Builder delayed Rs 44.36 lakh flat possession by 18 months and charged Rs 30,000 debris fee; Telangana RERA orders him to pay homebuyer 10.7% interest compensation for delay
You pay for a flat which the builder promises possession of on an agreed timeline. He delays possession beyond the grace period. What do you do in such a case?
Telangana RERA has granted relief to a homebuyer in one such case, ordering the building to pay interest compensation. It found that the builder had delayed handing over the flat by 18 months and had also levied an additional Rs 30,000 as a debris charge.
The Telangana RERA authority concluded that the builder had not fulfilled its obligations under the Agreement of Sale and Section 11(4)(a) of the RERA Act . It also rejected the builder's contention that the delay was caused by Covid-19.
What the case is aboutA man decided to purchase a flat after seeing an advertisement and checking information available on the builder's website. The flat, which was priced at Rs 44.36 lakh, was allotted to him.
An Agreement of Sale was signed. The builder assured the homebuyer that the flat would be ready for possession by December 26, 2024. There was also an extended grace period available up to August 2025.
Relying on these commitments, the homebuyer paid Rs 40.32 lakh towards the purchase of the flat. This included amounts that were charged for amenities, parking, EV charging and other allied facilities.
The promised possession timelines, however, were repeatedly changed by the builder. The homebuyer said he was not given sufficient clarity about when construction would actually be completed, when the promised amenities would be ready or when the Occupancy Certificate would be obtained.
There was also the issue of an additional debris charge of Rs 30,000. The homebuyer said this charge had not been disclosed earlier and did not form part of the agreement.
The builder, on the other hand, stated that the project had reached nearly 85% completion. It also said that following discussions with homebuyers, the debris charge had been rationalised to Rs 20,000 per flat.
Before the Telangana RERA authority, the homebuyer said the delay had put him under continuing financial pressure. He was having to meet his home loan EMI while simultaneously paying rent. He therefore sought interest compensation from the authority under the provisions of the RERA Act.
What the builder saidThe builder defended the delay by saying that it was making efforts to complete the project within the revised deadline of December 2026. It cited several difficulties that had affected the construction schedule, including a shortage of labour, Covid-19 and legal issues relating to encroachment.
He relied on the force majeure clause and cited the Covid-19 pandemic as a reason for the delay in the project. The builder also told Telangana RERA authority about an FTL encroachment issue involving some blocks in the society,
According to the builder, these issues had a wider impact on the project. They led to operational setbacks, labour dispersal, panic among customers and the withdrawal of institutional funding.
The builder further told the authority that the Telangana High Court subsequently clarified that construction work could proceed in blocks other than Blocks 8 and 9. It also said that the HMDA later confirmed there was no substantial FTL violation, apart from a minor issue that had already been rectified.
The builder extended the construction deadline to December 18, 2026. This meant that possession of the flat would be delayed by more than 18 months from the originally committed timeline.
On August 25, 2026, the homebuyer secured relief from Telangana RERA. The authority directed the builder to pay interest compensation at the rate of 10.7% for the delay in handing over possession, according to an ET report.
Why homebuyer won the caseAsha Kiran Sharma, Partner at King Stubb and Kasiva, told ET that the Telangana RERA authority rejected the builder's reliance on Covid-19 and its subsequent consequences as an explanation for the delay.
Sharma said the authority's reasoning centred on the timing of the Agreement of Sale. The agreement had been executed in February 2023, considerably after the pandemic had subsided.
Therefore, according to the authority's reasoning, the builder had entered into its commitment to deliver possession with knowledge of the circumstances in which the project was being executed.
It made it clear that the possession date that has been specified in the Agreement of Sale has to be taken into account.
The authority also raised objections to the developer's actions on issues beyond the delay in handing over possession.
One such issue was the Rs 30,000 "debris charge" added to the homebuyer's account. Telangana RERA rejected this charge, noting that it was not provided for in the Agreement of Sale and was inconsistent with the developer's statutory obligations under the RERA Act.
Additionally, the payment record clearly showed that the homebuyer had paid Rs 40.32 lakh towards the total flat cost of Rs 44.36 lakh. These payments had been made without any default. Even after fulfilling his payment obligations, however, he did not receive possession by the committed date of December 26, 2024. The flat remained undelivered even after the expiry of the grace period.
The Telangana RERA authority held that these circumstances amounted to a breach of the builder's contractual and statutory obligations under Section 18 of the RERA Act.
The Telangana RERA authority said: “The material on record clearly demonstrates a continued pattern of false assurances despite the Respondent’s (builder’s) knowledge of its inability to adhere to the committed timelines, while the project admittedly remains incomplete beyond the stipulated possession date.”
The Telangana RERA authority clarified that the homebuyer can seek compensation for mental agony, financial loss and any assured compensation amounts promised by the builder by filing an application in Form 'N' before the Adjudicating Officer under Section 71 of the RERA Act.
The authority also struck down the debris charge imposed by the builder. It found that the charge was not supported by the terms of the Agreement of Sale and was contrary to Sections 11(4)(a), 11(4)(d) and 14 of the RERA Act.
Telangana RERA directed that the homebuyer is entitled to interest compensation at the rate of 10.7% per annum.
The interest is to be calculated on the amounts already paid by the homebuyer and will apply from June 26, 2025 until the date on which lawful possession of the flat is actually handed over.
The authority directed the builder to clear the interest arrears accumulated up to the date of the order within 60 days. If the builder does not make the payment, the interest accruing thereafter will have to be paid every month, on or before the 10th day of the following month, until the homebuyer receives possession of the flat.
Telangana RERA has granted relief to a homebuyer in one such case, ordering the building to pay interest compensation. It found that the builder had delayed handing over the flat by 18 months and had also levied an additional Rs 30,000 as a debris charge.
The Telangana RERA authority concluded that the builder had not fulfilled its obligations under the Agreement of Sale and Section 11(4)(a) of the RERA Act . It also rejected the builder's contention that the delay was caused by Covid-19.
What the case is aboutA man decided to purchase a flat after seeing an advertisement and checking information available on the builder's website. The flat, which was priced at Rs 44.36 lakh, was allotted to him.
An Agreement of Sale was signed. The builder assured the homebuyer that the flat would be ready for possession by December 26, 2024. There was also an extended grace period available up to August 2025.
Relying on these commitments, the homebuyer paid Rs 40.32 lakh towards the purchase of the flat. This included amounts that were charged for amenities, parking, EV charging and other allied facilities.
The promised possession timelines, however, were repeatedly changed by the builder. The homebuyer said he was not given sufficient clarity about when construction would actually be completed, when the promised amenities would be ready or when the Occupancy Certificate would be obtained.
There was also the issue of an additional debris charge of Rs 30,000. The homebuyer said this charge had not been disclosed earlier and did not form part of the agreement.
The builder, on the other hand, stated that the project had reached nearly 85% completion. It also said that following discussions with homebuyers, the debris charge had been rationalised to Rs 20,000 per flat.
Before the Telangana RERA authority, the homebuyer said the delay had put him under continuing financial pressure. He was having to meet his home loan EMI while simultaneously paying rent. He therefore sought interest compensation from the authority under the provisions of the RERA Act.
What the builder saidThe builder defended the delay by saying that it was making efforts to complete the project within the revised deadline of December 2026. It cited several difficulties that had affected the construction schedule, including a shortage of labour, Covid-19 and legal issues relating to encroachment.
He relied on the force majeure clause and cited the Covid-19 pandemic as a reason for the delay in the project. The builder also told Telangana RERA authority about an FTL encroachment issue involving some blocks in the society,
According to the builder, these issues had a wider impact on the project. They led to operational setbacks, labour dispersal, panic among customers and the withdrawal of institutional funding.
The builder further told the authority that the Telangana High Court subsequently clarified that construction work could proceed in blocks other than Blocks 8 and 9. It also said that the HMDA later confirmed there was no substantial FTL violation, apart from a minor issue that had already been rectified.
The builder extended the construction deadline to December 18, 2026. This meant that possession of the flat would be delayed by more than 18 months from the originally committed timeline.
On August 25, 2026, the homebuyer secured relief from Telangana RERA. The authority directed the builder to pay interest compensation at the rate of 10.7% for the delay in handing over possession, according to an ET report.
Why homebuyer won the caseAsha Kiran Sharma, Partner at King Stubb and Kasiva, told ET that the Telangana RERA authority rejected the builder's reliance on Covid-19 and its subsequent consequences as an explanation for the delay.
Sharma said the authority's reasoning centred on the timing of the Agreement of Sale. The agreement had been executed in February 2023, considerably after the pandemic had subsided.
Therefore, according to the authority's reasoning, the builder had entered into its commitment to deliver possession with knowledge of the circumstances in which the project was being executed.
It made it clear that the possession date that has been specified in the Agreement of Sale has to be taken into account.
The authority also raised objections to the developer's actions on issues beyond the delay in handing over possession.
One such issue was the Rs 30,000 "debris charge" added to the homebuyer's account. Telangana RERA rejected this charge, noting that it was not provided for in the Agreement of Sale and was inconsistent with the developer's statutory obligations under the RERA Act.
Additionally, the payment record clearly showed that the homebuyer had paid Rs 40.32 lakh towards the total flat cost of Rs 44.36 lakh. These payments had been made without any default. Even after fulfilling his payment obligations, however, he did not receive possession by the committed date of December 26, 2024. The flat remained undelivered even after the expiry of the grace period.
The Telangana RERA authority held that these circumstances amounted to a breach of the builder's contractual and statutory obligations under Section 18 of the RERA Act.
The Telangana RERA authority said: “The material on record clearly demonstrates a continued pattern of false assurances despite the Respondent’s (builder’s) knowledge of its inability to adhere to the committed timelines, while the project admittedly remains incomplete beyond the stipulated possession date.”
The Telangana RERA authority clarified that the homebuyer can seek compensation for mental agony, financial loss and any assured compensation amounts promised by the builder by filing an application in Form 'N' before the Adjudicating Officer under Section 71 of the RERA Act.
The authority also struck down the debris charge imposed by the builder. It found that the charge was not supported by the terms of the Agreement of Sale and was contrary to Sections 11(4)(a), 11(4)(d) and 14 of the RERA Act.
Telangana RERA directed that the homebuyer is entitled to interest compensation at the rate of 10.7% per annum.
The interest is to be calculated on the amounts already paid by the homebuyer and will apply from June 26, 2025 until the date on which lawful possession of the flat is actually handed over.
The authority directed the builder to clear the interest arrears accumulated up to the date of the order within 60 days. If the builder does not make the payment, the interest accruing thereafter will have to be paid every month, on or before the 10th day of the following month, until the homebuyer receives possession of the flat.
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