The long-running dispute between homebuyer Faisal Sabir Rashid and Lokhandwala Kataria Construction Pvt. Ltd. has reached a decisive conclusion after the MahaREAT (Maharashtra Real Estate Appellate Tribunal), on 3 December 2025, upheld the earlier MahaRERA order directing the builder to remove an illegal mortgage, deliver possession with OC, and pay delay interest.
This is why the case is newsworthy now—the appellate ruling finally confirms that the original 2024 MahaRERA order must be complied with, closing all escape routes for the builder.
The original order was passed in November 2024 by the then MahaRERA Chairman.
🧨 What Exactly Happened? Builder Sold the Flat… Then Mortgaged It!
The facts of the case are disturbing — and a cautionary tale for every homebuyer.
✔ February 11, 2019
Homebuyer Faisal Sabir Rashid purchased flats in the Lokhandwala Infrastructure Project and executed a registered Agreement for Sale with Lokhandwala Kataria Construction.
✔ March 15, 2019
Barely a month later, the builder illegally mortgaged the same flats to IDBI Trusteeship Services Ltd., despite already selling them.
This violates Section 11(4)(h) of RERA, which clearly prohibits mortgaging or creating any charge on a flat after a registered agreement with a homebuyer has been executed.
But Lokhandwala did it anyway.
📣 Homebuyer Approaches MahaRERA
Faisal Rashid approached MahaRERA seeking:
- Removal of the illegal mortgage,
- Possession with Occupation Certificate (OC),
- Interest for delayed possession,
- Declarations of RERA violation.
⚖ What the 2024 MahaRERA Order Held
The then MahaRERA Chairman ruled strongly in favour of the homebuyer:
1️⃣ Mortgage Created After Sale Is Invalid
Any mortgage made after the registered sale agreement is meaningless in the eyes of law.
The burden falls on the builder — not on the homebuyer — to clear this mortgage.
2️⃣ Builder Must First Remove the Mortgage
MahaRERA held that the developer must:
- Clear the loan/charge with IDBI Trusteeship
- Ensure the flat becomes encumbrance-free
Only then can possession be offered.
3️⃣ Possession Must Come WITH a Valid OC
No partial, provisional or “fit-out” possession is acceptable.
Only OC-backed legal possession is considered possession.
4️⃣ Delay Interest Payable Until Actual, Legal Possession
Delay interest continues until:
- Mortgages are cleared
- OC is issued
- The flat is delivered in compliance with RERA
This makes it financially painful for the builder to delay.
🏛 Builder’s Appeal Rejected (December 3, 2025)
Lokhandwala Kataria Construction tried to overturn the order in MahaREAT.
However, on 3 December 2025, the Appellate Tribunal:
- Upheld MahaRERA’s findings
- Refused to interfere with the original order
- Confirmed that homebuyers cannot be forced to accept mortgaged properties
This makes the 2024 order final and enforceable.
🗣 Important Statement From MahaRERA (Clarification of Powers)
In the original order, the then Chairman clarified:
✔ MahaRERA cannot order eviction or recovery of premises
These are civil court issues.
✔ But MahaRERA can enforce RERA obligations
Including:
- Handing over lawful possession
- Removing mortgages
- Paying delay interest
- Complying with OC requirements
This ensures homebuyers are not left helpless, even when a builder behaves fraudulently.
🔥 Why This Judgment Matters (Impact)
🚩 For Homebuyers
- If a builder mortgages your flat after selling it — it is illegal.
- You cannot be forced to deal with banks or trusteeship companies.
- You must receive an encumbrance-free flat.
- You are legally entitled to delay interest.
🚧 For Builders
This case delivers a loud message:
- You cannot use sold flats as collateral.
- Appeals won’t protect you from illegal acts.
- You must provide OC + clear title + timely possession.
🏙 For the Real Estate Sector
This ruling strengthens:
- Transparency
- Buyer confidence
- Accountability
Developers will now be wary of mortgaging already-sold units.
📰 Conclusion
This case is a landmark victory for homebuyers, proving that:
- The law protects buyers
- Illegal builder practices will not stand
- RERA and MahaREAT are ready to act decisively
Lokhandwala’s attempt to mortgage a sold flat after taking money has now been shut down firmly — ensuring justice for the buyer and setting a powerful precedent for the entire real estate industry.
Also Read: MahaRERA Rejects Arbitration Clauses in Real Estate Disputes, Upholds Homebuyer Rights
