The Maharashtra Real Estate Appellate Tribunal has reiterated that the right to refund under Section 18 of RERA is unqualified and absolute, and Promoters cannot escape liability by citing COVID-19, NPA classification, or project restructuring. The Tribunal clarified that an Allotment Letter containing essential terms, such as identification of the flat, consideration, payment schedule, possession date, and mutual obligations, constitutes a concluded contract irrespective of its nomenclature, and the absence of a registered Agreement for Sale does not bar invocation of Section 18 of the RERA Act.
The Tribunal said that the right of an Allottee to seek refund under Section 18(1)(a) of the RERA Act is unqualified and not dependent on any contingencies or stipulations, once the Promoter fails to deliver possession within the stipulated period. Thus, the promoters cannot escape liability to pay interest for delayed possession by relying on COVID-19, NPA classification, financial difficulties, or project restructuring, particularly when the delay is not attributable to the Allottees.
The Tribunal also added that once the Authority accepts the Allottees’ entitlement to refund, such entitlement cannot be made subject to a further condition requiring execution of a fresh registered Agreement for Sale, as doing so creates an inherent contradiction in the order. Accordingly, promoters who accept advance or deposit without executing a written Agreement for Sale contravene Section 4(1) of the Maharashtra Ownership Flats Act, 1963, and remain liable to refund the consideration with interest.
Briefly, in the year 2014, Shabnam Singh and Yuvraj Singh (the Allottees/ Appellants) booked a Flat on the 29th Floor of Tower C in the real estate project ‘Omkar 1973 Worli’ situated at Worli, Mumbai, for a total consideration of Rs. 38.46 crores. Pursuant to the booking, the Promoters issued a provisional Booking Letter/Allotment Letter, against which the Allottees paid Rs. 8.01 crores, being 19.9% of the total consideration. Under Clause 19(e) of the Allotment Letter, possession was to be handed over on or before June 30, 2018, and at the latest by Dec 31, 2018.
Despite repeated follow-ups, the Promoters failed to provide satisfactory updates and attributed the delay to demonetisation, GST, stricter lending norms, and later to COVID-19 and NPA classification of their loan accounts. The Promoters neither executed a registered Agreement for Sale nor handed over possession within the agreed period. The Allottees issued a legal notice and thereafter approached MahaRERA by filing a complaint. The MahaRERA Authority passed an order directing the parties to execute a registered Agreement for Sale, with refund of the amount with interest becoming payable only if such execution failed within one month.
The Division Bench comprising S.S. Shinde (Chairperson) and Dr. Rajagopal Devara (Member) observed that the Allotment Letter records the identity of the project, the consideration payable, the payment obligations, and the stipulated period for handing over possession, and therefore contains the essential terms of a concluded contract. Thus, the mere nomenclature of the document as an ‘Allotment Letter’ cannot defeat the contractual rights that have crystallised between the parties, particularly when the Promoters have accepted substantial consideration without disputing the issuance of the document.
Applying Sections 2(a), 2(b), and 8 of the Indian Contract Act, 1872, the Tribunal held that performance of the conditions of a proposal or acceptance of consideration constitutes acceptance, and the subsequent failure to execute a registered Agreement for Sale cannot be permitted to defeat the rights arising from the Allotment Letter. The Tribunal further observed that the MahaRERA Authority’s impugned order suffered from an inherent contradiction: it recognised the Allottees’ entitlement to compensation for delay, yet made the refund contingent upon the execution of a fresh Agreement for Sale, which was contrary to the main relief sought.
The Bench explained that COVID-19 pandemic occurred much after the expiry of the extended due date of Dec 31, 2018, and therefore could not justify the delay in completion of the project. Similarly, the subsequent classification of the Promoters’ account as NPA, financial difficulties, and restructuring of the project could not be accepted as valid grounds to deny the Allottees’ rights under Section 18 of the RERA Act, 2016. The Tribunal also noted that the Promoters had contravened Section 4(1) of the Maharashtra Ownership Flats Act, 1963 (MOFA), which mandates execution of a written Agreement for Sale before accepting any advance or deposit.
