K-RERA Builder Delay — Section 18 Refund Playbook for Bangalore

A buyer paid ₹52.74 lakh for a flat. The builder charged GST in a way that RERA found was unfair billing. In January 2026, Karnataka RERA ordered a full refund. In December 2025, K-RERA ordered Sri Vanishelters to refund ₹32.94 lakh with interest at SBI MCLR plus 2%. Both orders turned on the same statute: Section 18 of the Real Estate (Regulation and Development) Act, 2016.

Section 18 is the provision most buyers never read until they need it. It gives a buyer two choices when a builder fails to hand over possession by the contractual date — or fails to meet any other obligation under the agreement. Both choices come with interest.

The two-route choice under Section 18

Route one: withdraw from the project. The buyer is entitled to a full refund of the amount paid, plus interest at the prescribed rate from the date of each payment to the date of refund. The buyer does not have to accept a credit note or a future delivery promise.

Route two: stay in the project. The buyer continues to hold the allotment but is entitled to monthly interest on the outstanding payments from the promised possession date until actual possession is delivered. This is a running compensation, not a one-time settlement.

The choice belongs to the buyer, not the builder. A builder who offers a revised possession date or a partial compensation cheque is not discharging the Section 18 obligation — the buyer retains the right to choose refund until possession is actually delivered.

The SBI MCLR + 2% benchmark

The Karnataka Real Estate (Regulation and Development) Rules, 2017, prescribe the interest rate for Section 18 as the State Bank of India's Marginal Cost of Funds Based Lending Rate (MCLR) plus 2%. The SBI MCLR is published monthly. Verify the current rate at sbi.co.in before calculating your claim — it changes. As of recent published rates, MCLR plus 2% has been running in the 10–11% range, but confirm the current figure. This is the floor; RERA authorities may in some cases award a different rate if the facts justify it.

The 70% escrow — why it matters

Section 4(2)(l)(D) of RERA requires every registered project to maintain a separate bank account where 70% of the amounts realised from allottees are deposited, to be withdrawn only for the specific project's land and construction costs. Where a builder has diverted this escrow — a common finding in delayed-project cases — K-RERA has the power to direct restoration. Buyers filing complaints should verify whether the project's RERA registration page shows the escrow account details and whether annual audits have been filed.

The 120-day complaint clock

There is no limitation period under RERA comparable to the Limitation Act's rigid bars, but the Authority has applied principles of delay and laches. File a complaint as soon as the builder has missed the possession date by a period where your choice (refund or interest) is clear. Waiting years while hoping for a voluntary resolution weakens the complaint on grounds of acquiescence. Filing within 60–90 days of the missed deadline reduces acquiescence arguments.

How to file a K-RERA complaint

• Online: file at rera.karnataka.gov.in through the Complainant Registration module. Upload the allotment letter, payment receipts, the sale agreement, the builder's RERA registration details, and all correspondence.
• Offline: a physical complaint can be filed at the K-RERA office in Bengaluru with a demand draft for the filing fee.
• Filing fee: currently a nominal amount per the K-RERA schedule — verify the current fee at rera.karnataka.gov.in before filing as it is subject to revision.
• The complaint should clearly state whether you are seeking refund under Route 1 or interest under Route 2, with a calculation of the claim.

Evidence to assemble before filing

• All payment receipts with dates and amounts — the interest calculation runs from each payment date
• The registered sale agreement or allotment letter showing the promised possession date
• The builder's RERA registration certificate and the project's RERA page printout
• All correspondence between you and the builder regarding delay — emails, letters, WhatsApp messages
• If the builder has cited force majeure or COVID delays, note those dates specifically

The appeal route

A K-RERA order can be appealed to the Karnataka Real Estate Appellate Tribunal (KREAT) within 60 days of the order. Either party may appeal — builders routinely do. A KREAT order is then appealable to the Karnataka High Court on questions of law. Most K-RERA orders are upheld at KREAT unless there is a factual error or an absence of jurisdiction; the statutory scheme is clearly buyer-protective.