Homebuyers who accept possession of a delayed project can still claim interest from the developer for the period of delay, the Bombay High Court has ruled, rejecting a developer’s argument that homebuyers lose this right if they accept possession without first giving notice that they intend to seek compensation.
The Bombay HC said that it is the right of the allottee (homebuyer) to get interest for every month of delay till the handing over of possession in accordance with the agreement between the parties, adding that it is an independent and indefeasible right of the allottee.
The ruling came in after appeal filed by a developer against homebuyers who had purchased apartments in the free-sale component of the Patra Chawl redevelopment in Mumbai’s Goregaon. The Bombay HC in an order dated August 5, 2026, dismissed the developer’s appeal and upheld the earlier findings of the Maharashtra Real Estate Appellate Tribunal (MREAT).
The case
The dispute relates to a flat for which possession was contractually due by June 30, 2018 for a project in Mumbai’s Goregaon. The developer argued that although there had been a delay, the homebuyers had subsequently accepted possession without giving notice of their intention to claim compensation for the delay. It relied on provisions of the Indian Contract Act to argue that the homebuyers could not claim compensation for the delay.
Bombay HC’s take
The Bombay High Court rejected this argument of the developer, holding that the provisions of Real Estate Regulatory Act (RERA), 2016 have an overriding effect over other laws. More importantly for homebuyers, the court said that a homebuyer’s right to receive interest for every month of delay until possession is handed over, in accordance with the agreement, is an “independent and indefeasible right”.
In simple terms, the Bombay HC said that the homebuyer does not automatically give up the right to delay interest merely by taking the keys to the flat. If the developer has failed to hand over possession by the date promised in the agreement, the buyer’s right under Section 18 of RERA continues to apply.
The court also noted that the buyers had paid 95% of the sale consideration by December 2017 and had sought inspection of the flat before taking possession. It upheld the finding that the developer had defaulted in delivering possession and that the case involved a violation of Section 18 of RERA.
The Bombay High Court ultimately dismissed the developer’s appeal, reinforcing the protection available to homebuyers under RERA. It said that the provisions of Section 18 are beneficial and intended to safeguard allottees, and that accepting the developer’s argument would defeat the purpose of the legislation.
What is the Patra Chawl redevelopment project?
Patra Chawl, in the Siddarth Nagar area of Goregaon, a western suburb of Mumbai, went for redevelopment in 2008. It had over 670 tenants, and the housing units were spread across 47 acres.
Patra Chawl was originally a barrack constructed by the British during the Second World War and was used as a military camp.
In 2008, MHADA took up the redevelopment project and appointed Guru Ashish Construction Private Limited (GACPL), a sister concern of real estate company Housing Development and Infrastructure Ltd (HDIL), to rehabilitate over 670 tenants and redevelop the locality.
A tripartite agreement was signed between GACPL, the tenants’ society and MHADA. Following this, the tenants moved out of the chawl by 2010, but 14 years down the line, they are yet to get their promised homes.
Additionally, under the free-sale component of the agreement, developers sold apartments to about 1,700 families. The real estate firms that were involved in this for over 10 years and built these projects are unable to hand over possession owing to the lack of OC. The home buyers had alleged that their possession was delayed due to administrative issues and disputes between the developers and MHADA over alleged pending liabilities of around ₹3,100 crore.
