Builders request for setting aside of Refund and Penalty Orders: Is it possible?


Status as on- 29/04/2020


The Covid-19 crisis has put a halt to the construction of various real estate projects which in turn has crippled the industry. The lockdown is slowly pushing the industry towards loss. Thus, to turn the corner from this situation of loss the builders are demanding for setting aside penalty orders against them.

Relief sought by Builders 

The lockdown is having a deterrent effect over the whole supply chain. The construction is stuck because of the lack of construction materials and laborer unavailability. 

Therefore, many developers of the National Capital Region requested the Real Estate Authorities of UP, Haryana, and Delhi, to not pass any adverse order for refund or recovery for a minimum period of six months.

RK Arora, the president of the Uttar Pradesh chapter of the National Real Estate Development Council stated that, 

“We have requested that no adverse order of refund or recovery be issued for a minimum period of six months. Cash flows of our industry are badly impacted in the present scenario and no customer is able to pay the due installments,”.

Furthermore, the builders mentioned that due to the COVID-19 outbreak financial markets are seeing an all-time low. Thus, promoters are not able to comply with the penalty orders as it will take a long time to get the required funds. Hence, they requested that either such orders be set aside or be reviewed. 

Moreover, the developers sought relief in delaying payment of compensation to homebuyers and more time to file quarterly updates on projects.


As the current situation has badly impacted the cash flows in the Real Estate Sector corrective measures are required. So far, there are no clues of upliftment of the lockdown, besides once its uplifted, developers will need a few more months to be on track. However, any relief or right provided under a statute or arising out of contractual agreement cannot be unilaterally waived off. Therefore, setting aside the refund order cannot be done as it would be against the principles of law.

Hence, the authorities in the process of decision making shall keep in mind the interest of all the stakeholders in the real estate industry. The interest of the homebuyer must not be prejudiced on the cost of the viability of the builder. As it is important for the government to strike a balance between the two.


Disclaimer- The above article is based on the interpretation of related judicial pronouncement and related laws. The readers are expected to take expert opinion before relying on this article. For more information and clarification, please connect to us at

Leave a Reply

Your email address will not be published. Required fields are marked *