The Bombay High Court has ruled that homebuyers who withdraw from a delayed housing project cannot be compelled to wait for the developer to obtain an Occupation Certificate (OC) before receiving a refund.
Justice Sandeep Marne dismissed an appeal filed by Sanklecha Constructions Pvt. Ltd. and its directors against directions to return Rs 22.58 lakh, along with interest, to two homebuyers who had invested in the Waterways project in Nashik.
The buyers had booked flats for Rs 43.13 lakh and paid Rs 22.58 lakh to the developer. Their Agreement for Sale was executed on May 16, 2016, with possession scheduled for December 31, 2017. With the project failing to meet the promised deadline, they approached the Maharashtra Real Estate Regulatory Authority (MahaRERA) in 2019, seeking cancellation and repayment.
MahaRERA allowed their request in August 2021 and ordered the developer to refund the amount with interest from January 1, 2018, as prescribed under Rule 18 of the Maharashtra RERA Rules. However, it had allowed the developer to make the payment after obtaining the OC, while permitting an earlier refund at its discretion.
The homebuyers challenged this condition before the Maharashtra Real Estate Appellate Tribunal. In November 2023, the tribunal removed the concession and ordered the developer to make the refund.
Before the High Court, Sanklecha Constructions argued that it had made genuine efforts to complete the project and that an immediate repayment could affect cash flow and other buyers. Its advocate said two of the five buildings were 95% complete, another was 85% complete and Building C-1 had reached 70%.
The buyers maintained that once they exercised their statutory right to withdraw, repayment could not be deferred until the OC was secured.
Justice Marne agreed, holding that Section 18(1) of the Real Estate (Regulation and Development) Act does not provide developers discretion over when such refunds must be made.
“Once the promoter fails to complete the project or is unable to give possession… allottee has a right to demand refund… and the promoter has an obligation to fulfil that demand,” the court said.
The court further noted that repayment with interest represents the “bare minimum” entitlement when a buyer exits due to project delay.
“Thus, on plain reading of Section 18 of RERA… the right to seek return of amount with interest is absolute and unqualified,” Justice Marne held.
The court dismissed the developer’s appeal and upheld the direction to refund Rs 22.58 lakh with interest from January 1, 2018.
Source: The Free Press Journal
