In a significant ruling, the Maharashtra Real Estate Appellate Tribunal (“Tribunal”) has upheld the rights of homebuyers under Section 18 of the Real Estate (Regulation and Development) Act, 2016 (“RERA”), directing the promoter of the Ekta Parksville project in Vasai to refund the entire amount paid by the complainants, including stamp duty, registration fees, MVAT, pre-EMI payments, and loan settlement costs. The appeal was filed against the Maharashtra Real Estate Regulatory Authority (“MahaRERA”) order seeking a full refund due to delays in possession beyond the agreed timeline.

Brief Facts:

The complainants booked a flat in the Promoter's Project, Ekta Parksville, for ₹32,17,400/- and executed an Agreement for Sale on 2 December 2014, with possession promised by December 2016. The complainants made payments amounting to ₹11,00,298, while HDFC disbursed ₹23,80,876 as a housing loan directly to the promoter. However, possession was delayed beyond the agreed timeline, prompting the complainants to file a refund claim before MahaRERA.

MahaRERA directed the promoter to refund the paid amount with interest from 1 January 2017, but the complainants appealed the decision, seeking a full refund, including stamp duty, registration fees, MVAT, brokerage, and pre-EMIs paid to HDFC.

Tribunal's Findings:

1. Absolute Right to Refund Under Section 18: The Tribunal held that homebuyers have an unconditional right to withdraw if possession is delayed. The promoter's justifications, including regulatory delays and the pandemic, were rejected.

2. Interest from Payment Dates: Interest at 2% above SBI's highest Marginal Cost of Funds based Lending Rate (“MCLR”) was awarded from the respective payment dates until full realization, modifying MahaRERA's previous order.

3. Refund of Additional Payments: The Tribunal directed a refund of stamp duty, registration fees, MVAT, brokerage, and pre-EMIs paid to HDFC, rejecting the argument that statutory charges paid to third parties are non-refundable.

4. Penalty for Non-Compliance: The promoter must refund the amount within 41 days or face additional interest from 1 April 2025. The complainants were also awarded ₹15,000 as costs.

MHCO Comment: This ruling strengthens homebuyer protections under RERA, reinforcing their absolute right to a refund with compensatory interest. The Tribunal's decision to expand the scope of refundable amounts underscores that delays will not go unpunished. This judgment is a strong deterrent against developers failing to meet contractual commitments. However, the judgment has come out after 8 years under appeal. Justice delayed is justice denied. Accordingly, it is important for the tribunals implement these orders and use this caselaw in a time bound manner.

This update was released on 21 Feb 2025.

The views expressed in this update are personal and should not be construed as any legal advice. Please contact us directly on +91 22 40565252 or legalupdates@mhcolaw.com for any assistance.

Legal Update Team
MANSUKHLAL HIRALAL & COMPANY
Advocates, Solicitors and Notaries
T: +91 22 40565252
Mumbai Office: Surya Mahal, 2nd Floor, 5, Burjorji Bharucha Marg, Fort, Mumbai-400 023, India
Delhi Office: Block C-9, Lower Ground Floor, Jangpura Extension, New Delhi - 110 014, India
www.mhcolaw.com

"Noted lawyer in the Real Estate practitioner from India" - Chambers & Partners

Please consider the environment before printing this email

The information contained in this communication is intended solely for the use of the individual or entity to whom it is addressed and others authorized to receive it. This communication may contain confidential or legally privileged information. If you are not the intended recipient, any disclosure, copying, distribution or action taken relying on the contents is prohibited and may be unlawful. If you have received this communication in error, or if you or your employer does not consent to email messages of this kind, please notify the sender immediately by responding to this email and then delete it from your system. No liability is accepted for any harm that may be caused to your systems or data by this message.