Punjab RERA Rules: No Extra Compensation for Delayed Housing Projects Except Interest

The Punjab Real Estate Regulatory Authority (RERA) has made it clear that a buyer who continues with a housing project that is running late cannot demand anything more than interest for the delay. The Authority has said that additional claims such as rent reimbursement, legal fees, or damages for mental stress are not allowed if the buyer chooses to remain in the project.

This ruling was delivered on December 10, 2025. It interprets Section 18(1) of the Real Estate (Regulation and Development) Act, 2016. That section of the law gives two options to a buyer when a builder fails to deliver on time: either withdraw from the project and claim a refund along with interest and compensation, or stay with the project and receive only interest for the delayed period.

The Cases
The issue started when a woman and her husband booked a flat in Chandigarh in February 2023. The agreement for sale, signed on February 15, 2023, promised that possession would be handed over by December 2023.

The buyer repeatedly contacted the developer after the deadline passed without delivery. At first, she was told that Punjab RERA had given the builder a six-month extension. Later, she discovered that no such extension had ever been granted.

Frustrated, she filed two separate complaints with Punjab RERA. In the first complaint, she asked for interest in delayed possession. In the second, she demanded Rs.40,000 per month to cover rent, harassment, and mental stress, along with Rs.1 lakh for litigation costs.

Case One
In its order dated August 14, 2025 (Complaint No. GCNo0223/2024), Punjab RERA examined the pact and confirmed that December 2023 was the promised possession date and rejected the claim made by the builder that the delay was due to payment defaults. The authority also noticed that no proper demand notices were issued and that the payment schedule was not linked to construction milestones.

The builder contended that the COVID-19 pandemic should be considered a significant obstacle.

Denying this argument, the authority noted that the deal was signed in February 2023, long after the six-month relief period (March 15, 2020 onwards).

Another objection raised was that HDFC Bank should have been included in the complaint because of a tripartite loan agreement. Punjab RERA rejected this, saying the dispute was only about delayed possession and did not involve the bank.

The Authority then directed the promoter to pay interest at 11.10 per cent per annum. This figure was calculated as the highest SBI Marginal Cost of Lending Rate (MCLR) of 9.10 per cent as of July 31, 2025, plus an additional 2 per cent. The buyer was awarded Rs.8.28 lakh as interest compensation until possession is handed over.

Case Two
In the second order dated December 10, 2025 (RERA/AdC No. 0055 of 2024), Punjab RERA considered whether the buyer could claim extra compensation beyond interest.

The Authority explained that Section 18(1) of the Act provides two distinct options. If a buyer withdraws from the project, they are entitled to a refund along with interest and compensation, while if the buyer chooses to remain in the project, the only relief available is interest for the delay.

The complainant had already received interest through the earlier order, and as she had not withdrawn from the project, she was not entitled to rent reimbursement, damages for harassment, or litigation costs, the authority noted.

The Authority relied on the Supreme Court's judgement in M/s Newtech Promoters and Developers Pvt. Ltd. vs State of Uttar Pradesh (Civil Appeal Nos. 6745-6749 of 2021), which had clarified that compensation is available only when the buyer exits the project.

Quoting directly from the order, Punjab RERA said, "Keeping in view all these facts and circumstances, coupled with Section 18(1), since the complainant has not withdrawn from the project, she is not entitled to compensation."

The complaint was therefore dismissed, with no order as to costs.

What This Means for Homebuyers
This ruling reinforces the principle that buyers must make a clear choice when faced with delays. If they decide to stay with the project, they can only claim interest for the period of delay. If they decide to withdraw, they can seek a refund along with compensation.
The decision is significant because many buyers often expect rent reimbursement or damages for mental distress while continuing with delayed projects. Punjab RERA has now clarified that such claims are not legally valid under Section 18(1).

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