Homebuyers to get 11% interest for delay in possession

For over three years since 2021, a builder who did not even have a RERA registration allegedly misused the money paid to him by 62 homebuyers by deploying it in other housing projects. The homebuyers, who were unaware of this situation, trusted the builder to finish the construction within the promised timeline and hence continued to pay the bank home loan EMI.

The issue came to light when the promised date of possession was coming near. The 62 homebuyers asked the builder repeatedly about the substantial delay in construction of the flats. The responses given by the builder were found to be vague and non-committed, which further raised suspicion among the home buyers. Ultimately six months after the promised date of possession, the homebuyers approached Telangana RERA for this issue, since the housing project was in Hyderabad.

Telangana RERA authority (TGRERA) found out that this housing project does not even have a RERA registration despite the project covering over 7,300 square metres area. For those uninitiated, RERA registration for a particular housing project is required if its area exceeds 500 square metres in area or involves more than 8 apartments.

TGRERA also found out that even after 3 years, the builder only completed about 20% of the real estate housing project. TGRERA noted that this action violated Section 3 and 4. Moreover the TGRERA held that since the builder executed the said 62 sale agreements without having RERA registration, a heavy fine was liable to be imposed on the builder.

Regarding the compensation payable to the 62 homebuyers for such an action by the builder, TGRERA said that the sale agreements were registered between 2021 and 2023 and the date of offering possession was December 2023 but as of June 2024, the house project is only 20% complete. TGRERA also noted that the builder, even after all of this, did not demonstrate any firm commitment or actionable roadmap for the completion of the said housing project. TGRERA said that buyers can’t be asked to wait indefinitely for their bought homes, hence the case called for full refund of the money with interest.

TGRERA ordered the builder to refund the money taken from these homebuyers with 11 % p.a. interest (SBI MCLR of 9.0% + 2%) from the date of the respective agreement of sale till the date of actual refund.

Read below to know what happened in this case and how these 62 homebuyers got relief from TGRERA authority and what should homebuyers note.

What did Telangana RERA say about the actions of the builder?
According to the order of TGRERA dated May 16, 2025, here’s what the authority said:

• The builder, despite having obtained statutory approvals and permissions for substantial residential development, proceeded to advertise, market, and enter into agreements of sale with various buyers without registering the project. Without having obtained registration under Section 3, the builder could not have executed the agreements of sale with the Complainants which constitutes a glaring violation of Sections 3.
• The builder’s plea that certain statutory approvals were pending or that registration was in process, cannot serve as a legal justification for such noncompliance. The RERA Act makes no exception for provisional or pending applications; the prohibition under Section 3(1) is absolute and unequivocal.
• This RERA Authority also takes judicial note of the builder’s conduct across multiple projects within its jurisdiction. In numerous cases involving similarly situated allottees, the builder has habitually indulged in the practice of undertaking real estate development without obtaining registration, thereby defeating the very object and purpose of the Act. The repetitive and conscious pattern of non-compliance evinces deliberate disregard for the statutory mandate and regulatory framework and undermines the rights and entitlements of homebuyers.

How much compensation can these 62 homebuyers get?
The TGRERA said in the order:

• The legislative intent behind provisions of Section 18(1) of the RERA Act is clear i.e., where a promoter fails to honour their contractual obligation of timely delivery of possession, the allottee is entitled to seek refund of the entire amount paid, along with statutory interest as prescribed under the Rules.
• Despite receiving considerable sums from the homebuyers, the construction of the project remains stagnated at a mere 20%, with no substantial progress reported even after lapse of time since the execution of the Agreements of Sale. In such a scenario, the allottees cannot be made to wait indefinitely for possession, particularly when there is no clarity or commitment from the Respondent regarding the completion timeline, thereby justifying the Complainants' entitlement to refund as per relief (2) under Section 18(1)(a) of the Act.
• Regarding reliefs, the homebuyers categorically submitted that the builder is embroiled in several criminal cases on account of complaints filed against him for siphoning funds and is not available to complete the construction and handover the allotted apartments to them. In view of the same, this RERA Authority is of the considered opinion that the homebuyers are entitled to their relief of seeking refund from the builder (M/s Bhuvanteza Infrastructures LLP), who are jointly liable to refund the amounts paid by the homebuyers along with interest in accordance with Rule 15 of the Rules, 2017.

Compensation: “Builder is liable to refund the amounts paid by the home buyers along with interest at the rate of 11.0% per annum (SBI MCLR of 9.0% + 2%) from the date of the respective agreement of sale of the homebuyers till the date of actual refund in accordance with Rule 15 of the Rules, 2017 within 30 (thirty) days.”

“Failing to comply with the above said directions by the Respondent Nos.1 & 2 shall attract penalty in accordance with Section 63 of the Act, 2016,” said TGRERA authority in its order.

Harsh Parikh, Partner at Khaitan & Co, says: “This order of the Telangana RERA Authority clarifies that no developer can market, sell the units in a project without registering the project with the RERA Authority. It also signifies that RERA authority will not shy away in awarding penalties and damages if there is delay in completion of the project. The importance of this order is for such projects where there is gross violation by the developer. Where the developer has failed to register the project with RERA and has also failed in adhering to timelines promised to allottee for completion.”

What is the significance of this judgement?
ET Wealth Online has asked various experts about what might be the significance of this judgement. Here's what they said:

Richa Mehta, Partner, Gandhi Law Associates: This judgment reinforces homebuyers’ faith in RERA and its authority to curb the illegal and unethical practices carried out by certain developers. It significantly strengthens the position of consumers, offering broad protection against such shoddy and non-compliant real estate practices. While the RERA Act provides stringent provisions to safeguard buyers, it is still essential for individuals to exercise caution. Prospective buyers should always conduct a thorough background check of the developer, verify all statutory approvals, and carry out detailed due diligence before signing any agreement. After all, “buyer beware” remains a guiding principle—even in a regulated environment.

Yuvraj Sharma, Advocate, Delhi High Court: The Telangana RERA’s ruling is a jurisprudential watershed. It holds that an unregistered project is not just a defective promise rather it is a legal impermissibility. By ordering refunds, levying penalty on to the Builder, and by freezing all further sales until registration is formalized, the Authority has endowed (or rather recognised) the home-buyers with a right to call upon the registration of the project. It fortifies the objective of the Act that a builder who markets an unregistered project automatically risks penalties and must refund buyers with interest if deadlines slip. For lakhs of home-buyers this means: don’t wait—approach RERA. If possession isn’t on schedule, the homebuyers’ money, with interest, can come back within a comparatively short period of time.

Varun Singh, Founder & Managing Partner, Foresight Law Offices India: Penalty for violating statutory norms is a welcome step from the point of view of homebuyers. However, to ensure there is 100% regulatory compliance, it’s important that rera extends the penalty to its highest amount for aggravated conduct of builders. The decision reinstates the essence of RERA and also strengthens the trust of homebuyers on the RERA Authorities against the injustices of builders. This judgement also recognises the fact that how homebuyers should be vigilant and undertake due-diligence about the project and its registration before signing their money off to the builders.

In a nutshell, the RERA Authority of Telangana has set a precedent where a fundamental breach of RERA will not be spared and rather will be penalised. But it’s important that in near future we see rera penalising entire 5 % of the project cost to create fear against misdemeanor. Securing the interest of homebuyers and holding the defaulters liable for refunds and penalties only makes the jurisprudence in the real estate little better but there is lot more that can be done.

Shashank Agarwal, Founder, Legum Solis: By this judgment, the Telangana RERA Authority enforces the law under RERA that provides that no developer can develop a real estate project unless the proposed project is registered. This registration goes to the very root of the policy with which the law under RERA has been framed.

Registration of a project is to make the crucial details publicly available so that the home-buyers/allottees are aware of what they would be getting out of the investment of their hard-earned money which they had saved up for their dream home. It is this registration that enables a home-buyer to assess the nature and quality of their ‘dream home’ and the timelines within which they would be delivered their ‘dream home’, before investing.

This judgment should instill a sense of responsibility on all the real estate developers to have their real estate projects registered in accordance with law under RERA.