Bombay High Court
Linker Shelter Private Limited vs Ramdas S Gadiyar And Anr on 18 July, 2025
2025:BHC-AS:30212
SA.391.2025 J-P4.doc
Digitally signed
by ANANT IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ANANT KRISHNA
NAIK
KRISHNA Date:
CIVIL APPELLATE JURISDICTION
NAIK 2025.07.21
20:18:52
+0530
SECOND APPEAL NO. 391 OF 2025
WITH
INTERIM APPLICATION NO. 10454 OF 2024
Linker Shelter Pvt. Ltd.
C/o. Paranjape Scheme Construction Limited,
Paranjape Bungalow, 34, M. G. Road,
Vile Parle (East), Mumbai - 400057 ... Appellant
Versus
1. Charmaine Chougule, Adult
2. Arvind D. Chougule, Adult
Both R/o. Flat No. 7, Aashis, Plot No. 22,
Tarun Bharat Society, Opp. Hotel Oriental
Aster, Andheri (East), Mumbai - 400099 ... Respondents
WITH
SECOND APPEAL NO. 392 OF 2025
WITH
INTERIM APPLICATION NO. 3601 OF 2024
Linker Shelter Pvt. Ltd.
C/o. Paranjape Scheme Construction Limited,
Paranjape Bungalow, 34, M. G. Road,
Vile Parle (East), Mumbai - 400057 ... Appellant
Versus
1. Annie E. Pinto, Adult
2. Edwin M. Pinto, Adult,
Both R/o, A/401, Shringeri CHS Ltd.
Near Vrishi Complex, Holy Cross Road,
I. C. Colony, Borivali (West), Mumbai - 400103 ... Respondents
akn 1/22
::: Uploaded on - 21/07/2025 ::: Downloaded on - 26/07/2025 08:20:57 :::
SA.391.2025 J-P4.doc
WITH
SECOND APPEAL NO. 393 OF 2025
WITH
INTERIM APPLICATION NO. 12371 OF 2024
Linker Shelter Pvt. Ltd.
C/o. Paranjape Scheme Construction Limited,
Paranjape Bungalow, 34, M. G. Road,
Vile Parle (East), Mumbai - 400057 ... Appellant
Versus
1. Ramdas S. Gadiyar, Adult
2. Veena R. Gadiyar, Adult
Both R/o. 202, Shree Shiv Sadan CHS Ltd.
Sant Muktabai Road, Vile Parle (East)
Mumbai - 400057 ... Respondents
WITH
SECOND APPEAL NO. 394 OF 2025
WITH
INTERIM APPLICATION NO. 13186 OF 2024
Linker Shelter Pvt. Ltd.
C/o. Paranjape Scheme Construction Limited,
Paranjape Bungalow, 34, M. G. Road,
Vile Parle (East), Mumbai - 400057 ... Appellant
Versus
1. Sanny M. Pinto, Adult
2. Nina S. Pinto, Adult
Both R/o. B-02, Silver Cloud,
Sundernagar, Kalina, Santacruz (E)
Mumbai - 400098 ... Respondents
****
Mr. G. S. Godbole, Senior Advocate a/w. Mr. Sarthak Diwan and Mr. Avesh
A. Ghadge for the Appellant in all Second Appeals.
Mr. Yogesh Patki a/w. Mr. A. S. Ramesan for the Respondents in all Second
akn 2/22
::: Uploaded on - 21/07/2025 ::: Downloaded on - 26/07/2025 08:20:57 :::
SA.391.2025 J-P4.doc
Appeals.
Mr. Pradeep J. Thorat, Amicus Curiae appointed by Court (assisted by Ms.
Aditi Naikare and Mr. Aniesh S. Jadhav)
****
CORAM : M. M. SATHAYE, J.
DATED : 18th JULY 2025
JUDGMENT :
1. These four Second Appeals are arising out of common Judgment and
Order 30/01/2024 passed by Maharashtra Real Estate Appellate Tribunal,
Mumbai (‘the Appellate Tribunal’ for short) in Appeal Nos.
AT001000000053706 of 2022, AT001000000053684 of 2022,
AT001000000053692 of 2022 and AT001000000053686 of 2022. The
Appellant is a common developer. The Respondents are Complainants /
Allottees in respect of flat nos. 4E-502, 4H-302, 4C-104 and 4E-504 in
project Aaryavarta at Mahale Farm, Off Mumbai-Agra Road, Nashik – 422
009. By the said impugned Order, the common order dated 17/02/2022
passed in 4 complaints filed by Respondent allottees, was set aside and the
Appellant/promoter was directed to refund to the Respondents all the
amounts including amounts paid for taxes, registration fees etc. with interest
from the date of receipt of the amount. It was directed that if there is failure
to pay the said amount, the Appellant/Promoter will pay interest on the
total outstanding amount as on 29/02/2024 till realization. Charge of this
amount is continued on the respective flats till the amounts are refunded.
2. In this judgment, the Real Estate (Regulation and Development) Act,
2016 is referred to as ‘the said Act’. Completion Certificate is referred to as
‘CC’. Occupation Certificate is referred to as ‘OC’. Maharashtra Real Estate
Regulatory Authority, Mumbai is referred to as ‘MahaRERA’.
akn 3/22
::: Uploaded on – 21/07/2025 ::: Downloaded on – 26/07/2025 08:20:57 :::
SA.391.2025 J-P4.doc
3. By earlier order dated 19/06/2025, following two questions of law
were framed by this Court and parties were heard on the said questions of
law. Learned counsel for both sides have filed compilation of documents and
referred to them. Considering the issues involved, the appeals are admitted
on following substantial questions of law and heard finally by consent of
parties.
“(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 ?”
4. Few facts necessary for disposal of these Appeals, are as under:
(a) In January 2013 and October 2013 the said 4 flats were agreed to be
sold by Appellant in favour of respective Respondents.
(b) The date promised for handing over possession was 31/12/2017.
(c) The Respondents paid various amounts under the agreement to the
Appellant.
(d) Some time in 2013, an ex-parte injunction order was passed by this
Court and it was served upon the Appellant/Developer in a litigation filed by
3rd party.
(e) By letters dated 22/05/2013, 12/07/2013 and 23/12/2015, the
Appellant/Developer informed various developments in the pending
litigation to the Respondents/allottees.
akn 4/22
::: Uploaded on – 21/07/2025 ::: Downloaded on – 26/07/2025 08:20:57 :::
SA.391.2025 J-P4.doc
(f) Appellant/Developer on 16/02/2016 informed the Respondents that
the decision of the Court has come in favour of the Developer.
(g) On 11/07/2018, Occupancy Certificate (‘Occupation Certificate’ or
‘OC’) for the building in which said flats are situated was obtained.
(h) By first letter dated 21/12/2018 the Appellant/Developer specifically
informed the Respondents/Allottees that since OC has been obtained,
possession of the suit flats can be given and the Respondents/allottees were
called upon to take possession. Copy of OC was attached and balance
payment was demanded.
(i) Thereafter again on 01/09/2019, the Appellant/Developer issued
another communication to the Respondents / Allottees asking them to make
remaining payment and take possession. This time, it was informed that CC
was also obtained, of which copy was annexed.
(j) On 18/02/2020, the Respondents/Allottee demanded refund of
amounts paid, in effect deciding to withdraw from the project. This letter
gives a reason that ‘title of the land on which construction has been carried
out is defective’ and therefore it was alleged that the Appellant is not in a
position to offer possession for use and occupation of the flat.
(k) On 23/03/2020, the Respondents/Allottees filed aforesaid complaints
before MahaRERA for refund of entire amount with interest, under section
18 of the said Act.
(l) Member 1/MahaRERA by common order dated 17/02/2022 rejected
the complaints refusing to refund, however, keeping open the claim of
compensation under section 18(2) and 18(3) of the said Act.
akn 5/22
::: Uploaded on – 21/07/2025 ::: Downloaded on – 26/07/2025 08:20:57 :::
SA.391.2025 J-P4.doc
(m) The Respondents/Allottees filed the aforesaid Appeals before the
Appellate Tribunal.
(n) By common impugned judgment and order, the Appeals are allowed
as indicated above.
(o) In these facts and circumstances, the parties are before this Court. The
facts are really not disputed.
SUBMISSIONS
5. Mr. Godbole, learned senior counsel submitted that there cannot be a
strait-jacket formula for all the contingencies arising between a developer
and allottee, however, in the present case, the time for delivery of possession
under the agreement expired on 31.12.2017. Occupation certificate was
obtained on 11.07.2018. First letter was issued by the Appellant Developer
offering possession alongwith OC on 21.12.2018. Thereafter on 01.09.2019,
second letter was issued offering possession with CC. In such circumstances,
he submitted that the Respondents allottees have waited till 18.02.2020 to
decide about withdrawal from the project and demand refund. He submitted
that it is not permissible to wait indefinitely and demand refund at the sweet
will of the allottee when it is his/her duty to take possession within two
months from the receipt of OC. He submitted that the decision must be
made by the allottee within reasonable time of which indication is found in
the statute itself in the form of section 19(10) of the said Act. He further
submitted that the time period during which the allottee does not decide,
the market prices may go up and the developer also cannot sell the
flat/apartment to any third party.
6. Per contra, Mr. Patki appearing for the Respondents / Allottees
akn 6/22
::: Uploaded on – 21/07/2025 ::: Downloaded on – 26/07/2025 08:20:57 :::
SA.391.2025 J-P4.doc
submitted that the provisions of sections 18(1)(a), 19(4), 19(10) of the said
Act must be harmoniously construed and the possession has to be ‘in terms
of agreement’ for section 19(10) to come into force. He submitted that it
was informed under letter dated 18 February 2020 that the title of the land
is defective and therefore the possession which was offered was not as per
Agreement. He submitted that allottees have unqualified right to seek refund
and it cannot be bound in terms of time period for demand. He has relied
upon following judgments :
(i) Newtech Promoters & Developers Pvt. Ltd. Vs. State of U.P. & Ors.
[(2021) 18 SCC 1]
(ii) Imperia Structures Ltd. Vs. Brigadier Harit Pant [(2022) 7 SCC 703]
7. Mr. Thorat, who was appointed as an Amicus Curiae by the Court has
assisted the Court by taking me through various provisions of the said Act.
He has shown the earlier judgment of Imperia Structures Ltd Vs. Anil Pant &
Anr. [(2020) 10 SCC 783].
CONSIDERATION
8. I have carefully considered the rival submissions and various
provisions of the said Act and perused the record with the assistance of
learned counsel for the parties. Facts are not really disputed.
9. Considering the issues involved, following provisions of the said Act
will have to be considered together :
***
Section 2(q) : “Completion Certificate” means the completion
certificate, or such other certificate, by whatever name called, issued
by the competent authority certifying that the real estate project has
been developed according to the sanctioned plan, layout plan and
specifications, as approved by the competent authority under the local
laws;
Section 2(zf) : “Occupancy Certificate” means the occupancy
akn 7/22
::: Uploaded on – 21/07/2025 ::: Downloaded on – 26/07/2025 08:20:57 :::
SA.391.2025 J-P4.doccertificate, or such other certificate by whatever name called, issued
by the competent authority permitting occupation of any building, as
provided under local laws, which has provision for civic infrastructure
such as water, sanitation and electricity;
Section 4. Application for registration of real estate projects
(1) ……
(2) The Promoter shall enclose the following documents along with
the application referred to in sub-section (1), namely –
x
x
(l) a declaration, supported by an affidavit, which shall be signed by
the promoter or any person authorised by the promoter, stating:–
(A) that he has a legal title to the land on which the development
is proposed along with legally valid documents with authentication
of such title, if such land is owned by another person(B) that the land is free from all encumbrances, or as the case
may be details of the encumbrances on such land including any
rights, title, interest or name of any party in or over such land
along with details;
x
x
Section 12 – Obligations of promoter regarding veracity of the
advertisement or prospectus :
Where any person makes an advance or a deposit on the basis of
the information contained in the notice advertisement or prospectus, or
on the basis of any model apartment, plot or building, as the case may
be, and sustains any loss or damage by reason of any incorrect, false
statement included therein, he shall be compensated by the promoter
in the manner as provided under this Act:
Provided that if the person affected by such incorrect, false
statement contained in the notice advertisement or prospectus, or the
model apartment, plot or building as the case may be, intends to
withdraw from the proposed project, he shall be returned his entire
investment along with interest at such rate as may be prescribed and
the compensation in the manner provided under this Act.
akn 8/22
::: Uploaded on – 21/07/2025 ::: Downloaded on – 26/07/2025 08:20:57 :::
SA.391.2025 J-P4.doc
Section 18. Return of amount and compensation.
(1) If the promoter fails to complete or is unable to give possession of
an apartment, plot or building,–
(a) in accordance with the terms of the agreement for sale or, as the
case may be, duly completed by the date specified therein; or
(b) due to discontinuance of his business as a developer on account of
suspension or revocation of the registration under this Act or for any
other reason, he shall be liable on demand to the allottees, in case the
allottee wishes to withdraw from the project, without prejudice to any
other remedy available, to return the amount received by him in
respect of that apartment, plot, building, as the case may be, with
interest at such rate as may be prescribed in this behalf including
compensation in the manner as provided under this Act:
Provided that where an allottee does not intend to withdraw from
the project, he shall be paid, by the promoter, interest for every month
of delay, till the handing over of the possession, at such rate as may
be prescribed.
(2) The promoter shall compensate the allottees in case of any loss
caused to him due to defective title of the land, on which the project is
being developed or has been developed, in the manner as provided
under this Act, and the claim for compensation under this subsection
shall not be barred by limitation provided under any law for the time
being in force.
(3) If the promoter fails to discharge any other obligations imposed on
him under this Act or the rules or regulations made thereunder or in
accordance with the terms and conditions of the agreement for sale,
he shall be liable to pay such compensation to the allottees, in the
manner as provided under this ActSection 19 : Rights and duties of allottees
x
x
(4) The allottee shall be entitled to claim the refund of amount
paid along with interest at such rate as may be prescribed and
compensation in the manner as provided under this Act, from the
promoter, if the promoter fails to comply or is unable to give
possession of the apartment, plot or building, as the case may be, in
accordance with the terms of agreement for sale or due to
discontinuance of his business as a developer on account of
suspension or revocation of his registration under the provisions of thisakn 9/22
::: Uploaded on – 21/07/2025 ::: Downloaded on – 26/07/2025 08:20:57 :::
SA.391.2025 J-P4.docAct or the rules or regulations made thereunder.
X
x
(6) Every allottee, who has entered into an agreement or sale to take
an apartment, plot or building as the case may be, under section 13,
shall be responsible to make necessary payments in the manner and
within the time as specified in the said agreement for sale and shall
pay at the proper time and place, the share of the registration charges,
municipal taxes, water and electricity charges, maintenance charges,
ground rent, and other charges, if any.
x
x
(10) Every allottee shall take physical possession of the apartment,
plot or building as the case may be, within a period of two months of
the occupancy certificate issued for the said apartment, plot or
building, as the case may be.
x
Circular No. 28/2021
No. MahaRERA/Secy/File No.27/34/2021, dated 8th March, 2021
(Note: Refer to Circular No. 28A /2021 Dated 22-7-2021
– Clarification regarding Formats for consent of allottees)
Subject: Standardized Formats for (A) Legal Title Report (B) Extension
u/s 7(3)(C) Correction u/s 14(2)
D. Whereas Section 4 of Real Estate (Regulation & Development)
Act. 2016 prescribes the procedure for real estate project registration
and Rule 3(2)(c) of Real Estate (Regulation and Development)
(Registration of real estate projects, Registration of real estate agents.
rates of interest and disclosures on website) Rules, 2017 mandates
submission of a copy of the latest legal title report with every project
registration application reflecting the flow of title of the owner or
promoter to the land on which development is proposed, with
authentication of such title by practicing advocate.
c. Now, therefore it has been decided to provide a format for Legal
Title Report. This format is Annexed as “Format A” and the applicant
should upload this format at the place of “Legal Title Report” in the
application for registration of the project.
akn 10/22
::: Uploaded on – 21/07/2025 ::: Downloaded on – 26/07/2025 08:20:57 :::
SA.391.2025 J-P4.doc
x
x
x
FORMAT – A
(Circular No. 28 of 2021)
FLOW OF THE TITLE OF THE SAID LAND
Sr. No.
1) 7/12 extract/ P.R. Card as on date of application for registration.
2) Mutation Entry No. …
3) Search report for 30 years from…Taken from sub-registrar’ office at..
4) Any other relevant title.
5) Litigations if any.
Advocate
(Stamp)
(Emphasis Supplied)
***
REASONS AND CONCLUSIONS
10. The said Act was introduced to regulate and promote the real estate
sector and to ensure sale of flat etc. in an efficient and transparent manner
while protecting the interest of allotees and providing an adjudicatory
mechanism for speedy dispute redressal. It is a salutary principle of
interpretation of statutes that an Act must be looked at as a whole.
11. The Hon’ble Supreme Court in Imperia Vs Anil Patni (supra) has held
in paragraph 25 as under :
“25. In terms of Section 18 of the RERA Act, if a promoter fails to
complete or is unable to give possession of an apartment duly
completed by the date specified in the agreement, the promoter would
be liable, on demand, to return the amount received by him in respect of
that apartment if the allottee wishes to withdraw from the Project. Such
right of an allottee is specifically made “without prejudice to any other
remedy available to him”. The right so given to the allottee is unqualified
and if availed, the money deposited by the allottee has to be refunded
with interest at such rate as may be prescribed. The proviso to Sectionakn 11/22
::: Uploaded on – 21/07/2025 ::: Downloaded on – 26/07/2025 08:20:57 :::
SA.391.2025 J-P4.doc18(1) contemplates a situation where the allottee does not intend to
withdraw from the Project. In that case he is entitled to and must be
paid interest for every month of delay till the handing over of the
possession. It is up to the allottee to proceed either under Section 18(1)
or under proviso to Section 18(1). The case of Himanshu Giri came
under the latter category. The RERA Act thus definitely provides a
remedy to an allottee who wishes to withdraw from the Project or claim
return on his investment.”
12. The Hon’ble Supreme Court in Newtech Promoters (supra), after
considering the Statement of Objects and Reasons of the said Act, has
observed as under :
“9. It was introduced with an object to ensure greater accountability
towards consumers, to significantly reduce frauds and delays and also
the current high transaction costs, and to balance the interests of
consumers and promoters by imposing certain responsibilities on both,
and to bring transparency of the contractual conditions, set minimum
standards of accountability and a fast-track dispute resolution
mechanism. It also proposes to induct professionalism and
standardization in the sector, thus paving the way for accelerated growth
and investments in the long run. ”
(Emphasis Supplied)
13. Keeping in view that interest of both sides are to be balanced and
minimum standard of accountability is to be set and standardization is to be
inducted, it is cardinally important that rights and liabilities of the parties
are interpreted keeping in view the duties provided.
14. While taking stock of relevant provisions of the said Act, before
framing the issues under consideration, the Hon’ble Supreme Court
observed about unqualified right of the allottee to seek refund under section
18(1)(a) of the said Act, as under :
“18. Section 18(1) of the Act spells out the consequences if the
promoter fails to complete or is unable to give possession of an
apartment, plot or building either in terms of the agreement for sale or
to complete the project by the date specified therein or on account ofakn 12/22
::: Uploaded on – 21/07/2025 ::: Downloaded on – 26/07/2025 08:20:57 :::
SA.391.2025 J-P4.docdiscontinuance of his business as a developer either on account of
suspension or revocation of the registration under the Act or for any
other reason, the allottee/homebuyer holds an unqualified right to
seek refund of the amount with interest at such rate as may be
prescribed in this behalf.
21. If we take a conjoint reading of sub-sections (1), (2) and (3) of
Section 18 of the Act, the different contingencies spelt out therein, ( a)
the allottee can either seek refund of the amount by withdrawing from
the project; (b) such refund could be made together with interest as
may be prescribed; (c) in addition, can also claim compensation
payable under Sections 18(2) and 18(3) of the Act; ( d) the allottee has
the liberty, if he does not intend to withdraw from the project, will be
required to be paid interest by the promoter for every months’ delay in
handing over possession at such rates as may be prescribed.
24. The unqualified right of the allottee to seek refund referred
under Section 18(1)(a) and Section 19(4) of the Act is not dependent
on any contingencies or stipulations thereof. It appears that the
legislature has consciously provided this right of refund on demand as
an unconditional absolute right to the allottee, if the promoter fails to
give possession of the apartment, plot or building within the time
stipulated under the terms of the agreement regardless of unforeseen
events or stay orders of the court/tribunal, which is in either way not
attributable to the allottee/homebuyer, the promoter is under an
obligation to refund the amount on demand with interest at the rate
prescribed by the State Government including compensation in the
manner provided under the Act with the proviso that if the allottee
does not wish to withdraw from the project, he shall be entitled for
interest for the period of delay till handing over possession at the rate
prescribed.”
15. Thereafter, the Hon’ble Supreme Court has indicated / framed
following issues under the said Act, in paragraph 30 which were under
consideration :
“30. After we have heard the learned counsel for the parties at length, the
following questions emerge for our consideration in the present batch of
appeals as under :
30.1. (1) Whether the 2016 Act is retrospective or retroactive in its
operation and what will be its legal consequence if tested on the anvil of the
Constitution of India ?
akn 13/22
::: Uploaded on – 21/07/2025 ::: Downloaded on – 26/07/2025 08:20:57 :::
SA.391.2025 J-P4.doc
30.2. (2) Whether the Authority has jurisdiction to direct return/refund of
the amount to the allottee under Sections 12, 14, 18 and 19 of the Act or
the jurisdiction exclusively lies with the adjudicating officer under Section
71 of the Act?
30.3. (3) Whether Section 81 of the Act authorises the Authority to
delegate its powers to a Single Member of the Authority to hear complaints
instituted under Section 31 of the Act?
30.4. (4) Whether the condition of pre-deposit under the proviso to
Section 43(5) of the Act for entertaining substantive right of appeal is
sustainable in law?
30.5 (5) Whether the Authority has power to issue recovery certificate
for recovery of the principal amount under Section 40(1) of the Act?”
16. Ultimately in paragraph 77 of the Judgment, the Hon’ble Supreme
Court has re-iterated para 25 of the Imperia Vs. Anil Patni (supra), which is
already reproduced above. In the case of Imperia Vs. Brig. Harit Pant
(supra), Hon’ble Supreme Court has followed the same course as in Imperia
Vs. Anil Patni (supra). From the above issues it is clear that the questions of
law framed in this case were not directly under consideration of Hon’ble
Supreme Court.
17. Learned counsel for the Respondents has based his arguments on this
unqualified right. However counter argument about possession being offered
with OC has given rise to a little deeper issues as formulated by me above.
Hence this consideration. The allottee certainly has unqualified right to seek
refund; question is – till what time decision to exercise such right can be
postponed? The issues framed by me in this Judgment are about ‘when’ such
unqualified right can be exercised and if it can be ‘postponed indefinitely’
and about ‘offer of possession with OC during litigation’. Of course all the
judgments of the Hon’ble Supreme Court relied upon, have been a guiding
light for me for the purpose of deciding the deeper issues and the view being
taken.
akn 14/22
::: Uploaded on – 21/07/2025 ::: Downloaded on – 26/07/2025 08:20:57 :::
SA.391.2025 J-P4.doc
18. Close look at the provisions narrated above indicates that under
section 4(2) of the Act, the promoter is required to enclose various
documents with the application for registration of project including
declaration supported by affidavit stating that the developer has legal title to
the land on which development is proposed along with valid documents and
stating that the land is free from all encumbrances, or as the case may be,
the details of the encumbrances on such land including right, title, interest
or claim of any party in or over such land alongwith details. The promoter is
obliged under section 12 of the said Act to compensate any person who
makes an advance or deposit on the basis of information contained in the
notice, advertisement or prospectus or on the basis of model apartment and
sustains loss or damage by reason of incorrect false statement included
therein. This is the requirement to safeguard the allottees or flat purchasers
from incorrect or false information and it is also for the flat purchaser to
make an informed choice. The proviso to section 12 provides that if the
person affected by any incorrect false statement intends to withdraw from
the proposed project, he shall be entitled to return of his entire investment
along with interest at such rate as may be prescribed and compensation in
the manner provided under the said Act.
19. Coming to section 18 of the said Act, it provides for 3 contingencies in
which the allottee or flat purchaser has an option to continue with the
project or withdraw from the same. They are as under :
Contingency 1 – The promoter is unable to complete and handover
possession in accordance with terms of the agreement.
Contingency 2 – The promoter is unable to complete and handover
possession by the date specified in the agreement.
akn 15/22
::: Uploaded on – 21/07/2025 ::: Downloaded on – 26/07/2025 08:20:57 :::
SA.391.2025 J-P4.doc
Contingency 3 – The promoter is unable to complete the project on
account of discontinuance of his business as a developer on account of
suspension or revocation of registration under the said Act or for any
other reason.
20. Close scrutiny of these contingencies indicate that handover of
possession can be only in first two contingencies and not in the third.
Therefore, in the cases where the promoter is unable to complete the project
on account of reasons mentioned in third contingency, there is no question
of handover of possession. This is obviously because ‘occupancy’ means
habitability and comprises of essential requirement of basic amenities.
Definitions of OC and CC (narrated above) clearly indicate provision of civic
infrastructure such as water, sanitation and electricity as well as construction
being accordance with sanctioned plan and layout as approved by competent
authority under local laws.
21. Now let us consider the first two contingencies. Inability to handover
‘possession in accordance with terms of agreement’ can cover wide range of
possibilities as the flat purchaser/allottee may feel differently in different
situations and may perceive that handover of possession is not possible
because it is not in accordance with terms of the agreement. This depends
on facts and circumstances of each case. Inability to hand over ‘possession by
date specified in agreement’ has a definitive character related to time, which
has to be interpreted keeping in view the standardisation sought to be
achieved, considering various provisions relating to time frames mandated in
the said Act.
22. In all the three contingencies, the allottee has an option to withdraw
from the project. But in first two contingencies, the allotee has an option to
akn 16/22
::: Uploaded on – 21/07/2025 ::: Downloaded on – 26/07/2025 08:20:57 :::
SA.391.2025 J-P4.doc
withdraw from the project or continue with the same.
23. The case of an allottee where he or she wants to claim compensation
for loss caused ‘due to defective title of the land’ covers the aspect of
litigation about title of the land. This is specifically provided under section
18(2) of the said Act and it cannot be included or confused with the remedy
provided under section 18(1) or the proviso thereto.
24. The said Act also provides for a residuary clause that if the promoter
fails to discharge any other obligation under the Act or Rules made
thereunder or in accordance with terms and conditions of the agreement,
compensation is payable to flat purchaser/allottee under section 18(3).
Since section 18(1)(a) specifically contemplates a situation where promoter
fails to ‘give possession in accordance with terms of the agreement’, it has to
be held that ‘other breaches of terms of agreement’ are covered under
section 18(3) of the said Act. Obviously, the legislature was conscious of the
usual problem faced by the flat purchasers of not getting possession of the
flat/unit in time, despite paying consideration from hard-earned money.
25. In my considered view therefore, section 18(1) provides for failure to
give possession under three contingencies, section 18(2) provides for
compensation for loss due to defect in title and section 18(3) is a kind of
residuary provision, providing for compensation in case of breach of any
other obligation under the terms and conditions of the agreement including
obligation imposed under the said Act or Rules made thereunder.
26. Having said that, if it is found in a given case that the objection of the
flat purchaser/allottee is about title of the land being defective, then this
akn 17/22
::: Uploaded on – 21/07/2025 ::: Downloaded on – 26/07/2025 08:20:57 :::
SA.391.2025 J-P4.doc
claim cannot be brought within the scope of section 18(1)(a) and (b) and
proviso, because remedy for such grievance is specifically provided under
18(2) of the said Act. Having understood thus, it is clear in my view that the
choice available with the flat purchaser/allottee to either withdraw from the
project or continue therewith is not available if the grievance is about ‘title
of the land’ and that grievance can be independently raised under section
18(2) of the said Act.
27. Section 19(4) of the said Act is a reflection of section 18(1)(a) and
(b). Section 19(6) of the said Act requires the allottee to make necessary
payments in the manner and within the time as specified in the agreement
including share of registration charges, municipal taxes etc. Section 19(10)
of the said Act mandates the flat purchaser/allottee that he/she shall take
physical possession of the apartment, plot or building as the case may be
within a period of two months of occupancy certificate issued for the said
apartment, plot or building.
28. It is therefore clear that in cases where the promoter/developer fails
to complete or is unable to give possession of premises by the date specified
in the agreement, the liability of the developer depends on the decision
taken by the allottee whether to withdraw from the project or continue
therewith as provided under section 18(1)(a) & (b) and the proviso.
29. Having found that the flat purchaser/allottee is duty bound to take
physical possession of the flat/apartment within a period of two months
from the occupancy certificate (OC) issued, it does not stand to reason that
the allottee can postpone his/her decision about whether to withdraw from
the project or continue with the same beyond the period of two months. At
akn 18/22
::: Uploaded on – 21/07/2025 ::: Downloaded on – 26/07/2025 08:20:57 :::
SA.391.2025 J-P4.doc
the most, it can be said that the allottee/flat purchaser must make the
decision about whether to withdraw from the project or continue therewith
within two months from the date on which the fact of OC issued for the
concerned building is brought to his/her notice and of course when
possession is offered along with OC. Offer of possession brings the case out
of the clutches of section 18(1) because it is based on failure of developer to
give possession. Once possession is offered along with OC, section 19(10)
starts to operate, making it necessary for the flat purchaser/allottee to take a
decision whether he/she wishes to withdraw from the project or continue
therewith because taking possession is inseparably connected to that
decision. It must be noted that under Section 19(6) of the said Act, the
allottee is responsible to make necessary payment in the manner and time
specified in the agreement and also pay the share of registration charges
alongwith municipal, water, electricity, maintenance, ground rent and other
charges which indicates final steps towards completion of transaction.
30. It must be kept in mind that during the time when the flat
purchaser/allottee has paid part consideration towards purchase of flat
under an agreement, the developer cannot sell the same to third person. In
such situation, if the allottee/flat purchaser keeps postponing this decision
about whether to withdraw from the project or continue therewith, during
the entire time of such postponement, the developer remains bound not to
sell the said flat to third person during which time, the market price may
escalate. This has to be pitched against duty of the allottee to take
possession, if a balance is to be reached or standardization is to be achieved.
31. Therefore in my considered view, interpreting that the allottee has an
unqualified right to withdraw from the project and seek refund and
akn 19/22
::: Uploaded on – 21/07/2025 ::: Downloaded on – 26/07/2025 08:20:57 :::
SA.391.2025 J-P4.doc
compensation to mean that he/she can postpone the decision about
withdrawal indefinitely beyond two months, when possession of flat is
already offered with Occupation Certificate and when there is no injunction
order prohibiting such hand-over of possession, would be an absurd
interpretation resulting into frustrating the balance and standardization
expected under the said Act.
32. Therefore I hold that the allottee under section 18(1) of the said Act
can not indefinitely postpone the decision about withdrawing from the
project or continuing therewith beyond a period of 2 months from the date
of possession being offered alongwith OC / CC as the case may be, provided
there is no injunction against the developer from doing so.
33. Now coming to the aspect of whether existence of litigation would
vitiate the offer of possession by the Developer. Section 4(2) of the said Act
mandates the Developer to enclose / file documents declaring legal title,
authentication and details of encumbrance if any as the case may be, at the
time of registration of project. Circular No. 28 of 2021 provides for Format-A
in which the promoter to required to submit / file legal title report and flow
of the title. Thus, the provisions merely require disclosure of litigations
pertaining to the project. The Developer under the said Act can inform
about litigation if any, in the format provided as per circular issued. There is
no indication that pendency of litigation is fatal to the offer of possession by
the promoter as long as the competent planning authority has issued the
OC/CC (as the case may be) and there is no order of injunction restraining
the promoter from doing so. No such prohibition is either pointed out or
seen in the scheme of the said Act.
akn 20/22
::: Uploaded on – 21/07/2025 ::: Downloaded on – 26/07/2025 08:20:57 :::
SA.391.2025 J-P4.doc
34. Therefore in my view, the possession offered by the developer can not
be compulsorily meant as only without any litigation over the subject
property; of course it has to be offered with OC / CC (as the case may be)
duly obtained from competent planning authority and there has to be no
order of injunction restraining the developer from doing so.
ABOUT FACTS OF THIS CASE
35. In the present case, the facts are not disputed. The injunction granted
by the Court was vacated in the pending litigation and OC was obtained in
July 2018 and under first letter of December 2018 the possession was
offered with copy of OC received. The Respondents allottees did not reply. In
September 2019, second letter was issued by the Appellant Developer, again
offering possession and informing that CC is also received, enclosing its copy
and demanding balance consideration. Still the Respondents allottees did
not take decision. On 18.02.2020, it is informed for the first time to the
Developer that the allottees want refund and the reason given for
demanding refund is ‘defect in title’. It is already clarified above that this
situation is covered under Section 18(2) of the said Act and it is basically
compensation for loss caused to the allottees due to defect in the title. When
the allottees were under duty to take possession of the flat within a period of
2 months of OC issued to the said premises, it cannot be said that despite
possession being offered, the allottees can wait indefinitely and decide on
some day of their choice to demand refund. Therefore it has to be held that
the Appellant developer will be liable to refund with interest till end of 2
months from the date when possession was offered with OC (21.12.2018).
36. The appeals are accordingly partly allowed by passing following order:
A. The common impugned judgment and order dated 30.01.2024
akn 21/22
::: Uploaded on – 21/07/2025 ::: Downloaded on – 26/07/2025 08:20:57 :::
SA.391.2025 J-P4.docis quashed and set aside.
B. In the peculiar facts of this case, the Respondents are permitted
to withdraw from the project.
C. The Appellant Developer is directed to refund to the
Respondents the respective amounts paid by Respondents (including
amounts of taxes, registration fees and other statutory payments) with
interest (at the rate of highest marginal cost of lending rate of State
Bank of India plus 2%) from date of receipt of payments till
21.02.2019. This amount is to be paid within a period of 4 weeks
from today. Charge of these amounts will continue on the respective
flats, till payment is fully made.
D. The Respondents are at liberty to file separate claims under
section 18(2) for compensation towards loss caused to them on their
case of defective title of the land. Such claims if filed, shall be decided
independently in accordance with law. Rival contentions in that
regard are kept open.
E. All appeals and pending applications are disposed of in above
terms. No order as to costs.
37. Before parting, a word of appreciation for Mr. Thorat with his
associates is necessary, who has assisted the Court by taking it through
various provisions of law and caselaw and filing a detailed note.
38. All concerned to act on duly authenticated or digitally signed copy of
this order.
(M. M. STHAYE J)
akn 22/22
::: Uploaded on – 21/07/2025 ::: Downloaded on – 26/07/2025 08:20:57 :::