Last Updated on September 21, 2026 by Satish Mishra

RERA on Delayed Possession: Builder Cannot Enforce a 15% Penal Interest Clause After Statutory Interest Regime Takes Over. Haryana RERA Panchkula Directs Promoter to Pay ₹11.02 Lakh Delay Interest and Execute Conveyance Deed

The Haryana Real Estate Regulatory Authority, Panchkula, has delivered an important order concerning delayed possession, statutory interest under Section 18 of the RERA Act, and unilateral contractual interest clauses in builder-buyer agreements.

The Authority held that a promoter cannot rely upon an outdated contractual clause prescribing 15% interest when the statutory framework under the Real Estate (Regulation and Development) Act, 2016 and the Haryana RERA Rules prescribes a different rate in IRIS PLAZA RERA Complaint. Iris Plaza Private Limited faces numerous active consumer disputes and execution proceedings under the Haryana Real Estate Regulatory Authority (HARERA), Panchkula.

The developer’s primary under-construction project, Terra Lavinium (an affordable housing complex in Sector 75, Faridabad), was officially flagged on the HARERA portal as a “Lapsed Project” after missing its declared completion timeline of March 31, 2024. [1, 2, 3]

IRIS PLAZA RERA Complaint-Background

The complainants had booked a residential unit in the project “Terra Lavinium” at Sector-75, Faridabad, Haryana, developed by the respondent promoter.

The Apartment Buyer’s Agreement was executed on 8 February 2019. The agreed sale consideration was approximately ₹26.12 lakh, against which the complainants had paid approximately ₹24.78 lakh.

Under Clause 3.1 of the Agreement, possession was required to be offered within four years from the date of approval of building plans or grant of environmental clearance, whichever was later. The Authority consequently treated 4 April 2022 as the committed possession date.

However, possession was not validly offered within the stipulated period.

COVID Extension Did Not Automatically Erase the Promoter’s Delay

The promoter relied upon the COVID-19 pandemic, construction restrictions and extension of the project’s registration period to justify the delay.

The Authority, however, made an important distinction between:

Extension of the project’s RERA registration period and extension of the promoter’s contractual obligation to hand over possession.

According to the Authority, an administrative extension of registration under Section 6 of the RERA Act does not automatically rewrite the contractual possession deadline or extinguish the promoter’s statutory liability under Section 18.

The Authority also examined the promoter’s conduct during the pandemic, including the continued operation of the payment schedule and absence of any corresponding waiver or meaningful relief to the allottees. It therefore rejected the promoter’s attempt to rely upon the COVID period as a blanket defence to delay interest.

“Fit-Out” or “Soft Possession” Is Not a Substitute for Valid Possession

A particularly significant aspect of the order concerns the promoter’s possession offer dated 10 June 2026.

The promoter contended that the offer was merely a “fit-out” or “soft” possession, allowing the allottee to carry out interior works while the application for the Occupation Certificate was pending.

The Authority rejected this approach.

It relied upon the statutory framework requiring a valid Occupation Certificate (OC) before possession can be treated as legally effective. The Authority referred to Supreme Court decisions concerning possession without a valid Occupation Certificate and held that an offer of “fit-out” or “soft” possession, without the requisite statutory approval, cannot ordinarily be treated as a valid possession offer.

Later Communication Became the Valid Offer of Possession

The Authority nevertheless examined a subsequent communication dated 15 May 2026.

The record showed that the Occupation Certificate had been issued on 31 December 2025. The Authority found that the communication of 15 May 2026 was not merely a nomenclature-based “possession letter”; its substance showed that the promoter had completed the project to the extent recognised by the competent authority and was seeking completion of the remaining conveyance formalities.

Consequently, the Authority treated 15 May 2026 as the effective and valid offer of possession.

The promoter’s liability for delayed-possession interest was therefore calculated from the committed possession date, 4 April 2022, up to 15 May 2026.

Contractual 15% Interest Clause Rejected

One of the most significant findings relates to the interest clause in the builder-buyer agreement.

The promoter sought to rely upon a contractual provision prescribing 15% interest for delayed payments by the allottee.

The Authority held that this provision could not be used to impose a disproportionate interest burden upon the allottee.

Under Section 18 read with Section 2(za) of RERA, the rate of interest payable by the promoter to the allottee for delay is linked to the rate payable by the allottee to the promoter in case of default. The Haryana RERA Rules prescribe the applicable statutory rate.

The Authority noted that the earlier 15% regime under the Haryana Affordable Housing Policy had already been amended before the parties entered into their 2019 agreement. The contractual clause could therefore not override the subsequently applicable statutory framework.

The Authority applied an interest rate of 10.80% per annum.

₹11.02 Lakh Delay Interest Awarded

The Authority calculated the delay interest on the amount deposited by the complainants.

As reflected in the calculation table on page 25, the principal amounts and applicable periods resulted in total interest of approximately:

₹11,02,144/-

The Authority directed the promoter to pay this amount upfront within 90 days from the date of the order towards delayed possession interest.

Conveyance Deed Also Directed

The relief was not restricted to monetary compensation.

The promoter was directed to execute the Conveyance Deed within 90 days after handing over possession. The complainants were also required to pay any balance consideration, if applicable, at the time of actual possession in accordance with the Authority’s order.

The Authority further clarified that, in case of default in payment of the awarded interest, the applicable statutory rate of 10.80% per annum would apply.

Compensation and Litigation Costs

The complainants had also sought litigation costs and compensation.

The Authority did not adjudicate the compensation and litigation-cost claim in the present proceedings. Referring to the statutory framework and the Supreme Court’s decision in Newtech Promoters and Developers, it observed that claims for compensation and legal expenses fall within the jurisdiction of the Adjudicating Officer under Section 71 of RERA, depending upon the nature of the claim.

The complainants were therefore left at liberty to approach the appropriate forum for such relief.

Key Legal Principles

This order highlights several practical principles for RERA litigation:

1. Contractual possession date matters.
A promoter remains bound by the possession commitment contained in the agreement unless a legally sustainable extension applies.

2. RERA registration extension is not automatically a contractual extension.
An administrative extension of project registration does not by itself rewrite the contractual possession obligation.

3. “Fit-out possession” cannot automatically substitute statutory possession.
A possession offer must be examined according to its substance and compliance with statutory requirements, including the Occupation Certificate.

4. Statutory interest can prevail over an inconsistent contractual clause.
The Authority refused to permit the promoter to rely upon a 15% contractual interest clause where the statutory RERA regime prescribed the applicable rate.

5. Promoter and allottee interest rates must maintain statutory parity.
Section 2(za), read with Section 18 and the applicable Haryana RERA Rules, provides the framework for determining the rate payable between the parties.

Conclusion

The Haryana RERA Panchkula order is significant for homebuyers facing prolonged construction delays.

It reinforces that a promoter cannot simply rely upon contractual clauses or administrative extensions to avoid statutory consequences for delayed possession. The validity of a possession offer must also be assessed in light of the statutory approval framework.

Most importantly, the decision demonstrates the practical operation of Section 18 of RERA, under which an allottee may claim interest for the period during which the promoter fails to fulfil its obligation to hand over possession in accordance with the agreed and legally enforceable timeline.

Legal Disclaimer: This article is intended solely for general educational and informational purposes. It does not constitute legal advice or solicitation. The outcome of each RERA matter depends upon its facts, contractual terms, statutory approvals, applicable rules and judicial precedents.

By Satish Mishra, Advocate (99888-17966)