The Bombay High Court set aside orders of Maha RERA and the Appellate Tribunal that had directed a promoter to execute an agreement for sale and pay interest on the booking amount, holding that the promoter was justified in terminating the allotment due to the allottee's failure to pay stamp duty and registration charges. The court found that mere transfer of funds to a bank account did not constitute actual payment of statutory dues to the concerned authorities, and the allottee's conduct demonstrated no genuine intent to complete the transaction.
Background & Facts
The Dispute
The case arises from a failed transaction for the purchase of Flat No. A-502 in a building constructed by JP Builders and Developers (the promoter) on Plot No. 1 in Airoli, Navi Mumbai. The promoter had entered into a Development Agreement with Airoli Cooperative Housing Society Ltd. on 27 April 2004 and obtained an Occupancy Certificate from Navi Mumbai Municipal Corporation on 17 January 2007. Vandana Nagendra Kharatmol and Mr. Nagendra Piraji Kharatmol (Kharatmols) initially booked the flat by paying a token amount of Rs.3,00,000/- on 28 May 2011 and further sums aggregating to Rs.12,30,000/- by 2 March 2012. However, the Kharatmols lost interest in purchasing the flat due to the pendency of a Writ Petition filed by the society regarding FSI allocation, and arranged for the transfer of their booking to Santosh Amarsingh Sandhu (the allottee).
Key Facts
- The Kharatmols paid a total consideration of Rs.12,30,000/- to the promoter by 2 March 2012 for Flat No. A-502
- On 11 July 2013, the promoter issued a fresh allotment letter in favour of the allottee (Sandhu) for the same flat, recording payment of Rs.12,30,000/- by the allottee
- The allottee claimed to have paid Rs.34,55,000/- to the Kharatmols under a MOU dated 27 June 2013 for transfer of rights under the allotment letter
- After securing a revised Commencement Certificate dated 26 April 2019, the promoter issued letters dated 3 May 2019 and 28 May 2019 calling upon the allottee to pay stamp duty and registration charges for execution of the Agreement for Sale
- A final notice dated 24 June 2019 granted one week to pay stamp duty and registration charges
- The allottee responded via email dated 30 June 2019 expressing inability to pay stamp duty due to financial constraints and offered two options: (1) promoter wait 3 months for fund arrangement, or (2) promoter bear stamp duty and claim reimbursement from home loan
- The promoter replied via email dated 2 July 2019 and 9 July 2019 calling for payment of stamp duty and registration charges
- On 9 July 2019, the allottee emailed the promoter claiming payment of stamp duty of Rs.4,35,000/- and registration charges of Rs.30,000/-, attaching four documents including bank statements showing transfer of Rs.4,65,000/- to Punjab National Bank account
- However, the bank statements revealed that the amount remained with Punjab National Bank and was never credited to the Stamp Authority or Registration Authority; on 18 January 2020, the allottee wrote to the bank seeking refund of Rs.4,65,000/- stating he would NEFT the amount to Maharashtra Government Statutory e-payment account
- The promoter served an advocate’s notice dated 9 July 2019 granting 15 days to pay stamp duty and registration charges, which the allottee did not comply with
- The promoter issued a termination notice dated 30 July 2019, refunding Rs.11,07,000/- (after deducting Rs.1,23,000/- as earnest money deposit) to the allottee
- The allottee remained silent for six months after the termination notice, only responding on 30 October 2019 with a letter totally silent on payment of stamp duty
- The allottee filed a complaint before Maha RERA in November 2019
Procedural History
- 6 March 2020: Maha RERA passed interim order directing promoter to execute registered Agreement for Sale with the allottee within 30 days
- 8 October 2020: Maha RERA passed final order disposing of the complaint and directing implementation of the interim order
- 22 October 2024: Maharashtra Real Estate Appellate Tribunal passed common judgment and order:
- Dismissed the promoter's appeal
- Partly allowed the allottee's appeal
- Upheld Maha RERA's order
- Directed promoter to pay interest on Rs.12,30,000/- at SBI MCLR + 2% w.e.f. 12 July 2016 till date of possession
- Directed adjustment of interest amount against balance consideration payable by allottee
- Directed promoter to hand over possession of the flat chosen by allottee upon project completion
- Restrained promoter from creating third party rights or charging floor rise charges
- 16 September 2026: Bombay High Court admitted the cross-appeals (Second Appeal No.116 of 2025 by promoter; Second Appeal No.603 of 2025 by allottee) and framed five questions of law
- 23 September 2026: Judgment pronounced
Relief Sought
The promoter (appellant in Second Appeal No.116 of 2025) sought:
- Setting aside of Maha RERA's order dated 8 October 2020 and Appellate Tribunal's order dated 22 October 2024
- Direction to the allottee to return the flat allotment
The allottee (appellant in Second Appeal No.603 of 2025) sought:
- Adjustment of Rs.12,30,000/- paid by Kharatmols to the promoter against the transaction
- Payment of interest on the booking amount
- Direction for execution of Agreement for Sale
The Legal Issue
The central questions were: (i) Whether the allottee proved payment of stamp duty and registration charges for execution and registration of the Agreement for Sale before Maha RERA and the Appellate Tribunal? (ii) Whether the promoter was justified in terminating the allotment of Flat No. A-502 by notice dated 30 July 2019 due to non-payment of stamp duty and registration charges? (iii) Whether Maha RERA and the Appellate Tribunal were justified in directing the promoter to execute the Agreement for Sale in favour of the allottee? (iv) Whether the Appellate Tribunal was justified in directing payment of interest on Rs.12,30,000/- at SBI MCLR + 2% w.e.f. 12 July 2016 till date of possession? (v) Whether Maha RERA and the Appellate Tribunal were justified in rejecting the allottee's contention that the consideration paid by Kharatmols ought to be adjusted in the transaction entered into by the allottee with the promoter?
Arguments Presented
For the Appellant/Promoter (JP Builders and Developers)
The promoter, represented by Mr. Vishal Kanade and Mr. Rajesh Vanzara, contended that Maha RERA and the Appellate Tribunal had grossly erred in holding the promoter responsible for non-execution of the Agreement for Sale. It argued that the allottee never actually paid stamp duty and registration charges to the concerned authorities, despite claiming via email dated 9 July 2019 that payment had been made. The promoter emphasized that it had issued five notices (dated 3 May 2019, 28 May 2019, 24 June 2019, 2 July 2019, and 9 July 2019) calling for payment of stamp duty and registration charges, to which the allottee only responded with an email dated 30 June 2019 expressing inability to pay and an email dated 9 July 2019 falsely claiming payment. The promoter submitted that the allottee's conduct - maintaining silence for six months after the termination notice, failing to approach the bank to verify challan generation, and seeking refund of the amount only to appropriate it for personal use - demonstrated absence of intent to complete the transaction. It argued that the transaction was validly terminated under Section 13 of RERA since the allottee failed to pay stamp duty and registration charges, which are prerequisites for execution of the Agreement for Sale. The promoter further contended that it had refunded Rs.11,07,000/- after deducting earnest money deposit, and the allottee's failure to encash the refund cheques absolved it of any liability.
For the Respondent/Allottee (Santosh Amarsingh Sandhu)
The allottee, represented by Mr. Kunal R. Maskar, contended that Maha RERA and the Appellate Tribunal had correctly appreciated the promoter's liability under Section 13 of RERA. It argued that the promoter had failed to execute the Agreement for Sale despite receiving more than 10% of the agreed consideration (Rs.12,30,000/-), thereby violating Section 13 of RERA. The allottee asserted that it had paid stamp duty of Rs.4,35,000/- and registration charges of Rs.30,000/- and had forwarded payment receipts to the promoter via email dated 9 July 2019. It relied on bank statements showing transfer of Rs.4,65,000/- to Punjab National Bank account as proof of payment. Regarding the adjustment claim, the allottee argued that under the MOU dated 27 June 2013 with the Kharatmols, it had paid various amounts aggregating to Rs.34,55,000/- to them, and thus was entitled to adjustment of the Rs.12,30,000/- paid by Kharatmols to the promoter. It cited the judgment in Laureate Buildwell Private Limited v. Charanjeet Singh (2021) 20 SCC 401 to support the contention that payments made by earlier allottees must be adjusted in fresh allotments. The allottee maintained that the promoter's termination notice was unjustified as it was ready, willing, and able to execute the Agreement for Sale upon payment of stamp duty, which it had allegedly already made.
The Court's Analysis
The court began by noting that the core dispute centered on whether stamp duty and registration charges were actually paid by the allottee to the concerned authorities. It observed that mere transfer of funds to a bank account, without generation of challans or e-payment receipts, did not constitute payment of statutory dues. The court placed significant reliance on the letter dated 18 January 2020, in which the allottee admitted to the bank that the challan for stamp duty had not been generated and requested refund of the amount to NEFT it to the Maharashtra Government Statutory e-payment account. This admission, coupled with the allottee's failure to approach the bank to verify challan generation after receiving the advocate’s notice dated 9 July 2019, led the court to conclude that the allottee had not actually paid stamp duty and registration charges.
The court rejected the allottee's reliance on bank statements as proof of payment, holding that transfer of funds to a bank account, without subsequent credit to the Statutory Authorities' accounts, could not be equated with actual payment. It emphasized that specific challans or e-payment receipts are mandatory for execution and registration of an Agreement for Sale under RERA, and their absence was fatal to the allottee's claim. The court found the allottee's conduct - waiting for the promoter to take necessary steps instead of proactively securing challans - indicative of a lack of genuine interest in completing the transaction.
On the justification for termination, the court held that the promoter was clearly justified in issuing the termination notice dated 30 July 2019. It noted that the promoter had been ready and willing to execute the Agreement for Sale immediately after sanction of plans on 26 April 2019, issuing multiple notices calling for payment of stamp duty and registration charges. The allottee's expressed inability to pay stamp duty due to financial constraints, coupled with the offer to let the promoter bear the charges, demonstrated absence of funds and intent to complete the transaction. The court found that Maha RERA and the Appellate Tribunal had erred by mechanically applying Section 13 of RERA without considering the factual reality of non-payment of statutory dues.
Regarding the interest direction, the court held that while the promoter was not entitled to retain the booking amount, interest could be awarded from 12 July 2016 (the date of allotment to Kharatmols, which the allottee stepped into) till actual refund. It approved the Appellate Tribunal's rate of SBI MCLR + 2% but clarified that interest would run till the date of actual payment, not till date of possession, since the transaction was terminated.
On the adjustment claim, the court held that Maha RERA and the Appellate Tribunal were justified in rejecting the allottee's contention. It found that the allotment letter dated 11 July 2013 made no provision for adjustment of payments made by Kharatmols, and the promoter had already refunded the booking amount to the Kharatmols. The court distinguished Laureate Buildwell on the grounds that the judgment dealt with timelines binding the promoter upon transfer of allotment, not adjustment of all payments made by earlier allottees. It stressed that without a specific arrangement in the allotment letter, the promoter could not be held liable to credit payments made by third parties.
The court concluded that the orders of Maha RERA and the Appellate Tribunal directing execution of the Agreement for Sale were unsustainable in light of the allottee's failure to pay stamp duty and registration charges, and set them aside accordingly.
The Verdict
The promoter partly succeeded in its appeal (Second Appeal No.116 of 2025) while the allottee's appeal (Second Appeal No.603 of 2025) was dismissed. The court set aside the order dated 8 October 2020 passed by Maha RERA in Complaint No. CC006000000100328, as well as the judgment and order dated 22 October 2024 passed by the Appellate Tribunal in Appeal Nos. AT00600000052787/20 and AT00600000052798/20. It directed the promoter to return to the allottee the amount of Rs.12,30,000/- along with interest @ SBI's MCLR + 2% w.e.f. 12 July 2016 till the date of actual payment. The court expressly noted that there shall be no order as to costs, and the pending Interim Application stood disposed of.
What This Means For Similar Cases
Statutory Payment Requires Actual Credit to Authority
The judgment clarifies that under RERA, payment of stamp duty and registration charges necessitates actual credit of funds to the concerned Statutory Authorities' accounts, not merely transfer to a bank account. Practitioners must ensure that clients obtain and retain challans or e-payment receipts as proof of payment, as bank statements alone are insufficient to discharge statutory obligations. This prevents parties from creating false paper trails of payment without actual compliance.
Termination Justified for Non-Payment of Statutory Dues
A promoter is justified in terminating an allotment under Section 13 of RERA if the allottee fails to pay stamp duty and registration charges despite repeated notices, even if more than 10% of the consideration has been paid. The judgment underscores that the promoter's readiness to execute the agreement and the allottee's financial inability or lack of intent to pay statutory dues are critical factors in assessing the validity of termination notices.
No Automatic Adjustment of Third-Party Payments
The allottee cannot claim adjustment of amounts paid to intermediaries (like the Kharatmols) unless the allotment letter specifically provides for such adjustment. Parties must ensure that tripartite agreements or allotment letters expressly contain clauses for adjustment of payments made by prior allottees to avoid disputes post-transfer of booking. The judgment prevents stretching judicial precedents beyond their factual matrix to create unintended liabilities.
