{"id":28238,"date":"2026-09-24T14:55:58","date_gmt":"2026-09-24T14:55:58","guid":{"rendered":"https:\/\/koshalsambada.in\/?p=28238"},"modified":"2026-09-24T14:55:58","modified_gmt":"2026-09-24T14:55:58","slug":"dubai-based-indian-bought-two-mumbai-flats-but-later-cancelled-them-after-delayed-possession-builder-sought-deductions-but-mahareat-orders-full-rs-1-15-crore-refund-plus-interest","status":"publish","type":"post","link":"https:\/\/koshalsambada.in\/?p=28238","title":{"rendered":"Dubai-based Indian bought two Mumbai flats, but later cancelled them after delayed possession; builder sought deductions, but MahaREAT orders full Rs 1.15 crore refund plus interest"},"content":{"rendered":"


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\"Dubai-based<\/div>\n<\/div>\n<\/div>\n
In 2015, the homebuyer decided to purchase two flats being offered by a Mumbai-based builder.<\/span><\/div>\n<\/section>\n<\/div><\/div>\n<\/div>\n

Delayed possession of homes can cause grievances to homebuyers. But, what if the builder inserts clauses of deductions if you cancel the booking and ask for a refund?In one such case the Maharashtra Real Estate Appellate Tribunal (MahREAT), Mumbai, has recently ruled in favour of a Dubai-based homebuyer. The dispute involved an arbitrary and one-sided condition inserted by a builder in the allotment letters.<\/p>\n

What the case is about<\/h2>\n<\/p>\n

The case involved an Indian homebuyer based in Dubai who had booked two flats with a Mumbai-based builder. Despite the promised possession date having passed by more than a year, the homebuyer still did not have possession of the flats.In 2015, the homebuyer decided to purchase two flats being offered by a Mumbai-based builder. The agreed purchase prices were Rs 2.35 crore and Rs 3.17 crore for the two flats, respectively. The homebuyer paid around 20% of the agreed price for each unit, which amounted to Rs 48.73 lakh for one flat and Rs 66.56 lakh for the other, and signed the allotment agreement. However, an agreement for sale was never executed.The allotment letters said that possession of the flats was to be handed over before April 2017. The occupancy certificate, however, was obtained only on May 27, 2018, nearly a year after the promised possession timeline.The homebuyer also raised concerns over the draft agreement for sale, which, according to him, contained discrepancies and did not accurately reflect the terms he had originally agreed to in the allotment letters.The buyer subsequently decided to cancel both bookings and sought a refund. The builder, however, told him that the money could be refunded only after another buyer was found for the flats.The builder also said that any refund would remain subject to the terms and conditions contained in the allotment letters, particularly Clause 12.Under Clause 12, the builder had reserved the right to forfeit 10% of the purchase price as liquidated damages, according to an ET report.In addition, the builder could levy interest at 1.5% a month, equivalent to 18% a year, calculated from the date of the allotment letter until termination. These amounts were to be deducted from the refund ultimately payable to a buyer who cancelled the booking.Aggrieved by the builder’s stand, the homebuyer approached the real estate tribunal in Mumbai. On July 1, 2026, he succeeded before the MahaREAT.<\/p>\n

Why did the homebuyer win relief and refund?<\/h2>\n<\/p>\n

On July 1, 2026, the homebuyer won the matter before the MahaREAT. In its ruling, the tribunal directed the builder to refund the homebuyer Rs 48.73 lakh and Rs 66.56 lakh, along with interest at the State Bank of India’s Marginal Cost of Lending Rate (MCLR) plus 2%. It also awarded Rs 25,000 towards costs to the homebuyer.As per calculations done by ET, if an average effective interest rate of approximately 10.5%, representing SBI’s highest MCLR plus 2%, is assumed for around 11 years, the estimated interest would work out to:Rs 1.153 crore \u00d7 10.5% \u00d7 11 years = approximately Rs 1.33 crore interest.This is only an estimate based on the assumed average rate and period.MahaREAT noted that Section 4(1) of the Maharashtra Ownership of Flats Act, 1963 requires a builder to enter into a written agreement for sale with a homebuyer before accepting any advance or deposit towards the property.In this case, around 20% of the consideration had already been paid, but the builder had not executed the agreement for sale as required under Section 4(1).MahaREAT therefore held that, in its view, the builder had contravened the provisions of MOFA, 1963.MahaREAT found from the evidence before it that the builder had not completed the project in accordance with the agreed terms or handed over possession of the flats to the homebuyer.The builder was therefore liable to return the money received for the two flats along with interest.MahaREAT observed: \u201cWe are of the view that the allottees are legally entitled for refund of consideration amount along with interest under Section 18 of the RERA Act, 2016.\u201dMahaREAT also examined Clause 12 of the allotment letters executed by the homebuyer and the builder and found the provision to be heavily weighted in the builder’s favour.Under this clause, cancellation of the booking did not give the homebuyer an immediate right to receive back the amount already paid. Instead, the refund was dependent on the builder finding another purchaser for the same flat and receiving the entire consideration from that new buyer.At the same time, Clause 12 gave the builder the right to deduct, adjust and forfeit various amounts from the refund that would eventually become payable.The homebuyer\u2019s advocate relied on the MahaREAT decision in Dinesh R. Humane and Ors. v. Piramal Estate Pvt. (Complaint No. CC006000000089770), which held that terms that are one-sided, unreasonable and unfair cannot be enforced against flat purchasers.The tribunal consequently held that the builder could not insist on enforcing Clause 12 when its terms were contrary to the rights available to homebuyers under the RERA framework. MahaREAT said the same principles applied to this case.<\/p>\n

Judgement explained<\/h2>\n<\/p>\n

Amit Wadhwani, Partner at Khaitan & Co, told ET that the key reason the homebuyer succeeded was MahaREAT’s finding that a one-sided condition in an allotment letter cannot override a homebuyer’s statutory entitlement to a refund under RERA.Wadhwani further pointed to a MahaRERA order dated September 3, 2024, under which the authority prescribed a model allotment letter that builders are required to follow in accordance with MahaRERA Order No. 60\/2024. The order sets out the model allotment letter that every promoter is required to issue under Clause (g) of Sub-section 2 of Section 4 of the Real Estate (Regulation and Development) Act, 2016.The model allotment letter also places a limit on the amount a builder can retain when a homebuyer cancels a booking. Wadhwani said Clause 9 of the model document provides that the maximum deduction can be 2% of the cost of the unit.MahaRERA’s 2024 order also establishes a graduated deduction structure, with the amount that can be retained depending on how soon the cancellation request is made after the allotment letter is issued:<\/p>\n

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