The Bombay High Court at Goa has clarified a critical procedural safeguard under the Real Estate (Regulation and Development) Act, 2016: interest payable to homebuyers must be calculated only up to the date of actual possession, not the date of the appellate order. This ruling prevents unjust enrichment of claimants and reinforces the principle that remedies under RERA must be grounded in factual timelines, not procedural delays.
Background & Facts
The Dispute
The dispute arose from a home purchase agreement between Aansav Realty & Infrastructure Pvt. Ltd. and Mr. Lakshmansaudra Vasudevamurfhy Ravi for a flat in Goa. The buyer paid the purchase price of Rs.90,00,000 in three tranches and claimed possession was due on 03.01.2020 as per the agreement. The builder contended that physical possession was handed over on 22.12.2021 under a Leave & Licence Agreement. The buyer, however, relied on a letter dated 29.07.2022 as proof of possession.
Procedural History
- 2025: Goa RERA ordered the builder to pay interest at 11.1% on the entire consideration from the due date of possession (03.01.2020) until the date of its order (19.12.2025).
- December 2025: Maharashtra RERA, acting as the Appellate Authority for Goa, granted an interim stay on the Goa RERA order but modified the interest calculation to commence from 03.01.2020.
- January 2026: The builder filed a writ petition under Article 227 challenging the Appellate Authority’s use of 19.12.2025 as the cutoff date for interest calculation.
Relief Sought
The petitioners sought modification of the Appellate Authority’s order to cap interest calculation at the date of possession claimed by the respondent - 29.07.2022 - arguing that continuing interest beyond actual possession violates the compensatory nature of RERA’s remedies.
The Legal Issue
The central question was whether interest under Section 18 of RERA must be calculated only until the date of actual possession, as claimed by the buyer, or whether it may extend to the date of the appellate order granting interim relief.
Arguments Presented
For the Petitioner
The petitioners argued that Section 18 of RERA is compensatory, not punitive, and that interest is meant to reimburse buyers for delay in possession, not to serve as a windfall during prolonged litigation. They cited M/s. DLF Limited v. Ramesh Kumar to assert that once possession is delivered, the obligation to pay interest ceases. The use of 19.12.2025 as the cutoff was arbitrary and not grounded in the factual timeline of the transaction.
For the Respondent
The respondent contended that the Appellate Authority’s calculation was procedurally sound, as the interim order was issued to secure the claim pending final adjudication. He argued that until the final order is passed, the claim remains outstanding and interest must accrue to preserve the value of the award.
The Court's Analysis
The Court examined the nature of interest under Section 18 of RERA, noting that its purpose is to compensate for delay in handing over possession - not to penalize builders indefinitely during litigation. The Appellate Authority erred by using the date of its own order (19.12.2025) as the cutoff, which had no nexus to the factual event triggering the liability: possession.
"The date until which interest is to be calculated must be the date on which the claimant claims to have received possession, which in this case is 29.07.2022. Extending it to the date of the appellate order would convert a compensatory remedy into a punitive one."
The Court emphasized that while the Appellate Authority was entitled to grant interim relief, it could not alter the substantive basis of the claim. The Goa RERA had accepted the respondent’s own claim that possession occurred on 29.07.2022. Therefore, the interest calculation must align with that date. The Court held that the Appellate Authority’s error was procedural and mechanical, not substantive, and could be corrected under Article 227.
The Verdict
The petition succeeded. The Court held that interest under Section 18 of RERA must be calculated only until the date of possession claimed by the buyer, which was 29.07.2022. The Appellate Authority’s order was modified to reflect an interest amount of Rs.24,01,200, payable from 03.01.2020 to 29.07.2022. The builder was granted four weeks to deposit the amount.
What This Means For Similar Cases
Interest Ceases at Possession, Not at Order Date
- Practitioners must now argue that Section 18 RERA interest accrues only until the date of actual or claimed possession, regardless of litigation timelines.
- Any appellate order extending interest beyond possession is legally unsustainable and subject to correction under Article 227.
Documentary Evidence of Possession Is Controlling
- A letter of possession submitted by the buyer, even if contested, becomes the operative date for interest calculation unless disproved by conclusive evidence.
- Builders must maintain contemporaneous records of possession handover; oral claims or post-litigation assertions will not override documented dates.
Interim Relief Cannot Redefine Substantive Liability
- Courts granting interim stays must not alter the foundational basis of the claim, such as the period for which interest is due.
- The interim order’s purpose is to preserve the status quo, not to pre-judge the merits or extend liability beyond the factual trigger.
