The Bombay High Court has set aside MahaRERA and Maharashtra Real Estate Appellate Tribunal orders that directed a Navi Mumbai promoter to execute a registered agreement and allot a flat of the buyer’s choice. Justice Sandeep V. Marne held that the builder was justified in cancelling the booking after the allottee failed to pay stamp duty and registration charges, even though money had been moved to a bank account.
In a judgment pronounced on 23 September 2026 in cross second appeals — Second Appeal No. 116 of 2025 by JP Builders and Developers through proprietor Jayant Shashikant Parikh, and Second Appeal No. 603 of 2025 by allottee Santosh Amarsingh Sandhu — the Court ruled that Section 13 of the Real Estate (Regulation and Development) Act, 2016 cannot be used to force an agreement when the promoter was ready and willing and the buyer did not complete registration formalities.
The dispute arose from Plot No. 1, Sector 19, Airoli. CIDCO had leased the land to Airoli Cooperative Housing Society Ltd. After the plot was split, the society executed a development agreement with JP Builders. Wings C and D were constructed and received occupancy certificate in January 2007. Balance FSI remained. The society later sought additional FSI linked to a high-tension-line plot and filed a writ petition in 2009 claiming a much larger entitlement than CIDCO allotted. While that petition was pending, the promoter booked flats in a proposed high-rise planned as ground plus 30 floors.
Vandana and Nagendra Kharatmol reserved Flat A-502 on the fifth floor of the proposed A-wing for ₹48.75 lakh and paid ₹12.30 lakh by March 2012. Construction did not start because of the pending writ. In June 2013 they entered a private arrangement with Sandhu. The promoter issued a fresh allotment letter dated 11 July 2013 in Sandhu’s name for the same flat and same price. That letter recorded payment of ₹12.30 lakh by Sandhu. The Court later treated this as a new booking, not an automatic continuation of the Kharatmols’ payments.
The society lost the writ in January 2016. A supplementary CIDCO agreement followed in April 2017. Revised commencement certificate dated 26 April 2019 sanctioned a scaled-down building of ground plus 19 floors with 93 units. The originally allotted A-502 was never built. On 3 May 2019 the promoter wrote to Sandhu asking him to pay stamp duty and registration charges and execute a registered agreement for sale. He was also asked to choose another flat. He selected Flat 1208. The promoter agreed, subject to floor-rise charges of ₹1.75 lakh, which the Tribunal later barred. Reminders followed on 28 May and 24 June 2019.
Sandhu’s email of 30 June 2019 said he did not have cash for stamp duty. He offered two options: wait three months, or let the promoter pay stamp duty and recover it from a sanctioned State Bank of India home loan of ₹40 lakh. He also wrote that only about ₹33 lakh remained payable out of ₹48.75 lakh — a statement the High Court later used against his claim that far more had already been paid.
On 9 July 2019 Sandhu emailed that he had paid ₹4.35 lakh stamp duty and ₹30,000 registration charges and attached documents. The promoter’s advocate notice the same day said proof had not been made available. Sandhu’s advocate replied on 19 July that payment had been made. On 30 July 2019 the promoter terminated the transaction, saying no payment advice for ₹4.65 lakh had been given, and later sent refund cheques of ₹11.07 lakh after deducting ₹1.23 lakh as earnest money. Sandhu did not encash them.
Documents produced before the High Court showed why the Court rejected the payment claim. Sandhu had transferred ₹4.65 lakh to a Punjab National Bank account used for generating e-challans. The amount never reached the stamp or registration authorities. On 18 January 2020 he wrote to the bank that he was unaware how to generate the challan, that the branch had stopped issuing e-SBTR, and that he wanted the money back so he could pay the government later. The bank reversed the amount. There is no record that he thereafter paid stamp duty. The Court held that transferring money to a banker is not payment of stamp duty. Challans required to be annexed to a registered agreement were never generated.
MahaRERA, in an interim order dated 6 March 2020 in Complaint No. CC006000000100328, directed execution of a registered agreement for another flat of equal area as per the complainant’s choice, citing Section 13 because more than 10 per cent had been paid and no agreement existed. The final order dated 8 October 2020 largely made that interim direction absolute, noting the promoter had not challenged the interim order and that lockdown had intervened. The Appellate Tribunal on 22 October 2024 dismissed the promoter’s appeal and partly allowed the allottee’s appeal. It upheld execution of the agreement, barred floor-rise charges and third-party rights, and directed interest on ₹12.30 lakh at SBI MCLR plus 2 per cent from 12 July 2016 till possession, to be adjusted against balance consideration.
The High Court admitted both second appeals on 16 September 2026 and framed five questions of law. It answered them against the allottee on the agreement and against automatic credit of the earlier booking, while protecting the proved payment.
On the first question, the Court held the allottee did not pay stamp duty or registration charges before 30 July 2019. MahaRERA and the Tribunal had not examined this evidence at all.
On termination and Section 13, the Court said the issues were linked. If cancellation was valid, there was no question of forcing an agreement. The promoter sent repeated notices after the revised CC asking only for stamp duty so that registration could happen. There was no demand for further sale consideration at that stage. The allottee first pleaded lack of funds, then created an impression of payment, stayed silent for months after cancellation, and later withdrew the banked amount. “The promoter is not expected to wait endlessly,” the Court observed. It also noted that some allotment letters are hoarded and traded; a genuine purchaser stuck for years would ordinarily produce challans and push for registration. Section 13 does not convert an old allotment letter into a right to pick any flat when the buyer does not complete the steps needed for registration.
On interest, once cancellation was upheld, the direction to adjust interest against balance consideration became academic. The promoter still could not retain ₹12.30 lakh or deduct earnest money. Counsel for the builder left the interest question to the Court. Justice Marne directed refund of the full ₹12.30 lakh with interest at SBI MCLR plus 2 per cent from 12 July 2016 till actual payment — the same start date and rate the Tribunal had used — as solace for the long wait, even though the buyer was responsible for non-execution after 30 July 2019.
On the fifth question, the Court rejected Sandhu’s claim that payments made by the Kharatmols, plus amounts he said he paid them under a 27 June 2013 memorandum of understanding, should be treated as ₹28.75 lakh paid to the promoter. The 2013 allotment letter recorded only Sandhu’s ₹12.30 lakh and contained no adjustment clause. The Tribunal had found the earlier allottees surrendered the booking and received their ₹12.30 lakh back. Sandhu’s own June 2019 email saying about ₹33 lakh was still payable demolished the larger payment claim. Reliance on the Supreme Court decision in Laureate Buildwell Private Limited v. Charanjeet Singh was held inapposite. That case concerned whether original timelines bind a transferee. It does not require a promoter to credit every rupee paid by a previous allottee when the documents show a fresh allotment and a refund to the first buyers.
The operative order sets aside MahaRERA’s order dated 8 October 2020 and the Tribunal’s judgment dated 22 October 2024. The promoter must return ₹12.30 lakh with interest at SBI MCLR plus 2 per cent from 12 July 2016 until actual payment. The promoter’s second appeal is partly allowed. The allottee’s second appeal is dismissed. There is no order as to costs.
For homebuyers, the judgment is a warning on two common practices. First, an NEFT to a bank account meant for stamp duty is not proof of payment until the government receives the money and challans exist. Second, taking over someone else’s allotment letter does not automatically transfer credit for what the first buyer paid the builder, unless the fresh documents say so. For promoters, cancellation after repeated written demands for stamp duty can survive High Court scrutiny — but the proved booking amount cannot be forfeited.
For regulators, the Court has signalled that Section 13 is not mechanical. Readiness of the promoter and actual conduct of the allottee have to be examined. Orders that skip the stamp-duty paper trail risk being called perverse.
Also Read: MahaRERA Orders Refund Paid for Seven Flats in Godrej RKS Project
