Rs 1.15 Cr paid for 2 Mumbai flats 11 yrs ago, refund sought after delay: Builder said ‘sell first, refund later’

The case involved Rahul Kalyan Raghuwanshi and two flats in the Omkar Meridia project in Kurla, Mumbai. Raghuwanshi had booked the flats in 2015 and paid Rs 48.73 lakh for one and Rs 66.56 lakh for the other. The total amount paid was about Rs 1.15 crore.

The flats were to be handed over by April 2017. But the Occupancy Certificate was obtained only on May 27, 2018, after the promised possession timeline. Raghuwanshi also said that differences arose over the terms of the proposed Agreement for Sale and that no registered agreement was ultimately executed.

The dispute eventually reached MahaRERA and then MahaREAT. The appellate tribunal has now directed the promoters to refund the two amounts paid by Raghuwanshi, along with interest at State Bank of India’s highest MCLR plus 2% from the respective dates of payment until final realisation. It also awarded Rs 25,000 as costs.

The final order, pronounced on July 1, 2026, allowed both appeals filed by Raghuwanshi.

Why the refund became the main dispute

At the centre of the case was not just the delay in the project but a condition in the allotment letters governing cancellation and refund.

The builder relied on a clause under which the buyer’s money was to be refunded only after the flat was sold to another purchaser and the promoter received the money from that purchaser. The clause also provided for deductions and other financial consequences if the allotment was cancelled.

For a buyer who had already paid more than Rs 1 crore, this meant that getting his own money back could depend on an event controlled by the builder — finding another buyer. MahaREAT did not accept this approach.

The tribunal found the condition requiring a fresh purchaser before the refund could be made to be “arbitrary, unreasonable and unconscionable.” It also held that such a condition could not be used to defeat the buyer’s statutory rights under RERA.

This is significant for homebuyers because allotment letters often contain detailed cancellation and refund conditions. A buyer may sign such a document at the time of booking, but that does not necessarily mean every clause will automatically prevail over statutory protections.

Harshit Batra, an advocate, RERA expert and founder of HBA Legal, said the important point is that a contractual term cannot be allowed to defeat or indefinitely postpone a statutory right.

“Signing an allotment letter does not, by itself, mean that every contractual condition will necessarily prevail over statutory protections,” Batra said.

He said a clause can be examined by a court or tribunal if it is found to be arbitrary, unreasonable or unconscionable.

The buyer had not simply walked away from the flats

The facts of the case are important here. Raghuwanshi had booked Flat B-1008 through an allotment letter dated February 27, 2015, for a consideration of Rs 2.35 crore. He paid Rs 48,73,313 towards it. He booked another flat, A-1001, through an allotment letter dated July 17, 2015. The agreed consideration was Rs 3.17 crore and he paid Rs 66,56,993. Together, the two payments came to Rs 1,15,30,306.

The committed possession timeline was April 2017. The project’s Occupancy Certificate was obtained only on May 27, 2018. The case therefore turned partly on whether the promoter had failed to meet the possession commitment and what consequences that failure should have for the allottee.

Batra said the date promised to the buyer matters under RERA. “The possession timeline is not merely an indicative date,” he said.

Once a promoter has committed to handing over possession within a stipulated period, failure to meet that commitment can have substantive consequences under Section 18 of RERA.

But he also cautioned against reading the judgment as saying that every delay automatically gives a buyer a right to a refund. The contractual possession date, reasons for delay, any agreed grace period and whether the buyer contributed to the delay would still have to be examined.

In this case, he said, the Occupancy Certificate itself came after the agreed possession timeline and the tribunal also considered the failure to hand over possession within the committed period.

Why Section 18 matters

Section 18 of RERA is central to the buyer’s claim. Broadly, where a promoter fails to give possession in accordance with the terms agreed with the allottee, the law provides an exit route through refund, along with applicable interest and compensation, subject to the statutory framework.

The important question before MahaREAT was whether the builder could use a contractual condition to put another hurdle in front of that right.

The tribunal relied on principles laid down by the Supreme Court in cases including Pioneer Urban Land and Infrastructure Ltd. v. Govindan Raghavan and Newtech Promoters and Developers Pvt. Ltd.

Batra said the ruling reinforces the idea that the Section 18 remedy is a statutory right. “The right to seek refund under Section 18 is fundamentally a statutory right and cannot be diluted through an unfair contractual mechanism,” he said.

In other words, a builder may have cancellation terms in an allotment letter, but those terms cannot be used to effectively take away a remedy that RERA gives to an allottee.

The ‘find another buyer first’ condition

This is perhaps the most important consumer takeaway from the case. Imagine a buyer who has paid Rs 50 lakh or Rs 1 crore to a builder and later becomes entitled to a refund. If the builder’s terms say that the money will be returned only after another person purchases the same flat, the buyer’s refund is no longer entirely within the builder’s obligation.

It becomes dependent on the builder’s ability to find another customer. That is what MahaREAT found problematic in Raghuwanshi’s case.

The tribunal held that making the refund dependent on the promoter finding a new purchaser was unfair and could not be allowed to override the allottee’s statutory rights.

Batra said the broader lesson is not that every contractual refund clause is invalid. Rather, contractual conditions cannot be used to defeat or indefinitely postpone a statutory entitlement.

This distinction is important because the ruling does not mean that every homebuyer who cancels a booking will automatically get an unconditional refund. The facts of each case and the requirements of Section 18 will still matter.

There was also a problem with the registered agreement

Another important part of the dispute was the absence of a registered Agreement for Sale despite the promoter having accepted substantial payments from the buyer.

The tribunal considered this in the context of the Maharashtra Ownership of Flats Act, or MOFA.

The case material says the promoter had accepted the advance but did not execute the required written Agreement for Sale. The tribunal treated this as another factor relevant to the buyer’s case.

For homebuyers, this is an important reminder: the document signed at the booking stage is not necessarily the end of the contractual process.

A buyer should check whether the formal Agreement for Sale has actually been executed and whether its terms match what was promised at the time of booking.

The appeal itself was initially late

There was another legal hurdle before MahaREAT could even examine the substance of the buyer’s appeals. MahaRERA had passed its orders on February 23, 2022. Raghuwanshi filed his appeals before MahaREAT on May 31, 2022. On a straightforward calculation, this appeared to be a delay of 36 days beyond the 60-day limitation period under Section 44(2) of RERA.

The promoters objected to the delay and argued that the buyer had not shown sufficient cause for filing the appeals late. But the Tribunal looked at the Supreme Court’s COVID-period orders on limitation.

Because the Supreme Court had excluded certain periods during the pandemic while calculating limitation, MahaREAT recalculated the period available to the buyer. The tribunal concluded that, after applying those directions, the buyer effectively had only a one-day delay.

It therefore condoned the delay and allowed the appeals to be heard. The delay order was passed on July 25, 2023.

The tribunal relied on the Supreme Court’s approach that procedural limitation rules should not be applied so rigidly that they defeat substantial justice. One of the lines reproduced in the order says: “Rules of limitation are not meant to destroy the right of parties.”

This part of the case, however, needs to be understood carefully. It does not mean a homebuyer can routinely ignore the 60-day appeal period.

The COVID limitation orders created an unusual legal situation, and the tribunal found that the actual delay after taking those orders into account was only one day.

What should homebuyers understand about limitation?

For a homebuyer challenging a MahaRERA order, the basic rule remains important: an appeal to MahaREAT has to be filed within the prescribed limitation period.

If there is a delay, the appellant must seek condonation and show sufficient cause. The Raghuwanshi case is therefore not a blanket exemption from limitation rules.

It is better understood as an example of a tribunal taking a liberal view where the delay, after accounting for the Supreme Court’s COVID-related limitation directions, was effectively only one day and there was no indication of deliberate or mala fide delay.

This is also where the case offers a useful legal lesson beyond the refund itself.

Courts and tribunals have some discretion to condone delay when sufficient cause is shown. But that discretion does not erase limitation law.

What the ruling does — and does not — mean

-The decision is favourable to homebuyers, but it should not be read too broadly.

-It does not establish that every project delay automatically gives a buyer the right to cancel and demand a refund.

-Nor does it mean that every cancellation clause in an allotment letter is invalid.

-What it does reinforce is that a promoter cannot rely on an unfair contractual condition to defeat a statutory right available to an allottee.

-Batra said the judgment should therefore not be treated as a blanket rule that every delay leads to an unconditional refund.

“The entitlement to refund will still depend upon the facts of each case and the requirements of Section 18,” he said.

At the same time, he said the broader principle is important: contractual terms cannot be used to defeat or indefinitely postpone statutory rights given to homebuyers under RERA.

What MahaREAT finally ordered

The tribunal allowed both appeals and directed the promoters to refund:

Rs 48,73,313 paid for one flat

Rs 66,56,993 paid for the other flat

The total refund works out to Rs 1,15,30,306, or about Rs 1.15 crore. The promoters were also directed to pay interest at SBI’s highest MCLR plus 2%, calculated from the respective dates of payment until final realisation. In addition, MahaREAT awarded Rs 25,000 as costs to the buyer.

The often-quoted figure of Rs 1.33 crore should therefore be used with some caution. The tribunal’s operative direction is for the Rs 1.15 crore principal refund plus interest at the specified rate until final realisation. If Rs 1.33 crore is used as the interest figure in a story, it should be clearly described as a calculated/ accrued amount as of a particular date, rather than as a fixed interest amount expressly awarded by the tribunal.

The bigger lesson for homebuyers

The Raghuwanshi case has two separate lessons. The first is about the contract.

A homebuyer should not assume that a clause in an allotment letter will automatically protect the builder if the clause is heavily one-sided or conflicts with statutory rights. In particular, a refund condition that effectively makes the buyer wait indefinitely for a new purchaser can come under scrutiny. The second is about procedure.

Even when a buyer may have a strong substantive case, limitation can become a separate hurdle. The safest approach is to calculate the appeal deadline immediately after receiving a MahaRERA order and file within time.

The Raghuwanshi case succeeded on both fronts: MahaREAT first allowed the delayed appeals to be heard after considering the COVID-era limitation rules, and then, on the merits, rejected the attempt to make the buyer’s refund dependent on a fresh sale.

For a homebuyer, that distinction matters. A builder’s contract may set out the terms of a transaction, but it cannot necessarily be used to postpone or defeat a right that the law itself gives the buyer.

Disclaimer: This story is based on the orders passed by the Maharashtra Real Estate Appellate Tribunal (MahaREAT) and the submissions and responses of the parties recorded in the proceedings. The views expressed by the expert quoted in the story are his own. The reference to the Rs 1.33 crore interest figure is an indicative calculation; the Tribunal’s operative direction provides for interest at SBI’s highest MCLR plus 2% from the respective dates of payment until final realisation.

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