Dubai-Based Indian Purchaser Cancels Mumbai Flat Purchases Amid Delayed Possession

In a significant ruling, the Maharashtra Real Estate Appellate Tribunal (MahREAT) has sided with a Dubai-based homebuyer in a dispute with a Mumbai builder over delayed possession of two flats. The tribunal ordered the builder to refund the buyer’s payments, totaling Rs 1.15 crore, along with interest. This decision highlights the legal protections available to homebuyers under the Real Estate (Regulation and Development) Act, 2016 (RERA).

Case Background

The homebuyer purchased two flats from a Mumbai builder in 2015, agreeing to prices of Rs 2.35 crore and Rs 3.17 crore. After paying approximately 20% of the total cost for each unit, the buyer faced significant delays, with possession promised before April 2017 but not delivered until May 27, 2018. The buyer raised concerns about discrepancies in the draft agreement for sale and ultimately decided to cancel the bookings, seeking a refund. The builder responded by stating that refunds would only be processed after finding new buyers for the flats and would be subject to deductions outlined in the allotment letters.

Tribunal’s Ruling

On July 1, 2026, MahREAT ruled in favor of the homebuyer, directing the builder to refund Rs 48.73 lakh and Rs 66.56 lakh, plus interest at the State Bank of India’s Marginal Cost of Lending Rate (MCLR) plus 2%. The tribunal also awarded Rs 25,000 in costs to the homebuyer. MahREAT emphasized that the builder had violated the Maharashtra Ownership of Flats Act, 1963, by failing to execute a written agreement for sale before accepting the advance payments.

The tribunal found that the builder’s Clause 12 in the allotment letters, which allowed for significant deductions from refunds, was heavily biased in favor of the builder. MahREAT referenced a previous ruling that deemed one-sided and unreasonable terms unenforceable against homebuyers. The tribunal concluded that the builder could not enforce such terms when they contradicted the statutory rights of homebuyers under RERA.

Legal Implications

Amit Wadhwani, a partner at Khaitan & Co, noted that the ruling reinforces that one-sided conditions in allotment letters cannot override homebuyers’ rights to refunds. He pointed to a MahaRERA order from September 2024, which established a model allotment letter that builders must follow. This model limits the deductions a builder can retain upon cancellation, with a maximum of 2% of the unit cost applicable after 61 days from the allotment letter. The remaining amount must be refunded within 45 days, with interest accruing if the builder fails to comply.

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