Case Note & Summary
The dispute arose under the Real Estate (Regulation and Development) Act, 2016 between a common developer and four sets of allottees for flats in project Aaryavarta at Mahale Farm, Off Mumbai-Agra Road, Nashik. Agreements for sale were executed in January and October 2013 with a promised possession date of 31/12/2017. The allottees paid various amounts under the agreements. In 2013, an ex-parte injunction order was passed by the High Court in third-party litigation and served upon the developer. The developer informed the allottees about the litigation through letters dated 22/05/2013, 12/07/2013 and 23/12/2015, and on 16/02/2016 informed them that the court decision had come in favour of the developer. The Occupation Certificate for the building was obtained on 11/07/2018. By first letter dated 21/12/2018, the developer informed the allottees that possession could be given, attached a copy of the OC, and demanded balance payment. By second letter dated 01/09/2019, the developer informed that the Completion Certificate was also obtained and again asked the allottees to make remaining payment and take possession. On 18/02/2020, the allottees demanded refund of amounts paid, alleging that the title of the land was defective and the developer was not in a position to offer possession for use and occupation. On 23/03/2020, the allottees filed complaints before MahaRERA seeking refund under Section 18 of the Act. MahaRERA by common order dated 17/02/2022 rejected the complaints refusing refund but kept open the claim of compensation under Sections 18(2) and 18(3). The allottees appealed to the Maharashtra Real Estate Appellate Tribunal, which by common judgment and order dated 30/01/2024 allowed the appeals, set aside the MahaRERA order, and directed the developer to refund all amounts including taxes and registration fees with interest from the date of receipt, with default interest and continuing charge on the flats until refund. The developer then filed four second appeals before the Bombay High Court. By order dated 19/06/2025, the High Court framed two substantial questions of law: (A) whether the allottee under Section 18 has an unqualified right to withdraw from the project even after possession with Occupation Certificate was offered; and (B) whether possession offered by the developer along with Occupation Certificate under Section 19(10) can only be possession without any litigation over the subject property. The appeals were admitted on these questions and heard finally by consent. The appellant argued that an allottee cannot wait indefinitely to demand refund, and that the decision must be made within a reasonable time, with Section 19(10) providing statutory indication of two months from receipt of OC; meanwhile the developer cannot sell the flat to a third party. The respondents argued that Sections 18(1)(a), 19(4) and 19(10) must be harmoniously construed, and that possession must be in terms of the agreement; they alleged defective title and contended that the allottee has an unqualified right to seek refund without any time limit. The Amicus Curiae assisted the court by taking it through various provisions and citing Imperia Structures Ltd. v. Anil Pant & Anr. The court considered Sections 2(q), 2(zf), 4(2)(l), 12, 18 and 19(10) of the Act. The extracted portion of the judgment ends before the final operative order, so the final decision of the High Court is not available in the provided text.
Headnote
A) Real Estate Regulation - Withdrawal from Project - Allottee's Right to Refund under Section 18 - Real Estate (Regulation and Development) Act, 2016, Sections 18, 19(10) - The appeals raised substantial question whether allottee has an unqualified right to withdraw from the project at any time after possession with Occupation Certificate was offered, even after the agreed date. The High Court noted that OC was obtained on 11.07.2018, possession was offered on 21.12.2018 and 01.09.2019, but the allottees demanded refund on 18.02.2020 citing defective title. The court admitted the appeals on this question and heard parties finally. Held that the question is a substantial question of law requiring interpretation of Sections 18 and 19(10) (Paras 3-9). B) Real Estate Regulation - Possession under Section 19(10) - Whether Possession Offered with OC Must Be Litigation-Free - Real Estate (Regulation and Development) Act, 2016, Section 19(10) - The court framed second question whether possession offered by the developer along with Occupation Certificate can only be possession without any litigation over the subject property, considering allottees' allegation of defective title due to third-party litigation and ex-parte injunction. The court noted the factual background of litigation and communications to allottees, and the Appellate Tribunal's direction to refund. Held that this issue also raises a substantial question of law for adjudication (Paras 3-4, 8-9).
Issue of Consideration
(A) Whether the allottee, under section 18 of Real Estate (Regulation And Development) Act, 2016, has an unqualified right to withdraw from the project to mean that he can choose to decide withdrawal from project after whatever time he decides at his own will, when possession of a flat/apartment/plot/building with Occupation Certificate is already offered? (B) Also it needs to be considered whether the possession being offered by the developer alongwith Occupation Certificate (with reference to section 19(10) of the said Act) can only be possession without any litigation over the subject property?
Law Points
- Section 18 of RERA makes promoter liable on demand to allottee if promoter fails to complete or is unable to give possession in accordance with agreement by date specified
- Section 19(10) requires allottee to take possession within two months of issue of occupancy certificate
- Section 12 allows allottee to withdraw and get entire investment with interest if any false statement in advertisement or prospectus
- promoter must declare legal title and encumbrances under Section 4(2)(l)
- completion certificate and occupancy certificate are defined under Sections 2(q) and 2(zf)
