Section 18 of the RERA Act: A Homebuyer's Guide to Refund, Interest, and Possession

Why Section 18 Matters

The Real Estate (Regulation and Development) Act, 2016 was enacted to bring transparency and accountability to a sector that, for decades, had operated with limited recourse for ordinary homebuyers. Section 18 is the heart of that protection. It tells the developer that if possession is not handed over on the date promised in the agreement for sale, the buyer has a statutory choice — withdraw from the project and take back what was paid, with interest; or continue with the project and receive interest for every month of delay until possession is actually given.

The provision sounds simple, but the way MahaRERA, the Maharashtra Real Estate Appellate Tribunal, and the Supreme Court have interpreted it over the last several years has produced a rich body of case law that every Maharashtra homebuyer should understand before signing a complaint.

What the Statute Actually Says

Section 18(1) provides that if 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, the promoter is liable on demand to return the entire amount received, with interest, where the allottee chooses to withdraw. Where the allottee does not intend to withdraw, the promoter must pay interest for every month of delay, at the prescribed rate, until possession is handed over.

Two points are often missed. First, the statutory right is triggered the moment the agreed possession date passes — not the date on the brochure, not the date on the booking form, but the date written into the registered agreement for sale. Second, the rate of interest is not negotiable. The Maharashtra Rules, 2017, fix it at the State Bank of India's highest Marginal Cost of Lending Rate plus two per cent. Any clause in the agreement that purports to give the developer a lower rate when paying the buyer, while reserving a higher rate for late payment by the buyer, has been held unenforceable as one-sided.

The Allottee's Choice — and When To Make It

Section 18 gives the allottee a choice, and that choice is consequential. Once the buyer formally elects to withdraw and seeks a refund, the Authority typically treats the contractual relationship as terminated. The buyer cannot, mid-proceeding, switch back and demand specific performance of the agreement. Conversely, if the buyer elects to continue and receive interest, the developer is bound to complete and hand over — but the buyer remains exposed to further delays, cost escalation, and changes in market conditions.

Our practice advises clients to make this choice only after a structured evaluation of three things — the current state of construction (verified physically and through the MahaRERA project page), the developer's financial health, and the buyer's own financing position, including ongoing EMIs on a home loan disbursed for the very property.

How a Section 18 Complaint Moves Through MahaRERA

1. Pre-complaint preparation — collation of the registered agreement for sale, allotment letter, payment receipts, bank statements showing each tranche, and email correspondence about possession.
2. Filing of the complaint on the MahaRERA online portal under Section 31, with the prescribed fee and a clear prayer — refund with interest under Section 18(1) first proviso, or interest for delayed possession under Section 18(1) second proviso.
3. Notice, reply, and rejoinder — the Authority issues notice to the promoter, who files a reply; the complainant responds with a rejoinder addressing the developer's defences.
4. Hearing before the Authority or the adjudicating officer — oral submissions, written briefs, and any documentary evidence the parties wish to rely on.
5. Order — typically directing refund with interest, or fixing interest until the date of actual possession, with a recovery warrant under Section 40 if the developer does not pay within the time stipulated.
6. Execution — if the developer fails to comply, the order is forwarded to the Collector and District Magistrate for recovery as arrears of land revenue.
7. Appeal — either party may appeal within sixty days to the Maharashtra Real Estate Appellate Tribunal under Section 44, and onwards to the Bombay High Court on questions of law under Section 58.

Key Supreme Court Guidance

In Newtech Promoters and Developers Pvt. Ltd. v. State of Uttar Pradesh (2021), the Supreme Court confirmed that the RERA framework applies to projects that were ongoing at the time the Act came into force, and that the right to refund under Section 18 is unqualified once the agreed possession date has lapsed. The Court further clarified that the buyer's remedy under RERA operates concurrently with the Consumer Protection Act — the buyer may elect either forum, but cannot pursue duplicate relief for the same cause of action.

Subsequent decisions of the Bombay High Court and MahaREAT have refined the application of Section 18 to redevelopment projects, deemed conveyance disputes, and projects where occupation certificate is partial. The position today is reasonably settled, but the facts of each case still drive outcome — particularly the question of what constitutes the agreed date of possession and whether force majeure clauses validly extend it.

Practical Tips Before You File

• Save the developer's MahaRERA project page as a PDF on the day you decide to act — quarterly compliance pages are updated and earlier snapshots are often the most useful evidence.
• Reconcile every rupee paid — token, booking, instalments, GST, stamp duty, and registration — against the agreement and bank statements before quantifying your refund.
• If you are also a home loan borrower, intimate your bank of the pending complaint and seek a hold or restructuring of the EMI obligation pending the outcome.
• Consider the MahaRERA Conciliation Forum where the developer is solvent and willing to engage — settled, signed terms are enforceable as MahaRERA orders.

How We Can Help

K. H. Giri & Associates has represented homebuyers, allottees' associations, and developers in MahaRERA, MahaREAT, and Bombay High Court proceedings under the RERA framework. If you are considering action under Section 18, we offer a paid consultation that ends with a clear written assessment — the strength of your claim, the realistic relief available, the costs and timelines involved, and the strategic choice between refund, interest, and continued specific performance.