1. Statutory Context & Scope of AP RERA
The enactment of the Real Estate (Regulation and Development) Act 2016 (RERA) fundamentally reshaped the legal relationship between property developers (promoters) and allottees (homebuyers) across India. In the State of Andhra Pradesh, the Andhra Pradesh Real Estate (Regulation and Development) Rules, 2017 established the institutional framework for AP RERA, headquartered at Amaravati.
Prior to RERA, allottees were largely relegated to prolonged civil suits for specific performance under the Specific Relief Act 1963, or summary consumer forums under the Consumer Protection Act. The creation of a dedicated regulatory authority with powers to issue binding directions, impose interim injunctions, and order refunds with statutory interest marked an unprecedented shift toward transparency.
2. Mandatory Project Registration & Escrow Mandates
Section 3 of the Act establishes that no promoter shall advertise, market, book, sell, or offer for sale any plot, apartment, or building in any real estate project exceeding 500 square meters or eight apartments without prior registration with the Authority.
Crucially, Section 4(2)(l)(D) mandates that 70% of the amounts realized for the real estate project from the allottees must be deposited in a separate dedicated bank account maintained in a scheduled bank to cover the cost of construction and the land cost, and can be withdrawn only in proportion to the percentage of completion of the project, certified by an engineer, architect, and chartered accountant.
“The statutory requirement under Section 18 of RERA is unconditional and absolute: where a promoter fails to deliver possession within the agreed timeline, the allottee's right to refund with statutory interest cannot be defeated by contractual force majeure clauses that lack external causality.”
3. Delay in Possession: Section 18 Remedies
Section 18 of the Act provides the principal statutory remedy for allottees when a developer fails to complete or give possession of an apartment, plot, or building in accordance with the terms of the agreement for sale:
- Right of Exit with Refund: If the allottee wishes to withdraw from the project, the promoter is liable to return the entire amount received along with interest at the prescribed rate (State Bank of India Highest Marginal Cost of Lending Rate + 2%), in addition to statutory compensation.
- Right of Continuation with Monthly Delay Interest: Where the allottee chooses not to withdraw from the project, the promoter must pay interest for every month of delay until the actual physical handing over of possession with occupancy certification.
4. Five-Year Structural Defect Liability (Section 14)
Under Section 14(3) of RERA, in case any structural defect or any other defect in workmanship, quality, or provision of services is brought to the notice of the promoter within a period of five years from the date of handing over possession, it shall be the duty of the promoter to rectify such defects without further charge within thirty days. In the event of failure, the aggrieved allottee is entitled to receive appropriate compensation.
5. Key Judicial Precedents of the High Court of Andhra Pradesh
Recent judicial review decisions rendered by the High Court of Andhra Pradesh under Article 226 of the Constitution have reaffirmed key procedural safeguards:
In a series of landmark writ petitions, the High Court held that orders of refund and recovery certificates issued by AP RERA under Section 40 of the Act are enforceable as arrears of land revenue through the District Collector, and execution cannot be stymied by ongoing insolvency petitions where the project itself has not been admitted to CIRP prior to the order.
6. Conclusion & Takeaways for Litigants
For buyers and developers operating in Amaravati, Vijayawada, and Visakhapatnam, adherence to AP RERA compliance timelines is non-negotiable. Agreements for sale must strictly mirror the Model Form prescribed under the AP Rules, avoiding one-sided forfeiture clauses that have been repeatedly invalidated by the Supreme Court of India in Pioneer Urban Land & Infrastructure Ltd. v. Govindan Raghavan.
