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Maharashtra Real Estate Appellate Tribunal: Developer cannot deny homebuyer refund even without a sale agreement
The Maharashtra Real Estate Appellate Tribunal (MREAT) has ruled that a real estate developer cannot deny a refund solely because of a missing sale agreement
The Maharashtra Real Estate Appellate Tribunal (MREAT) has ruled that a real estate developer cannot deny a refund for an apartment solely because of the absence of a signed agreement. The tribunal directed the developer to refund over ₹26 lakh, along with interest, to a UAE-based Non-Resident Indian (NRI) homebuyer who exited the project due to delayed possession.
The case
A UAE-based NRI homebuyer had booked an apartment in Panvel, near Mumbai, in 2013 for ₹84 lakh, initially paying a booking amount of ₹1 lakh. Although no formal agreement was executed, the developer issued a booking form stating that possession would be linked to the receipt of the occupation certificate, without specifying a timeline.
Over time, the homebuyer paid ₹26 lakh in instalments and later shifted the booking to another tower within the same project due to possession delays. Despite waiting for more than five years, the homebuyer did not receive possession of the apartment.
Frustrated by the prolonged delay, the buyer sought a refund in May 2019 under Section 18 of the Real Estate (Regulation and Development) Act, 2016.
Also Read: Booked a flat but developer changed midway? Original builder still liable, rules MahaRERA
Homebuyer approached MahaRERA for a refund and compensation
In September 2019, the homebuyer filed a written complaint with MahaRERA seeking a refund and compensation for the delayed possession.
After hearing both parties, MahaRERA passed its order in March 2020, stating that since no agreement for sale had been executed, the provisions of Section 18 of the Real Estate (Regulation and Development) Act, 2016, were not applicable to the case.
MahaRERA disposed of the complaint by directing both the homebuyer and the developer to execute and register the agreement for sale within 30 days of the order. It further noted that if the homebuyer chose to withdraw from the project, any refund would be governed by the terms and conditions outlined in the application form.
Aggrieved by the MahaRERA order, the buyer approaches the Maharashtra Real Estate Tribunal
Aggrieved by MahaRERA’s order, the homebuyer approached the Maharashtra Real Estate Appellate Tribunal (MREAT), seeking a refund along with compensation.
In response, the developer argued that a refund under Section 18 of RERA is applicable only when possession is not handed over as per the terms of an executed agreement for sale. In this case, the developer claimed that no such agreement existed due to the homebuyer’s failure to execute it.
The developer further contended that the homebuyer could not benefit from their own inaction, asserting that the agreement remained unsigned because the buyer did not come forward to complete it. Additionally, the developer pointed out that the homebuyer failed to provide any document specifying a possession date or showing that the developer had ever committed to a timeline for delivery.
Maharashtra Tribunal’s order
The Maharashtra Real Estate Appellate Tribunal (MREAT) set aside the March 2020 order passed by MahaRERA. After reviewing the case, MREAT directed the developer to refund the amount paid by the homebuyer along with interest.
In its judgment dated May 7, 2025, the tribunal observed that a formal agreement for sale is not mandatory for the applicability of Section 18 of the RERA Act. Any document containing the essential elements of such an agreement would suffice.
The tribunal noted that the contents of the booking application form reflected the mutual understanding between the parties, akin to a sale agreement. This clearly indicated the intent of both parties to enter into a sale transaction, making the intention behind the document more important than its title.
MREAT further clarified that the RERA Act does not explicitly permit a developer to forfeit the earnest money or any specific amount upon cancellation of a booking.
Also Read: Over 50,000 housing projects registered with MahaRERA; highest in India
"The booking has been done by the homebuyer on 31 August 2013, and even after the lapse of such long years, the developer has failed to deliver possession of the subject flat even as on today. The reliefs sought by the homebuyer herein are nothing but a refund of his own paid amounts together with interest at the prescribed rate due to the fault and deficiency in service on the part of the developer," the MREAT said in its judgment.
Based on these findings, the MREAT directed the developer to refund the amount paid by the homebuyer within one month, along with interest calculated from the date of each payment. The interest is to be paid at the rate of the highest marginal cost of lending rate (MCLR) of the State Bank of India, plus 2%.
