Patra Chawl: Can Homebuyers Claim Delay Interest After Possession?

The Bombay High Court has ruled that homebuyers who accept possession of a delayed project can still claim interest from the developer for the period of delay, rejecting a developer’s argument that homebuyers lose this right if they accept possession without first notifying the developer of their intention to seek compensation.

The Bombay High Court stated that the allottee (homebuyer) has the right to receive interest for each month of delay until ownership is handed over in line with the parties’ agreement, and that this right is independent and indefeasible.

The decision came after a developer filed an appeal against homebuyers who bought homes in the free-sale component of the Patra Chawl project in Mumbai’s Goregaon. In a ruling dated August 5, 2026, the Bombay High Court denied the developer’s appeal while upholding the prior findings of the Maharashtra Real Estate Appellate Tribunal (MREAT).

The case

The dispute is over a flat for a project in Mumbai’s Goregaon, with possession expected by June 30, 2018. The developer contended that, notwithstanding the delay, the homebuyers accepted ownership without giving notice of their intention to seek compensation for the delay. It used provisions of the Indian Contract Act to argue that the homebuyers couldn’t seek compensation for the delay.

Bombay HC’s take

The Bombay High Court dismissed the developer’s petition, finding that the requirements of the Real Estate Regulatory Act (RERA), 2016 take precedence over other legislation. More importantly for homeowners, the court stated that a homebuyer’s entitlement to collect interest for each month of delay until ownership is turned over is a “independent and indefeasible right” under the agreement.

In layman’s terms, the Bombay High Court ruled that just taking the keys to a property does not waive the ability to suspend interest payments. If the developer fails to give over control by the agreed-upon date, the buyer’s rights under Section 18 of RERA remain in effect.

The court further observed that the buyers had paid 95% of the sale price by December 2017 and had requested an inspection of the unit before taking possession. It upheld the determination that the developer failed to deliver possession and that the case constituted a violation of RERA Section 18.

The Bombay High Court eventually denied the developer’s petition, confirming the protections provided to homebuyers under RERA. It stated that the provisions of Section 18 are useful and meant to protect allottees, and that accepting the developer’s claim would contradict the objective of the Act.

What is the Patra Chawl Redevelopment Project?

Patra Chawl, located in the Siddarth Nagar section of Goregaon, a western suburb of Mumbai, was redeveloped in 2008. It housed over 670 residents and covered 47 acres.

Patra Chawl was initially a barrack built by the British during World War II and used as a military camp.

In 2008, MHADA began the reconstruction project, appointing Guru Ashish Construction Private Limited (GACPL), a sister business of real estate firm Housing Development and Infrastructure Ltd (HDIL), to rehabilitate over 670 tenants and renovate the area.

A tripartite agreement was signed between GACPL, the tenants’ society, and MHADA. Following this, the residents moved out of the chawl in 2010, but 14 years later, they have yet to receive their promised dwellings.

In addition, under the agreement’s free-sale provision, developers sold units to around 1,700 families. The real estate businesses that have been involved in this for over a decade and built these projects are unable to transfer up possession due to a lack of OC. Home buyers claimed that their possession was delayed due to administrative hurdles and disagreements between developers and MHADA over pending liabilities of around ₹3,100 crore.