Section 18 RERA: Refund + Interest for Delayed Possession — Complete Guide

Section 18(1) of the RERA Act creates a statutory liability on the promoter when the promoter fails to complete or is unable to give possession of an apartment, plot or building in accordance with the terms of the agreement for sale, or in case of his/her discontinuance of business due to suspension or revocation of registration. The allottee gets two alternatives:

1. Withdrawal + refund — "to return the amount received by him in respect of that apartment, plot, building, as the case may be, with interest at such rate as may be prescribed in this behalf, including compensation in the manner as provided under this Act". The refund covers the entire principal amount paid + interest from the date each tranche was paid + any compensation.
2. Continue + delay interest — "shall be liable to pay interest to the allottee, for every month of delay, till the handing over of the possession, at such rate as may be prescribed". The allottee retains the booking and the builder must pay interest monthly on the entire amount the allottee has paid until possession is finally handed over.

The election lies with the allottee, not the promoter. Section 18(2) and 18(3) also provide compensation for defective title and structural defects respectively, but those are separate remedies.

Critical: the trigger is the agreement for sale, not the brochure, MoU or allotment letter. The possession date in the registered/signed agreement is what counts. If you do not have a signed agreement, Section 18 still applies if there is a written sale agreement under any name — but the absence of a clearly dated possession commitment is the most common defence builders raise.

Interest under Section 18 is computed as simple interest on the principal amounts paid (not on the total sale consideration), from the date each tranche was paid until either (a) the refund is actually made, in case of withdrawal, or (b) actual possession is offered, in case of continuance.

The rate is whatever the respective State RERA Rules prescribe. Most states have settled on State Bank of India highest Marginal Cost of Lending Rate (MCLR) + 2% — which works out to roughly 10.85–11.10% p.a. in 2026 depending on the date of the SBI MCLR notification taken as the reference. A few states (notably Haryana RERA in older orders) have used different formulae; check the rule applicable to the state where the project is registered.

Worked example — an allottee pays ₹15,00,000 on 1 April 2022, ₹10,00,000 on 1 December 2022 and ₹5,00,000 on 1 June 2023; the agreement promises possession by 31 December 2023; the builder offers possession on 30 June 2026 (a delay of 30 months from the agreed date):

• Interest on ₹15L from 1 April 2022 to 30 June 2026 (≈ 51 months) @ 10.85% p.a. = ₹6,90,937
• Interest on ₹10L from 1 December 2022 to 30 June 2026 (≈ 43 months) @ 10.85% p.a. = ₹3,88,729
• Interest on ₹5L from 1 June 2023 to 30 June 2026 (≈ 37 months) @ 10.85% p.a. = ₹1,67,396
• Total Section 18 interest payable: ₹12,47,062 (≈ 41.6% of the ₹30L paid)

If the allottee chooses withdrawal instead, the same interest is computed up to the date of actual refund, and the principal of ₹30,00,000 is also refundable. RERA authorities have consistently held that interest runs until the actual refund credit, not the date of the order — keep this in mind when drafting prayers.

A second compensation claim may lie under Section 18(1) proviso for additional losses (rent paid elsewhere, EMIs serviced, etc.) — but this requires separate proof and a separate compensation application before the Adjudicating Officer, not the Authority.

Build the file in this exact order — RERA registrars routinely reject complaints that are incomplete:

1. Agreement for sale (registered or unregistered, both work) — establishes the possession date.
2. Allotment letter or builder-buyer agreement, if separate from the sale agreement.
3. Payment proof — bank statements highlighting every tranche paid, receipts issued by the builder, and any home-loan disbursement schedule.
4. Project RERA registration certificate — print from the State RERA Authority website. If the project is not RERA-registered, that itself is a violation under Section 3 and supports an additional prayer.
5. Demand letters from the builder showing the construction-linked schedule (proves you were not in default).
6. Any correspondence with the builder about the delay — emails, letters, WhatsApp screenshots, customer-portal screenshots.
7. Photographs of the project site as of the date of filing (helpful to establish the site is genuinely incomplete).
8. PAN and Aadhaar of the allottee for identification.
9. Power of attorney if filing through an advocate.
10. Interest computation sheet prepared as per the worked example above — most authorities now expect a one-page sheet showing tranches, dates, days, rate and total.

The complaint is filed under Section 31 of the Act read with the state-specific RERA Rules. The procedure is broadly the same across states, but the form, fee and the online portal differ. The high-level flow is:

1. File the complaint in the form prescribed under the state RERA Rules — usually called Form A or Form M depending on the state (Maharashtra uses Form A, UP uses Form M, etc.).
2. Pay the filing fee — typically ₹1,000 to ₹5,000 (Maharashtra is ₹5,000; Karnataka ₹1,000; Tamil Nadu ₹1,000; UP ₹1,000; Haryana ₹1,000). Some states charge per unit.
3. Upload all documents on the state RERA's online portal in PDF (10 MB per file in most states). MahaRERA uses maharerait.maharashtra.gov.in; UP RERA uses up-rera.in; Karnataka uses rera.karnataka.gov.in.
4. First hearing notice is typically issued within 30–45 days. The builder gets 21 days to file a reply.
5. Hearings are conducted by the Authority (or a single member). Most authorities now allow online appearance.
6. Order must be passed within 60 days of admission (Section 29) — though in practice 6–12 months is the norm.
7. Compliance is to be completed within the time fixed in the order. Failure attracts penalty under Section 63 (up to ₹5,000 per day, max 5% of project cost) and the recovery is as arrears of land revenue under Section 40.

The authority can grant interest under Section 18, direct possession with a fresh timeline, impose penalty under Section 63 and direct refund — often in the same order. Compensation prayers (additional losses) are referred to the Adjudicating Officer.

Important — timeline: an allottee can file under Section 18 the moment the agreed possession date passes. There is no need to wait for a particular period of delay. Several state authorities have held that even a one-day delay triggers Section 18 — though most allottees pragmatically wait 3-6 months.

Either party may appeal to the Real Estate Appellate Tribunal (REAT) under Section 44 within 60 days of the Authority's order. Key procedural points:

• Pre-deposit — if the builder is the appellant and the order directs payment of any amount, the builder must deposit at least 30% of the penalty / amount payable (or such higher amount as the Tribunal directs) before the appeal is entertained. Allottee-appellants are not required to make this deposit.
• Form and fee — each state has its own appeal form and fee schedule (Maharashtra REAT fee is ₹5,000, UP REAT ₹1,000, Karnataka REAT ₹1,000 per appeal).
• Scope — the Tribunal can decide on facts and law. Pre-condition: the order being appealed against must be a final order, not interim.
• Further appeal — Section 58 allows a further appeal to the High Court within 60 days, on a question of law only. The Supreme Court has held (Newtech Promoters and Developers v. State of UP, 2021) that a further writ under Article 226 is also maintainable in limited circumstances.

Deadlines run from the date of the order, not from the date the allottee receives the certified copy — keep this calendar tight.

Five defences come up in 80% of Section 18 hearings; each has a settled rebuttal:

1. "Force majeure delayed the project" — Builders cite COVID, NGT bans on construction, sand-mining bans, etc. Rebuttal: force majeure can only extend the possession date by the period of actual obstruction, and only if it was beyond the builder's reasonable control. Most authorities now accept only documented orders (lockdown notifications, NGT/HC orders) and only for the period the order was in force. Six months of COVID does not entitle the builder to a five-year extension.
2. "The agreement is only a brochure / MoU" — Builders sometimes argue that the document signed is not a 'agreement for sale' within Section 13 because it predates the prescribed form. Rebuttal: nomenclature is irrelevant; the substance of the document controls. If it identifies the unit, the price, the payment schedule and a possession date, it is an agreement for sale for Section 18 purposes (consistent line of MahaRERA orders).
3. "The allottee delayed payments" — Builders argue Section 19(7) (allottee's obligation to pay) was breached first. Rebuttal: this is only a defence if the builder served valid demand letters as per the agreement, and the allottee failed to pay despite cure period. If demands were not raised when due, or were raised contingent on construction milestones that were not achieved, this defence fails.
4. "Possession was offered earlier; the allottee did not take it" — Builders sometimes claim possession was offered orally or by SMS. Rebuttal: Section 17 requires possession to be offered after obtaining the occupancy certificate (OC). Without OC, possession is not legally tenderable. The OC date controls.
5. "The Authority has no jurisdiction post-OC" — Builders argue that after OC, RERA loses jurisdiction. Rebuttal: the Bombay High Court in Lavasa Corporation Ltd v Jitendra Jagdish Tulsiani (2019) and subsequent MahaRERA orders have held that the cause of action accrued before OC, hence RERA retains jurisdiction over the dispute. Karnataka and UP have followed this reasoning.