The first decision is whether the allottee wants to exit the project or continue with the unit. That choice changes the statutory relief, interest period, documents and prayer. Interest and compensation are related but legally distinct, and an offer of possession must be tested against the agreement, approvals and actual readiness of the unit.
What Section 18 requires
Section 18 of the Real Estate (Regulation and Development) Act, 2016 applies where the promoter fails to complete the project or is unable to give possession in accordance with the agreement for sale, or where the promoter's business is discontinued because the project registration is suspended, revoked or affected for another statutory reason.
Allottee withdraws: refund of the amount received, with prescribed interest, along with any legally maintainable compensation claim.
Allottee does not withdraw: prescribed interest for every month of delay until possession is handed over.
Other statutory loss: compensation may also arise for defective title or breach of other obligations under the Act, rules, regulations or agreement.
Section 19(4) correspondingly recognises the allottee's right to claim refund, interest and compensation when the promoter cannot give possession in accordance with the agreement or discontinues the business for the reasons contemplated by the Act.
Refund, delay interest and compensation are different reliefs
The three expressions should not be used interchangeably. A refund claim seeks return of the amounts paid after the allottee elects to leave the project. Delay interest is the statutory consequence of remaining in the project while possession is overdue. Compensation addresses a proved head of loss or statutory injury and may require a separate factual and adjudicatory assessment.
A complaint should state the election clearly. Prayers that simultaneously demand unconditional exit and continued-possession interest without explaining the alternative basis can create ambiguity about the relief actually sought.
When does the right to withdraw arise?
The central date is ordinarily the possession date promised in the agreement for sale, read with any legally valid extension, amendment, force-majeure clause, project-registration extension or order affecting the project. Marketing assurances and informal emails should be separated from the contractual and regulatory record.
In Newtech Promoters and Developers Pvt. Ltd. v. State of Uttar Pradesh, the Supreme Court described the allottee's Section 18 refund entitlement, once the agreed possession obligation is not met, as an unqualified statutory right. The promoter cannot convert the allottee's election into an indefinite obligation to wait merely because construction later progresses or possession is offered after substantial delay.
This does not remove the need to examine the complete file. The agreement, due date, extension record, allottee defaults, cancellation correspondence, project registration and actual possession status remain material to determine whether Section 18 is attracted on the facts.
How is refund interest calculated?
The Act does not prescribe one permanent nationwide percentage. The applicable rate is prescribed under the relevant State or Union Territory rules and may be linked to a benchmark that changes over time. The correct rule and benchmark should therefore be checked for the project location and the legally relevant period.
Section 2(za) requires parity between the rate payable by the promoter and the rate chargeable from the allottee. For promoter liability on money to be returned, the statutory explanation runs interest from the date the promoter received the amount until the date the amount and interest are refunded.
A refund schedule should therefore be payment-wise rather than based only on one consolidated total:
- date and amount of each booking or instalment payment;
- taxes, charges or deposits claimed as refundable;
- part-refunds, reversals or adjustments already made;
- applicable prescribed rate and benchmark period;
- calculation cut-off date; and
- separate compensation heads, if claimed.
What if the allottee wants possession?
An allottee who does not withdraw may claim prescribed interest for every month of delay until possession is handed over. The file should identify the agreed possession date, any permissible grace period, the date of a legally supportable possession offer and the date on which possession was actually made available.
The continued-possession route should also record incomplete amenities, pending approvals, access restrictions, unpaid or disputed demands and defects affecting handover. The interest period cannot be calculated reliably from a brochure date or a bare possession letter without checking the underlying legal and factual position.
Is an offer of possession enough to stop delay interest?
A promoter may rely on an offer letter to argue that delay ended. The allottee should test whether the unit and project were contractually and legally ready, whether the necessary completion or occupancy approval existed, whether essential access and services were available, and whether the offer imposed disputed or unauthorised conditions.
In Parsvnath Developers Ltd. v. Mohit Khirbat (2026), the Supreme Court, in a consumer dispute, reaffirmed the significance of an occupancy certificate and held that purchasers cannot be compelled to accept possession unsupported by the legally required approval. The precise effect of an offer still depends on the governing State law, project approvals, agreement and facts.
When can compensation be claimed?
Compensation is not automatically identical to statutory interest. Section 18 also addresses loss caused by defective title and failure to discharge other obligations under the Act, rules, regulations or agreement. Sections 71 and 72 govern adjudication and require consideration of matters such as disproportionate gain, loss caused, repetitive default and other factors necessary for justice.
In Newtech Promoters, the Supreme Court distinguished the Authority's power to order refund and interest from the adjudicating officer's role in determining compensation. Drafting should therefore identify whether a prayer seeks statutory refund/interest, quantified compensation, or both through the legally appropriate route.
Possible compensation evidence may include additional rent, financing cost, storage expense, alternative accommodation records, proven business loss, title-related loss or other direct consequences. Each head should be supported by documents and should not duplicate an amount already recovered as interest or under another order.
What if the promoter relies on force majeure or project extensions?
A promoter may rely on force majeure, regulatory delay, litigation, governmental restrictions, approval issues or an extension of project registration. These matters must be proved and connected to the contractual and statutory timeline; a general assertion of difficulty does not by itself answer the Section 18 claim.
The complaint and reply should distinguish:
- an extension formally granted by the RERA Authority;
- a contractual grace period or amendment accepted by the allottee;
- a specific event that actually prevented construction or possession;
- delay attributable to the promoter before or after that event; and
- the effect, if any, on the agreed possession obligation.
What if the allottee has payment defaults?
The promoter may contend that possession was delayed or the allotment was cancelled because the allottee failed to pay instalments, execute documents or comply with contractual obligations. The allottee should reconcile every demand with the payment plan and preserve objections to disputed charges.
Prepare an invoice-and-payment chart showing the amount demanded, due date, payment made, delay alleged, interest charged, waiver or extension, and the promoter's response. A genuine allottee default may affect the timeline or relief; an unsupported or premature demand should be challenged with the agreement and project record.
Does later completion defeat a refund claim?
Later completion or a belated offer of possession does not automatically extinguish an allottee's earlier statutory election to withdraw. The chronology should show when default occurred, when withdrawal/refund was demanded, what proceedings followed and when the promoter later claimed readiness.
A buyer who continued to accept revised schedules, made further payments or took possession may present a different factual case. Conduct after the original due date should therefore be documented rather than treated as legally irrelevant.
Which forum can grant relief?
An aggrieved person may file a complaint under Section 31 before the RERA Authority or adjudicating officer, as the statutory allocation requires. Project location, applicable rules, relief sought and existing proceedings should be checked before filing.
In Imperia Structures Ltd. v. Anil Patni, the Supreme Court held that the Consumer Protection Act remedy remains additional and is not barred merely because RERA provides another remedy. Forum choice should nevertheless be deliberate. Parallel proceedings must be disclosed, and the claimant cannot obtain duplicate recovery for the same loss.
Where insolvency, arbitration, civil litigation or another regulatory proceeding is pending, the effect on maintainability, moratorium, enforcement and relief should be assessed separately.
Documents to preserve
- Booking form, allotment letter and complete agreement for sale.
- Project registration details, declared completion date and extension orders.
- Payment plan, receipts, bank statements and loan-disbursement records.
- Demand letters, account statements, debit entries and disputed-charge objections.
- Promised possession date, grace-period clause and all revised timelines.
- Construction updates, site photographs and association communications.
- Possession offer, completion certificate, occupancy certificate and handover papers.
- Refund demand, cancellation letter, promoter reply and settlement proposals.
- Rent receipts, loan-interest records and other compensation evidence.
- Copies of every previous complaint, order, appeal or consumer proceeding.
Relief-selection checklist
Exit route: identify the withdrawal/refund demand date, payment-wise principal, prescribed interest and distinct compensation evidence.
Possession route: identify the valid possession date, monthly delay period, pending approvals, incomplete work and disputed possession demands.
Settlement route: specify refund instalments or possession milestones, interest treatment, default consequences, document return and closure of pending proceedings.
Common mistakes
- Seeking refund and continued-possession interest without stating alternative relief clearly.
- Using one universal interest percentage without checking the applicable State or Union Territory rules.
- Calculating refund interest from one consolidated date instead of each payment date.
- Treating compensation as automatic or duplicating the same loss under several heads.
- Ignoring allottee payment defaults, disputed charges or cancellation correspondence.
- Accepting a possession letter without checking occupancy/completion approval and actual readiness.
- Relying only on marketing material while omitting the agreement and regulatory extension record.
- Filing in multiple forums without disclosing pending proceedings.
- Failing to preserve the date on which withdrawal or refund was first demanded.
- Assuming later project completion automatically defeats—or automatically proves—the claim.
Conclusion
Section 18 gives the allottee a structured choice when the promoter fails to deliver possession as agreed. Withdrawal ordinarily leads to refund with prescribed interest and any maintainable compensation claim; remaining in the project leads to monthly delay interest until possession.
A reliable claim separates these reliefs, calculates interest under the applicable rules, verifies whether possession was legally and factually ready, and supports every compensation head with records. The agreement, project registration, payment trail and complete chronology remain the core evidence.
Last updated on: 29/07/2026 at 19:30
Useful internal pages
References / Sources
- Real Estate (Regulation and Development) Act, 2016 - official India Code PDF.
- Newtech Promoters and Developers Pvt. Ltd. v. State of Uttar Pradesh, decided on 11 November 2021.
- Imperia Structures Ltd. v. Anil Patni, decided on 2 November 2020.
- Pioneer Urban Land & Infrastructure Ltd. v. Govindan Raghavan, decided on 2 April 2019.
- Parsvnath Developers Ltd. v. Mohit Khirbat, 2026 INSC 170.