjala vs. Ozone Urbana Infra Developers, in which the Authority exercised its power to shield homebuyers from gross project delay.
Legal Framework of RERA:
RERA empowers the homebuyer through clear rights and remedies. Under Section 18(1), whenever the promoter fails to give possession to the allottee as specified in the agreement for sale, the allottee may withdraw from the project and shall be entitled to a full refund with interest.
The Hon'ble Supreme Court, in M/s. Newtech Promoters and Developers Pvt. Ltd. V. State of Uttar Pradesh & Ors., (2021) LL SC 6411, held these rights to be "absolute and unconditional", thereby not subjecting them to be diluted by contractual terms or external circumstances like court orders or unforeseen events. This principle has been reiterated in subsequent case laws, including the Karnataka RERA case mentioned below.
Supreme Court Gives Clarification on the Scope of Liability of the Builder:
Judgement-: GMADA v. Anupam Garg and Others, AIR 2025 SC 8082
The Greater Mohali Area Development Authority (GMADA) launched a housing scheme under which the complainant booked apartments. An explicit clause mentioned in the Letter of Intent that the possession shall be given within 36 months from the date of the issuance of the Letter of Intent. In case of delay, the Letter of Intent gave homebuyers a remedy to exit from the project so that they may claim a refund with compound interest at the rate of 8% per annum and further clarified that GMADA shall have no other liability beyond such refund and interest.
Due to the delay in the project, the allottees approached the consumer forum. The State Consumer Commission and thereafter the National Consumer Disputes Redressal Commission passed orders directing GMADA to refund not only the principal amount along with interest at 8% per annum but also to compensate the homebuyers for the interest they had paid on bank loans taken by them to finance the purchase of these flats. GMADA challenged the said order before the Hon'ble Supreme Court of India.
The Court examined whether it was appropriate for the consumer fora to assume jurisdiction to impose an additional liability beyond the terms agreed under the Letter of Intent (LOI). The Supreme Court observed that while consumer fora are empowered to award damages for delay, they cannot alter or rewrite the contractual terms to impose liabilities that the parties never contemplated.
Quoting from Paragraph 17 of the judgment, the Court observed:
"What flows from the above is that the amount of interest awarded is the compensation to the investment maker for the amount of money and the time he has been denied the fruits of that investment. The 8% interest awarded in this case on top of the entire amount that is being invested, is the compensation for being deprived of the investment of that money. Apart from this, no amount of interest on the loan taken by the respondents could have been awarded." (GMADA vs. Anupam Garg, 2025 INSC 808, ¶17)
In Paragraph 18, the Court clarified:
"We clarify that we have in no way held that the Commission is not empowered to give compensation, generally. For that reason, we do not interfere with the award of certain amounts on account of mental agony and litigation costs. We have only interfered with that part of the order as set out in the notice. It has come on record that the amount deposited before the State Commission does not include the amount of interest on the loan. In view of the above discussion, we hold that there is no requirement for GMADA to make any further deposit. The amount as it stands currently, be dispersed to the respondents." (GMADA vs. Anupam Garg, 2025 INSC 808, ¶18)
Significance of the Decision
This is a landmark judgment because it highlights the distinction between statutory rights conferred in pursuance of contractual obligations. It respects the sanctity of agreed contractual terms, but at the same time ensures that homebuyers receive compensation equitably for the delay. Most importantly, it stops double claiming of damages by homebuyers, whereby contractual interest is claimed alongside additional interest on a bank loan, unless expressly provided under the agreement.
Karnataka RERA Orders Refund for Delay in Ozone Urbana Project
Judgement-: Abhishek Reddy Gujjala & Anr. vs. M/S Ozone Urbana Infra Developers Pvt. Ltd., CMP/00754/2024 (Order dated 03.04.2025)3
In this case, the complainants booked a plot in the "Southend" project developed by Ozone Urbana Infra Developers. The agreement for sale was entered on 6 August 2021, with the total sale consideration being ₹1,20,01,008. The builder was responsible for completing the project and handing over possession by July 2024. The complainants had paid ₹24,02,000 towards the plot price.
As the due date for possession approached, the developer was causing prolonged delays. Despite the complainants' repeated follow-ups, the builder neither completed the construction nor handed over the possession. Consequently, the complainants cancelled their bookings and sought refunds. Although the builder assured that the refunds would be processed by 15 August 2024, this promise was breached, prompting the complainants to approach the Karnataka RERA under Section 31 of the Real Estate (Regulation and Development) Act, 2016, seeking relief.
During the proceedings, the Authority observed that the builder had failed to offer a satisfactory explanation and was in breach of the terms of the agreement. In its reasoning, it referred to the landmark decision of the Hon'ble Supreme Court in M/s. Newtech Promoters v. State of Uttar Pradesh, (2021) LL SC 641, wherein the apex court had held that the aggrieved homebuyer's right to seek a refund or claim interest for delay was "absolute and unconditional". The Authority also placed reliance on M/s. Imperia Structures Ltd. and Anil Patni & Anr., Civil Appeal Nos. 3581-3590 of 20204, wherein the Supreme Court held:
"In terms of Section 18 of the RERA Act, if a promoter fails to complete or is unable to give possession of an apartment duly completed by the date specified in the agreement, the promoter would be liable, on demand, to return the amount received by him in respect of that apartment if the allottee wishes to withdraw from the project. Such right of an allottee is specifically made without prejudice to any other remedy available to him." (Imperia Structures v. Anil Patni, ¶23, SC)
Applying these principles, Karnataka RERA held:
"From the materials available on record, it is apparent that despite entering into the agreement of sale and receiving substantial sale consideration, the respondents have not completed the project nor handed over possession of the plot as agreed in July 2024. The complainants are therefore entitled to a refund with interest." (Abhishek Reddy Gujjala v. Ozone Urbana Infra Developers, CMP/00754/2024, ¶19)
The Authority directed the builder to refund ₹31,46,485 to the complainants within 60 days, along with interest at the rate of MCLR plus 2% from May 8, 2021, till December 1, 2024, and further till the date of full payment. The Authority also directed the complainant to assist in the cancellation of the agreement on receipt of the refund.
Conclusion
The Consumer forums and RERA authorities have now emerged as a robust mechanism for resolving real estate disputes with greater clarity and enforceability. The Supreme Court, in GMADA vs. Anupam Garg, held that contractual terms must be honoured, and any delay must be duly compensated; however, such compensation should not exceed what is lawfully due nor be compounded with any other relief.
On the other hand, the Karnataka RERA's decision in Abhishek Reddy Gujjala vs. Ozone Urbana Infra Developers serves as an excellent example of how the Act safeguards consumer interests, ensuring that a homebuyer is neither cheated nor deprived of timely refunds with applicable interest.
Together, these decisions underscore the importance for homebuyers to be aware of their rights under RERA and the remedies available in cases of project delays. For developers, they serve as a reminder of the legal consequences that follow non-compliance with timelines and contractual obligations.
With the continual evolution of these authorities, such judgments are likely to serve as guiding precedents—promoting greater accountability and transparency across the real estate sector.
Footnotes
1. M/s. Newtech Promoters and Developers Pvt. Ltd. v. State of Uttar Pradesh & Ors., (2021) LL SC 641.
2. Greater Mohali Area Development Authority (GMADA) vs. Anupam Garg & Ors., 2025 INSC 808, Supreme Court of India, decided on 4 June 2025.
3. Abhishek Reddy Gujjala & Anr. vs. M/S Ozone Urbana Infra Developers Pvt. Ltd., CMP/00754/2024, Karnataka RERA, Order dated 3 April 2025.
4. M/s. Imperia Structures Ltd. v. Anil Patni & Anr., Civil Appeal Nos. 3581-3590 of 2020, Supreme Court of India.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
