“Homebuyers’ 20 Year Plight!” read a recent headline while reporting the Supreme Court’s intervention in the Parsvnath Exotica dispute in Gurugram.1 This phrase in a nutshell describes a problem which is unfortunately common in India- a homebuyer may pay the entire consideration and fulfil every contractual obligation and still spend years waiting for the corresponding possession to crystallize. This shows us an imbalance which is now woven into the homebuyer-developer relationship: buyer bears the immediate financial burden, control over construction, project finances, information and but at the end the performance remains substantially with the developer. It is this imbalance that the law has increasingly been called upon to correct.

Indian courts are now increasingly treating delayed possession and incomplete construction as a breach of statutory duties especially where buyers have paid substantial consideration, are servicing loans and the builder retains funds while pushing timelines. In the 2021 case of Ireo Grace Realtech Pvt. Ltd. v Abhishek Khanna, the Supreme Court rejected both extremes of developer-drafted token delay clauses and excessive buyer claims for very high interest, and instead adopted a balanced, equity-oriented approach. The Court held that buyers cannot be made to wait indefinitely for possession and that oppressive contractual clauses such as refund without interest or forfeiture mechanisms are unfair. It therefore ordered refund with 9% simple interest, and 12% if payment was further delayed.2

In the 2017 case of Bikram Chatterji v Union of India, even though home buyers had paid upto 40-100 percent of the total consideration, the Amrapali group in Noida and Greater Noida did not give them possession after the promised period of 36 months and buyers remained vulnerable to forfeiture of their booking amounts. The agreements authorised developers to mortgage or securitise the project and retain complete control over the flats, leaving allottees without any lien. At the same time, the builder limited its own liability for delayed possession to a nominal compensation of Rs.5 per sq. Ft per month. The Supreme Court strongly criticised such one-sided contractual arrangements such as this and held that developers could not retain buyers’ funds while failing to complete the project. The Court observed that money collected from homebuyers is
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1. Debby Jain, ““Homebuyers’ 20 Year Plight!”: Supreme Court Issues Warrants to Haryana Builder’s Directors; Flags State Inaction’ (LiveLaw, 13 July 2026) https://www.livelaw.in/top-stories/homebuyers-20-year-plight-forces-supreme-court-to-question-rera-mechanisms-efficacy-540942 accessed 6 September 2026.

2. Ireo Grace Realtech Pvt Ltd v Abhishek Khanna (2021) 3 SCC 241.


meant to be used for the construction of the specific project and cannot illegally diverted elsewhere. Treating the developer as of having a fiduciary responsibility toward the allottees, the Court intervened to protect the interests of homebuyers to ensure completion of the stalled projects by Amrapali. This was to be completed by NBCC.3


These cases represent how Indian courts have increasingly relied on equitable remedies to correct the imbalance between developers and homebuyers. In situations where possession has been delayed for years or the project itself has become uncertain, courts have often considered damages and specific relief as the most appropriate remedy. In Ireo Grace Realtech, the Supreme Court adopted a balanced approach by ordering refund with reasonable interest, recognising that buyers cannot be compelled to indefinitely wait for possession while their funds remain locked with the developer. Such monetary compensation serves the purpose of contractual damages but additionally also as an equitable mechanism to prevent developers from unjustly benefiting from prolonged retention of buyer funds. Conversely, in Bikram Chatterji, where the primary objective of the buyers was to obtain their homes which they had contracted for, courts leaned towards specific relief and recognised that monetary damages alone couldn’t adequately compensate these buyers.


The judicial interventions discussed above, have one problem though, no matter how significant. All of them operate reactively as they address harm after it has crystallised. The legislature addressed this by adopting a preventive response to this problem of developer delays by introducing the Real Estate (Regulation and Development) Act, 2016 (“RERA”), which fundamentally restructured the way builder-buyer relationships worked. RERA was enacted precisely to address the vacuum that cases like Bikram Chatterji and Ireo Grace Realtech exposed: developers collecting buyer funds without adequate oversight, unilaterally extending timelines and drafting contracts that insulated them from liability.


Three of RERA’s provisions are especially directed at recurring delays. Firstly, S.3 mandates compulsory project registration before any advertisement or sale, eliminating pre-launch sales that previously left buyers entirely unprotected. Secondly, S.4(2)(l)(D) requires developers to deposit at least 70% of amounts realised from allottees into a dedicated escrow account, to be used only for land and construction costs of the specific project, directly targeting the diversion of funds that the Supreme Court condemned in Bikram Chatterji. Thirdly, S.18 entitles allottees to either a full


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3. Bikram Chatterji v Union of India (2019) 19 SCC 161.

refund with interest or ongoing compensation for every month of delay, holding a developer accountable by turning the delay into a direct financial liability.

Additionally, on a state-level, the Uttar Pradesh RERA authority has recently issued revised Project Account directions that expressly prohibit cross-collateralisation of project finance. The Directions establish a comprehensive project-wise fund management framework, detailing the operation of Collection, Separate and Transaction Accounts, prescribing permissible withdrawals and expenditures, and imposing strict obligations on promoters regarding the utilisation, disclosure and monitoring of project funds.4


We must also look at when RERA kicks in because real estate project failures do not arrive suddenly. When one looks back, we can easily point out the timeline and the process- they develop through initial construction slowdowns, escalating unpaid contractor dues, mounting debt, and ultimately, insolvency. The problem here is that allotees only realise what is wrong only once the situation has moved past well beyond RERA’s practical reach. Formal insolvency, once triggered under the Insolvency and Bankruptcy Code 2016 (“IBC”), puts the developer’s assets under the jurisdiction of the National Company Law Tribunal (NCLT) and a Resolution Professional, displacing RERA’s authority.5 The Supreme Court’s recognition in Pioneer Urban Land6 addresses this, and we visit this later, but even though homebuyers qualify as financial creditors under the IBC, this doesn’t resolve the jurisdictional clash. Courts have generally sought to harmonise the two statutes by recognising that they operate in distinct spheres, the RERA primarily protects the interests of allottees and ensures project completion, whereas the IBC is concerned with the insolvency resolution of the corporate debtor. However, where an inconsistency arises, particularly after the commencement of the Corporate Insolvency Resolution Process, the provisions of the IBC prevail by virtue of Section 238 of the Code7, while RERA remedies continue to exist to the extent that they do not conflict with the insolvency process. RERA cannot enforce its refund or compensation orders against the insolvent estate. This points to the fact that RERAs ideal moment of intervention is before insolvency crystallises, not after.8 The Supreme Court’s recognition of homebuyers as financial creditors under the IBC in Pioneer Urban Land and Infrastructure Ltd. v. Union of India9 partially addresses this gap, but only theoretically, as the practical recovery experience for buyers


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4. Uttar Pradesh Real Estate Regulatory Authority, U.P. Real Estate Project (Maintenance and Operation of Project Bank Accounts) Directions, 2020- 3rd Revision, 2026 (11 May 2026) https://up-rera.in/pdf/RERAAccountDirections11052026.pdf accessed 6 June 2026.
5. Aashna Bhargava, Role of Resolution Professional in Corporate Insolvency Resolution Process in the Light of Corporate Governance (SSRN Electronic Journal, 18 March 2024) https://dx.doi.org/10.2139/ssrn.4763623 accessed 13 June 2026.

6. Pioneer Urban Land and Infrastructure Ltd v Union of India (2019) 8 SCC 416.

7. Insolvency and Bankruptcy Code 2016, s 238.

8. M/S Imperia Structures Ltd v Anil Patni (2020) 10 SCC 783.

9. Pioneer Urban Land and Infrastructure Ltd v Union of India (2019) 8 SCC 416.

in insolvency proceedings remains uncertain and protracted. RERAs regulatory apparatus is almost entirely oriented toward compliance and grievance redressal, to register, disclose, maintain escrow, and finally compensate if you fail. What is conspicuously absent is any ex ante, consultative engagement between the regulator and the developer community around the structural conditions that make project completion more likely. Sadly, the question of whether RERA should proactively share distress signals with the IBC machinery rather than waiting for insolvency to be formally declared remains one that the regulatory framework has not yet answered, but that shouldn’t be the case. I say this because housing supply in India is constrained not only by developer misconduct but also by approval bottlenecks, fragmented land titling, financing costs and the absence of standardised construction contracts. If RERA were to engage proactively with developers through industry consultations, model project finance frameworks or streamlined approval facilitation, it could help create conditions in which more projects are completed on time, giving buyers a genuine multiplicity of choices rather than concentrating risk in a small number of highly leveraged mega-projects.


However, in terms of Ex post enforcement mechanisms, we can see RERA authorities take more proactive steps such as the MahaRERA in Maharashtra which introduced quarterly developer compliance reports10 and a conciliation forum for pre-adjudication settlement.11 Its rules set the interest payable by a defaulting party at the State Bank of India’s MCLR plus two percent, making delay a costly affair.12 Most importantly, the Bombay High Court, in Neelkamal Realtors Suburban Pvt. Ltd. v. Union of India13, upheld MahaRERA’s constitutional validity by ruling that its core provisions regulating ongoing projects are constitutional, valid and legal. The Court affirmed that the Act operates prospectively and may sometimes have a retroactive or a quasi-retroactive effect as it serves as a beneficial, curative legislation designed in the larger public interest to maintain a balance in the rights and obligations of both promoters and allottees. The Court rejected claims that the Act was arbitrary or expropriatory, validating key measures such as mandatory project registration, adherence to declared completion timelines, and the requirement for promoters to pay compensatory interest for delayed possession.


The next phase of RERA must therefore move from reacting to project failure towards preventing it. Real estate insolvency rarely occurs overnight, one can see it develop through persistent


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10. Maharashtra Real Estate Regulatory Authority, ‘Guidance on Periodic Compliances’
https://maharera.maharashtra.gov.in/guidance-periodic-compliances accessed 6 June 2026. 
11. Maharashtra Real Estate Regulatory Authority, ‘Guidance for Conciliation’ https://maharera.maharashtra.gov.in/guidance-conciliation accessed 6 June 2026. 
12. Prashant M. Sane v Vital Developers Pvt Ltd and Others, Appeal No AT00600000053027/21 (Maharashtra Real Estate Appellate Tribunal, 9 May 2024). 

13. Neelkamal Realtors Suburban Pvt Ltd v Union of India 2018 SCC OnLine Bom 9302.


construction delays, irregular withdrawals from project accounts, unpaid contractors and repeated extensions which provide early indications of financial distress. A structured RERA–IBC coordination mechanism could enable these warning signals to be identified and shared before insolvency crystallises. RERA Authorities could undertake enhanced monitoring of stressed projects and facilitate consultations between promoters, lenders and homebuyer representatives on project progress, financing and prospects of completion. Their regulatory powers could also be strengthened to permit closer scrutiny of project accounts, investigation where diversion of funds is suspected, and early corrective or project-revival measures.


Prevention must equally extend to disputes. Conciliation forums contemplated under Section 32(g) should be strengthened through standard procedures, trained conciliators and efficient implementation of settlements allowing buyer-developer disputes to be resolved before they simmer into prolonged litigation. Ultimately, RERA’s success should not be assessed only by the refunds, interest or penalties ordered after a project fails but by its ability to detect distress early, resolve disputes efficiently and ensure that viable projects and the homes dependent upon them do not fail in the first place.


 

(These are the personal views of the author. They do not necessarily reflect the opinion of OP Jindal Global University or its affiliated institutions).