When the builder pleads COVID-19 to escape delay in handing over the flat

Almost every flat buyer in India whose project was running between March 2020 and the long tail of pandemic disruption has heard the builder's defence — the delay in handing over possession is on account of COVID-19, the agreement-for-sale's force-majeure clause is engaged, no delay compensation is payable, and the period of disruption must be added to the contractual possession date. The defence is rarely as clean as the builder pleads. Force majeure in Indian law runs on two analytically distinct tracks. Where the contract contains a force-majeure clause that names the supervening event, the Indian Contract Act, 1872 treats the matter as a contingent contract under Section 32 — the parties have allocated the risk in advance, and whether the event excuses performance is a question of construction of the clause's wording and proof that the event was the actual cause of the delay. Where the contract is silent on the event, the doctrine of frustration under Section 56 of the Indian Contract Act, 1872 applies — the contract is discharged only if the supervening event renders the performance impossible or radically different from what the parties contemplated, a high bar that the Supreme Court fixed in Satyabrata Ghose v Mugneeram Bangur & Co, AIR 1954 SC 44 and reaffirmed in Energy Watchdog v Central Electricity Regulatory Commission, (2017) 14 SCC 80. Imperia Structures Ltd v Anil Patni, (2020) 10 SCC 783 and the National Commission's COVID-era line have applied the framework to real-estate delays — the builder's force-majeure plea succeeds only on proof that the pandemic period substantively affected the specific construction activity, only for the actual duration of disruption, never where the project was already in delay before March 2020, and never as a blanket excuse for the entire COVID period. This guide tracks the framework, the recurring builder defences, and the buyer's rebuttal.

The COVID-19 force-majeure defence in Indian real estate is the single most-pleaded and least-scrutinised excuse for delay in handing over possession. Builders invoke it as a blanket — the contract specifies a possession date, the pandemic disrupted construction across the country for years, the force-majeure clause is engaged, the contractual obligation is suspended, and no delay compensation runs. Buyers, having paid 80% of the consideration and EMIs on home loans, often accept it. They should not. Indian contract law treats the two limbs of force-majeure with different rigour. The contractual limb under Section 32 of the Indian Contract Act, 1872 — contingent contracts dependent on an uncertain event — turns on the clause's actual wording and on proof that the event caused the specific delay. The statutory limb under Section 56 of the Indian Contract Act, 1872 — frustration of contracts — turns on impossibility or radical change in the contractual obligation, not on inconvenience or extra cost. The Supreme Court in Energy Watchdog v Central Electricity Regulatory Commission, (2017) 14 SCC 80 reaffirmed that the two limbs are exhaustive — there is no third doctrine of "commercial impossibility" or "general hardship" that excuses performance. For the residential buyer, the framework means that the builder's COVID plea must clear three tests — the clause must on its terms cover the event, the event must have actually disrupted the specific work, and the duration claimed must match the actual disruption.

The two legal pathways — Section 32 versus Section 56

The Indian Contract Act, 1872 deals with supervening events through two distinct provisions. Section 32 governs contingent contracts — contracts that are to do or not to do something if an uncertain future event happens; the contract is enforced according to its terms. Where the parties have written a force-majeure clause into the agreement for sale, the clause is a contingent provision under Section 32 — the obligation to deliver possession on a fixed date is suspended on the happening of the named event. Section 56 governs frustration — the doctrine of supervening impossibility. A contract to do an act which after the contract is made becomes impossible, or by reason of some event which the promisor could not prevent, unlawful, becomes void when the act becomes impossible or unlawful. The Supreme Court in Energy Watchdog v Central Electricity Regulatory Commission, (2017) 14 SCC 80 fixed the relationship — Section 56 applies when the contract is silent on the supervening event; Section 32 applies when the contract has provided for it; the two pathways are mutually exclusive.

The choice of pathway changes everything for the COVID defence. Under Section 32, the question is whether the clause's wording covers the pandemic — many older builder agreements (signed before 2020) listed "act of God, war, riot, strike, lockout, government order" without specifically mentioning epidemic or pandemic; whether the residual phrase "act of God" covers a pandemic is contested. Under Section 56, the question is whether the pandemic rendered the construction impossible — and the answer in Energy Watchdog is that "mere onerousness" or "increased cost" or "delay caused by general disruption" does not amount to frustration; the bar is true impossibility or radical change.

What Energy Watchdog actually held

The Supreme Court's two-judge bench in Energy Watchdog v Central Electricity Regulatory Commission, (2017) 14 SCC 80 dealt with two power-purchase agreements where the supplier's Indonesian-coal source had become uneconomic on account of an Indonesian regulatory change that fixed coal prices. The supplier pleaded frustration under Section 56 and, in the alternative, force majeure under the contractual clause. The Court rejected both. On Section 56, the Court restated the rule from Satyabrata Ghose v Mugneeram Bangur & Co, AIR 1954 SC 44 — frustration runs only when the performance becomes objectively impossible or fundamentally different from what was contemplated; commercial hardship, increased cost, fluctuation in prices, do not frustrate. On the contractual clause, the Court held that the supplier had assumed the risk of price fluctuation in the supply source and that the regulatory change in Indonesia did not engage the clause's listed events.

Three propositions emerge from Energy Watchdog that frame the COVID real-estate dispute. First, where a contract contains a force-majeure clause, Section 32 is the governing provision; Section 56 is excluded. Second, the clause's wording controls — the burden is on the party invoking force-majeure to show that the supervening event is one of the listed events and that it has caused the specific failure to perform. Third, "hardship" and "commercial impossibility" are not the test; the test is the clause's terms or, where the clause is absent, true impossibility under Section 56.

The COVID litigation — how the courts have applied the framework

The first Indian high-court order on COVID force-majeure came from Delhi in M/s Halliburton Offshore Services Inc v Vedanta Ltd, (2020) SCC OnLine Del 542 in April 2020. Justice Anup Jairam Bhambhani granted an ad-interim injunction against invocation of a bank guarantee, accepting in principle that the nationwide lockdown declared under the Disaster Management Act, 2005 was a force-majeure event. The same Court in the substantive order later that month declined to make the injunction absolute on the facts — the contract was substantially in default before COVID. The pattern was set — COVID may be a force-majeure event but the contractual default cannot be retrofitted to COVID where the breach pre-dated the pandemic.

The Bombay High Court in Standard Retail Pvt Ltd v M/s G S Global Corp, (2020) SCC OnLine Bom 704 declined relief to a steel-importer who sought to invoke COVID force-majeure to discharge the obligation to take delivery and pay for steel imports — the contracts of import were performance-able, the lockdown affected only the importer's onward business, and the inability to resell at a profit was commercial hardship, not frustration. The Court anchored its reasoning in Energy Watchdog.

The National Consumer Disputes Redressal Commission and several State Authorities under RERA, 2016 have applied the framework with care in the real-estate context. The recurring holding is that the builder gets the benefit of the actual duration of construction stoppage during the lockdowns — typically the period from 24 March 2020 to 31 August 2020 for the first wave, with second-wave extensions varying by state — but not the entire calendar year, and not for a project that was already in delay before March 2020. Imperia Structures Ltd v Anil Patni, (2020) 10 SCC 783 confirmed that the consumer forum retains jurisdiction in parallel with RERA, 2016 and that the buyer's election of forum is final.

The RERA extension under Section 6 — what it does and does not do

The Real Estate (Regulation and Development) Act, 2016 contains its own force-majeure mechanism. Section 6 of RERA, 2016 allows the Authority to extend a project's registration "where the registration is granted by the Authority under Section 5, the Authority may extend the registration granted to a project for such time and on such conditions as may be prescribed by the State Government, only on account of force majeure." The Explanation to Section 6 defines force majeure narrowly as "a case of war, flood, drought, fire, cyclone, earthquake or any other calamity caused by nature affecting the regular development of the real estate project." During COVID, the Ministry of Housing and Urban Affairs in May 2020 advised State Authorities to treat the pandemic as a force-majeure event under Section 6 and extend project registrations by six months automatically, with further extensions case-by-case.

The Section 6 extension does two things and stops there. It extends the project's RERA registration so that the project does not lapse and the promoter does not face Section 71 / Section 59 penalties for an expired registration. It does not, by itself, modify the buyer-builder agreement for sale. The contractual possession date in the agreement runs on its own terms; the Section 18 delay-interest clock is calibrated to that contractual date, not to the extended RERA registration date. The State Authorities have separately considered, on Section 18 applications, whether the COVID period excuses the contractual delay — and they have applied Energy Watchdog and the contractual force-majeure clause analytically.

The contractual clause — what to look for

The buyer's first move on receiving the builder's COVID force-majeure letter is to read the agreement for sale's force-majeure clause word by word. Three features matter.

First, the list of events. Builder agreements vary widely. Older agreements (2010s) typically listed "act of God, war, riot, strike, lockout, civil commotion, fire, earthquake, flood, government order" without specifying epidemic or pandemic. Newer agreements (post-2020) explicitly include "pandemic, epidemic, public-health emergency, lockdown". The buyer's argument is straightforward when the older clause is in play — "act of God" has historically been read in Indian law as a natural calamity (storm, flood, earthquake) and not as a public-health event; "government order" is engaged only for the duration of the order. The pandemic is not an "act of God" on a literal reading; the residual phrase "any other event beyond the promoter's reasonable control" is a catch-all but bears the same burden of causation.

Second, the procedural requirement. Most clauses require the promoter to give written notice of the force-majeure event to the buyer within a fixed period (typically 30 days) after the event, identifying the event, the expected duration, and the activities affected. A builder that did not give that notice during 2020 cannot retrospectively invoke the clause in 2024 when handing over an OC-less unit. The procedural failure is fatal — the National Commission has repeatedly held that the notice requirement is mandatory.

Third, the duration and consequence. The clause typically provides that the obligation is suspended for "the period of the event" and resumes thereafter. The builder bears the burden of showing the precise duration of disruption to its specific project — through site-supervisor records, contractor's letters confirming labour absence, and government orders applicable to the project's location. Blanket assertion of "twenty-four months of pandemic disruption" without specific proof is rejected.

What the builder must prove — the three causation tests

The Supreme Court's framework in Energy Watchdog and the National Commission's COVID-era orders converge on three causation tests the builder must clear to succeed on the COVID force-majeure plea.

First, the event must fall within the clause's listed events on a fair reading. The builder cannot smuggle COVID into "act of God" if "act of God" has a settled narrower meaning. The buyer's submission cites the Halsbury's Laws of India entry on "act of God" and the line of decisions from Naihati Jute Mills Ltd v Khyaliram Jagannath, AIR 1968 SC 522 limiting the phrase to natural calamities and physical events.

Second, the event must have actually disrupted the specific construction activity. The builder must show — through dated site records, contractor invoices, labour-attendance registers, and contemporaneous correspondence with sub-contractors — that work on the buyer's tower stopped from a specific date and resumed on a specific date. Where the project was substantially complete before March 2020 and only finishing works (painting, plumbing, electricals) remained, the disruption claim is calibrated to the actual finishing-stage workforce, not to the construction stage's larger workforce.

Third, the duration must match. The pandemic's chronology is in the public record — the first national lockdown was 24 March 2020 to 31 May 2020 with phased unlocking; some states had additional restrictions; the second wave's restrictions were April-June 2021 with state-by-state variation. A builder that claims thirty months of force-majeure extension on a project that had eighteen months of pandemic disruption has overclaimed. The State Authorities have routinely trimmed the builder's claimed extension to the actual government-restricted period.

When the project was already in delay before March 2020

The cleanest buyer-win is where the project was already in delay before the pandemic struck. The Supreme Court in DLF Home Developers Ltd v Capital Greens Flat Buyers Assn, (2020) SCC OnLine SC 1056 and the National Commission's orders apply the rule consistently — the COVID force-majeure plea cannot resurrect a contractual obligation that was already breached. If the contractual possession date was December 2019 and the builder had not delivered, the breach crystallised in December 2019; the buyer's right to delay compensation under Section 18 of RERA, 2016 and the buyer-builder agreement runs from that date. The COVID period adds neither suspension nor extension to a pre-existing breach.

The same logic applies where the project's RERA registration extended the completion date past March 2020 but the builder's earlier non-compliance had already triggered Section 18 rights. The Section 6 extension is for the project's registration; it does not erase the buyer's already-vested rights.

The Section 56 frustration plea — when the clause is absent

A subset of older agreements has no force-majeure clause at all, or has one so narrowly drafted that the builder cannot invoke it. The fallback is Section 56 of the Indian Contract Act, 1872 — frustration. The threshold under Section 56 is high. Satyabrata Ghose v Mugneeram Bangur & Co, AIR 1954 SC 44 — itself a real-estate case from the 1940s where the contract for sale of a plot was claimed to be frustrated by World War II requisition of part of the land — established that frustration applies only where the supervening event "strikes at the root of the contract" and renders performance impossible or radically different. Mere delay, inconvenience, or commercial hardship is not frustration. Energy Watchdog reaffirmed this — the "non-occurrence of the assumed state of things" test is to be applied with care, and frustration is not a "well-known doctrine of mitigation".

For the COVID-real-estate dispute, Section 56 almost never helps the builder. The construction was not rendered impossible — it resumed when lockdowns lifted. The contract was not radically changed — the buyer-builder bargain remained intact, with delivery delayed by months rather than years. The builder's argument that the contract is frustrated is treated as a forensic stretch.

The buyer's rebuttal — the three documents

The buyer's rebuttal of the builder's COVID force-majeure invocation runs on three documents.

The first is the written reply to the builder's force-majeure notice. The reply, sent within 30 days of receipt, denies the invocation, demands particulars of the affected activities and durations, asserts that the contractual notice requirement was not complied with (if applicable), and reserves the right to claim delay compensation under Section 18 of RERA, 2016 and the agreement.

The second is the RERA project page printout. The State RERA portal carries the project's quarterly progress reports filed by the promoter under Section 11(1) of RERA, 2016 — these reports record the construction stage at each quarter and reveal whether the project was on track or in delay before March 2020. The buyer who finds that the project was at 40% completion in March 2020 against a contractual completion date of June 2020 has a strong rebuttal.

The third is the RTI response from the local body confirming the actual government-ordered construction-stoppage period for the project's location. The MoHUA advisory of May 2020 prescribed a six-month automatic extension; many states reduced or modified it. The local body's response anchors the actual duration argument.

The Section 18 refund route — when the buyer wants to exit

The buyer who has had enough of the COVID-extended timeline has the unconditional right under Section 18(1)(a) of RERA, 2016 to withdraw from the project and recover all amounts paid with interest at the prescribed rate. The Supreme Court in Newtech Promoters and Developers Pvt Ltd v State of UP, (2021) SCC OnLine SC 1044 confirmed that the right is unconditional — the builder's COVID force-majeure plea is not a defence to the Section 18(1)(a) refund. The plea may, depending on the State Authority's view, reduce the period for which delay-interest under Section 18(1)(b) runs, but it does not block the buyer's exit.

The interplay matters when the buyer is choosing between continuing in the project with delay interest and exiting with refund-plus-interest. Where the State Authority is likely to allow the builder some COVID extension (say twelve months) and the contractual delay is twenty-four months, the buyer who continues recovers interest for twelve months of net delay; the buyer who exits recovers principal plus interest for the same twelve months of net delay calibrated to the principal. The economic calculation usually favours exit where the project's completion is genuinely uncertain.

The consumer-protection track

The Consumer Protection Act, 2019 runs in parallel. Pioneer Urban Land & Infrastructure Ltd v Govindan Raghavan, (2019) 5 SCC 725 and Wing Commander Arifur Rahman Khan v DLF Southern Homes Pvt Ltd, (2020) 16 SCC 512 confirmed that the consumer forum applies the asymmetric-clause doctrine to builder-buyer agreements — heavy default-interest on the buyer with derisory delay-compensation by the builder is an unfair contract term, and the National Commission's prescribed-rate interest is the substantive remedy. The COVID force-majeure plea is treated as a contractual defence to be tested on the same Energy Watchdog framework.

The consumer track's distinctive lever is the Section 39(1)(d) punitive-damages head — egregious conduct by the builder (refusal to acknowledge delay, retrospective invocation of force-majeure without contemporaneous notice, retention of the buyer's money without giving accounts) attracts punitive damages over and above the prescribed-rate interest. The State and National Commissions have applied this in the COVID delay-line for builders whose conduct went beyond ordinary delay.

Three traps the buyer should avoid

The first is the silence-is-consent trap. The builder writes to the buyer in 2020 invoking force-majeure for "an indefinite period of pandemic-related disruption"; the buyer does not reply; the builder treats the silence as acquiescence and pleads it as estoppel in the later RERA complaint. The discipline is to reply in writing — by registered post or email — denying the invocation and reserving rights, even where the buyer has no objection in principle.

The second is the supplemental-agreement trap. The builder offers a "revised possession date" supplemental agreement that adds the entire pandemic period to the original date in exchange for a small concession (a parking slot, a maintenance-charge waiver). The buyer who signs is contractually bound to the new date; the Section 18 clock is reset; the COVID force-majeure question is moot because the buyer has agreed to the new date. The discipline is to refuse the supplemental agreement and to insist that the force-majeure question be litigated on its merits.

The third is the OC-with-force-majeure trap. The builder hands over possession in 2024 of a unit without OC, citing COVID for the OC delay, and asks the buyer to take possession on the implicit understanding that the OC will issue. The buyer should treat the OC delay separately under Section 14(3) of RERA, 2016 and the possession question under Section 18 — the COVID plea cannot waive either the OC duty or the delay-interest right.

The position consolidated

The builder's COVID force-majeure defence is not a blanket excuse for delay in handing over possession. The Indian Contract Act, 1872 distinguishes two pathways — Section 32 governs the contractual force-majeure clause where the clause is present; Section 56 governs frustration where the contract is silent. The Supreme Court in Energy Watchdog v Central Electricity Regulatory Commission, (2017) 14 SCC 80 fixed the framework — the contractual clause is read on its terms with the burden of proof on the party invoking it; frustration is reserved for true impossibility, not commercial hardship. Satyabrata Ghose v Mugneeram Bangur & Co, AIR 1954 SC 44 anchors the high frustration threshold. The COVID-era courts in M/s Halliburton Offshore Services Inc v Vedanta Ltd, (2020) SCC OnLine Del 542 and Standard Retail Pvt Ltd v M/s G S Global Corp, (2020) SCC OnLine Bom 704 applied the framework with discipline — COVID is a force-majeure event for the actual disruption period, not a calendar-year shield. Imperia Structures Ltd v Anil Patni, (2020) 10 SCC 783 and the National Commission's RERA/CPA orders confirm that the buyer's rights under Section 18 of the Real Estate (Regulation and Development) Act, 2016 and Sections 2(11), 35 and 39 of the Consumer Protection Act, 2019 survive the COVID plea. Section 6 of RERA, 2016 extends the project's registration but does not modify the buyer-builder agreement's possession date or the buyer's vested Section 18 rights. The buyer who tests the builder's plea on the three causation tests — the clause covers the event, the event disrupted the specific work, the duration matches — almost always finds that the builder has overclaimed and that delay compensation runs for the net delay after the genuine COVID period is excluded.

This guide is general information about Indian law for adult readers and is not legal advice. The force-majeure regime is governed by the Indian Contract Act, 1872, the Real Estate (Regulation and Development) Act, 2016 and the State RERA Rules, and the case law of the Supreme Court, the High Courts and the National Consumer Disputes Redressal Commission, which may have changed since this guide was last reviewed. For a specific dispute on a builder's COVID-related force-majeure invocation, consult a lawyer and file a complaint before the State Real Estate Regulatory Authority and, in parallel, before the District, State or National Consumer Commission with appropriate pecuniary jurisdiction.