Functions and Duties of the Promoter — Land Law Notes

Functions and Duties of the Promoter

The single word that used to defeat every cheated homebuyer was “delay”. The builder would take your money, miss the possession date by years, and shrug — your only option was a civil suit that would outlast the delay itself. RERA rewrites that story by turning the builder’s promises into statutory duties with a statutory remedy attached. The star of the show is section 18: if the promoter fails to hand over on time, the buyer can walk away and demand his entire money back with interest — an unconditional right the Supreme Court confirmed in M/s Newtech Promoters vs State of UP (2021). This topic is the most-tested in the unit and the source of every problem, so learn the duties as a chain of remedies.

What the promoter’s duties are, and why they matter

Here is the everyday picture: the promoter (the “builder” or “developer” — the person who constructs or causes to be constructed and sells the flats) owes the buyer a whole ladder of duties running from the first advertisement to five years after possession. The Act groups them in sections 11 to 18. The best way to hold them is by what stage they protect: before booking (honest disclosure), at booking (a written registered agreement, no big advance), during construction (stick to the sanctioned plan, use the escrow money properly), and at and after handover (convey title, fix defects, and — if he fails — refund with interest).

Section 11(4)(a), RERA, 2016: the promoter shall “be responsible for all obligations, responsibilities and functions under the provisions of this Act or the rules and regulations made thereunder or to the allottees as per the agreement for sale, or to the association of allottees, as the case may be, till the conveyance of all the apartments, plots or buildings … to the allottees, or the common areas to the association of allottees or the competent authority …”

In Simple Terms: From the day he starts selling until the day he hands over every flat and the common areas, the promoter carries full responsibility for the project — to each buyer under the agreement and to the Act. He cannot pass the buck; the duty stays on him.

A. Duties before and at booking (ss. 11–13)

1. Full disclosure and the project web page (s. 11). On getting his login, the promoter must create a web page on the Authority’s site and enter all project details — the registration, the number and type of apartments booked, approvals taken and pending, and the quarterly up-to-date status of the project. Every advertisement must quote the registration number and the Authority’s website.
2. Make key documents available to the buyer (s. 11). At booking he must make available the sanctioned and layout plans with specifications, and the stage-wise time schedule of completion including water, sanitation and electricity.
3. Veracity of advertisement / prospectus (s. 12). If a buyer pays an advance relying on a false statement in the advertisement, prospectus or model flat and suffers loss, the promoter must compensate him; and if the buyer chooses to withdraw, he is returned his entire investment with interest plus compensation.
4. No advance above 10% without a registered agreement (s. 13). The promoter shall not accept more than ten per cent of the cost of the apartment/plot/building as an advance or application fee without first entering into a written agreement for sale and registering it. The agreement must specify the construction particulars, the payment schedule, the possession date, and the rate of interest each side pays on default.

🔑 Section 13 is the buyer’s first shield: a builder who demands 30% or 50% “to block the flat” before any registered agreement is acting illegally, however normal the market treats it.

B. Duties during construction (ss. 14–16)

1. Adherence to sanctioned plans (s. 14). The project must be developed in accordance with the sanctioned plans, layout plans and specifications approved by the competent authority. The promoter cannot make alterations to a booked flat without that buyer’s consent, and cannot alter the sanctioned plans of the building or common areas without the written consent of at least two-thirds of the allottees. “Minor” architectural/structural changes needed by an engineer are allowed on intimation — but a major deviation is not.
2. Five-year structural-defect warranty (s. 14(3)). If any structural defect or defect in workmanship, quality or services is brought to the promoter’s notice within five years of possession, he must rectify it free of charge within thirty days; if he fails, the allottee gets compensation.
3. No transfer of the project without consent (s. 15). The promoter cannot transfer or assign his majority rights and liabilities in a project to a third party without the written consent of two-thirds of the allottees and the prior approval of the Authority.
4. Insurance (s. 16). He must obtain the notified insurances (title of the land and building; construction of the project).

C. Duties at and after handover (ss. 17–18)

1. Convey title (s. 17). The promoter must execute a registered conveyance deed in favour of the allottee (and hand over the common areas to the association of allottees) — in the absence of a local-law timeline, within three months of the occupancy certificate.
2. Return of amount and compensation (s. 18) — the buyer’s core remedy. If the promoter fails to complete or give possession by the agreed date (or because his registration is suspended/revoked), then, at the allottee’s choice:
   • if the allottee wishes to withdraw, the promoter must return the entire amount received, with interest and compensation; or
   • if the allottee does not wish to withdraw, the promoter must pay interest for every month of delay until possession.

Section 18(1), RERA, 2016: “If the promoter fails to complete or is unable to give possession of an apartment, plot or building … in accordance with the terms of the agreement for sale … he shall be liable on demand to the allottees, in case the allottee wishes to withdraw from the project, without prejudice to any other remedy available, to return the amount received by him … with interest at such rate as may be prescribed … including compensation … Provided that where an allottee does not intend to withdraw from the project, he shall be paid, by the promoter, interest for every month of delay, till the handing over of the possession, at such rate as may be prescribed.”

In Simple Terms: Miss the possession date, and the buyer holds the whip. He can either quit and get all his money back with interest, or stay and be paid interest for every month you keep him waiting. In Karnataka that interest rate is the SBI highest marginal cost of lending rate + 2% (Rule 16) — and, importantly, the same rate applies when the buyer defaults, so the law is symmetrical.

D. Who enforces it — the RERA remedy, not a civil suit

The decoy in every problem is that this looks like an ordinary breach of contract, tempting the answer toward a civil suit for damages. It is not. RERA gives a special, faster route: the aggrieved allottee files a complaint with the Authority (for refund/interest/completion under ss. 12, 14, 18, 19 the matter goes to the adjudicating officer for compensation), decided in about 60 days, and section 79 bars the civil court from entertaining such matters. So the advice is always: proceed under RERA, not by an ordinary suit.

🧩 WORKED EXAMPLE — advance paid, no sale deed after two years (Oct 2023 / Feb 2025 problem)

Facts. A couple, through a real estate agent, pay a Rs. 5 lakh advance to a developer for a site near the airport. Two years pass and the developer neither executes the sale deed nor gives possession. What is their remedy?

Rule. Section 13 bars taking an advance above 10% without a registered agreement for sale; s. 18 lets an allottee, on the promoter’s failure to give possession by the agreed date, withdraw and recover the entire amount with interest, or stay and claim interest for the delay; the remedy is a complaint to the Authority/adjudicating officer, not a civil suit (s. 79).

Apply. The developer has failed to perform for two years. The couple may invoke s. 18: they can withdraw and demand their Rs. 5 lakh back with interest (SBI MCLR + 2%, Karnataka Rule 16) and compensation, or insist on the site and claim interest for every month of delay. If the Rs. 5 lakh exceeded 10% and no registered agreement was signed, that is a separate s. 13 breach. They file before the Authority / adjudicating officer; the registered agent who handled the deal is answerable too (Topic 3).

Decoy. It looks like a plain contract breach calling for a civil suit for the return of money. The trap is forgetting that s. 79 ousts the civil court and RERA supplies a faster, stronger remedy (refund with interest, not just damages to be proved).

Conclusion. Advise the couple to complain under RERA and claim refund with interest under s. 18 — not to file an ordinary civil suit.

🧩 WORKED EXAMPLE — major deviation from the sanctioned plan (Aug 2024 problem)

Facts. An allottee buys a site relying on the sanctioned layout plan and pays an advance. The promoter later makes a major deviation from that plan. The allottee wants to rescind and recover his money.

Rule. Section 14 obliges the promoter to develop the project strictly per the sanctioned plans; he cannot make additions/alterations to a booked unit without that allottee’s consent, nor alter the building/common-area plans without two-thirds allottees’ written consent. A major deviation is a breach, and read with s. 18 the allottee may withdraw and recover his money with interest.

Apply. The change is a major deviation, not a permitted minor architectural adjustment, and it was made without the allottee’s consent. That breaches s. 14. Because the allottee relied on the sanctioned plan and no longer gets what he bargained for, he may rescind and recover his advance with interest under s. 18, by complaint to the Authority.

Decoy. “Advance already paid / site already chosen” suggests the buyer is bound to accept whatever is built. The trap is treating a major deviation as a minor variation the buyer must tolerate — s. 14 makes the buyer’s consent the dividing line.

Conclusion. The allottee wins: the unconsented major deviation breaches s. 14, and he may rescind and recover his money with interest under s. 18.

flowchart TD
    ROOT["Functions & Duties of the Promoter<br/>(ss. 11-18)"]:::root
    ROOT --> B["Before/at booking<br/>s.11 disclose + web page ·<br/>s.12 true advertisement ·<br/>s.13 no advance >10% without<br/>registered agreement"]:::leaf
    ROOT --> C["During construction<br/>s.14 stick to sanctioned plan +<br/>5-yr defect warranty ·<br/>s.15 no transfer w/o 2/3 + Authority ·<br/>s.16 insurance"]:::leaf
    ROOT --> D["At/after handover<br/>s.17 registered conveyance deed ·<br/>s.18 refund + interest OR<br/>interest for delay"]:::leaf
    D --> R{"Promoter fails to<br/>give possession on time?"}:::decide
    R -->|"Allottee withdraws"| R1["Full refund + interest<br/>+ compensation (s.18)"]:::warn
    R -->|"Allottee stays"| R2["Interest for every<br/>month of delay (s.18)"]:::leaf
    R1 --> F["Complaint to Authority /<br/>adjudicating officer (60 days);<br/>civil court barred (s.79)"]:::root
    R2 --> F
    classDef root fill:#FFF8DC,stroke:#000,stroke-width:1px,color:#000;
    classDef leaf fill:#E6F3FF,stroke:#1E3A8A,color:#000;
    classDef decide fill:#FEF3C7,stroke:#92400E,color:#000;
    classDef warn fill:#FDECEA,stroke:#B22222,color:#000;
    linkStyle default stroke:#888,stroke-width:1px;

Case Laws

• M/s Newtech Promoters and Developers Pvt. Ltd. vs State of Uttar Pradesh (2021) — the allottee’s right under section 18 to a refund of the amount with interest on the promoter’s failure to give timely possession is unconditional and absolute, not dependent on any further inquiry; the Court also clarified when a matter goes to the Authority versus the adjudicating officer.
• Imperia Structures Ltd. vs Anil Patni (2020) — a promoter’s failure to deliver on time entitles the allottee to a refund; RERA remedies are additional to the Consumer Protection Act, so the buyer may choose his forum.
• Pioneer Urban Land and Infrastructure Ltd. vs Union of India (2019) — recognised the homebuyer/allottee as a protected stakeholder (a “financial creditor” under the insolvency law), reinforcing the buyer-protective thrust behind the promoter’s RERA duties.
• Fortune Infrastructure vs Trevor D’Lima (2018) — a buyer cannot be made to wait indefinitely for possession; he is entitled to seek a refund of the money paid — the principle s. 18 now codifies.

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