Maharashtra Real Estate Tribunal Orders Refund to NRI Homebuyer Despite No Registered Sale Agreement

The Maharashtra Real Estate Appellate Tribunal (MREAT) has ruled in favor of a Non-Resident Indian (NRI) homebuyer, holding that a developer cannot refuse a refund solely because no formal agreement for sale was signed. The tribunal ordered the developer to return more than ₹26 lakh, along with interest, to UAE-based NRI Ashok R. Deshmukh, who had booked an apartment in Panvel near Mumbai over a decade ago but never received possession.

Ashok Deshmukh had booked a flat in 2013 in a Panvel housing project for a total value of ₹84 lakh. At the time of booking, he paid ₹1 lakh as a token amount. Over time, he made additional payments totaling ₹26 lakh in instalments. Due to consistent delays in the project, he later shifted the booking to a different tower within the same complex, hoping for quicker possession.

The original booking form, issued by the developer, linked possession to the receipt of an occupation certificate. However, no specific timeline was provided, and no formal sale agreement was executed.

After waiting over five years without receiving the apartment, Deshmukh sought a refund under Section 18 of the Real Estate (Regulation and Development) Act, 2016 (RERA), which provides compensation to homebuyers in cases of delayed possession.

MahaRERA's Initial Ruling

In September 2019, Deshmukh filed a complaint with the Maharashtra Real Estate Regulatory Authority (MahaRERA). In March 2020, MahaRERA ruled that Section 18 of RERA was not applicable since no registered sale agreement had been executed between the parties. The authority advised that both the developer and the buyer execute and register the agreement within 30 days. It also stated that if the buyer wished to cancel, the refund would be governed by the terms outlined in the initial application form.

Dissatisfied with this response, Deshmukh appealed to the Maharashtra Real Estate Appellate Tribunal.

Developer's Defense

The developer argued that Deshmukh was not entitled to any relief under Section 18 due to his failure to complete the formalities for executing the sale agreement. According to the developer, the absence of such an agreement rendered the clause inapplicable.

The developer further contended that Deshmukh never produced any document with a promised possession date. They maintained that he could not benefit from his own decision not to formalize the sale through a registered agreement.

Tribunal's Observations and Final Verdict

After reviewing the case, MREAT disagreed with MahaRERA’s earlier interpretation. The tribunal emphasized that Section 18 does not mandate the existence of a formally registered agreement for it to apply. It found that the booking form, which included critical details and reflected mutual consent between the parties, constituted sufficient evidence of a sale arrangement.

MREAT found that the understanding recorded in the booking document demonstrated both parties' intention to engage in a property transaction. It stated that the substance of such a document, even if not titled as an agreement, holds legal significance under RERA.

The tribunal also clarified that the Real Estate Act does not allow developers to withhold or forfeit earnest money arbitrarily in the absence of specific contractual provisions. In Deshmukh's case, the ongoing delay—over a decade since the initial booking—was deemed unreasonable and attributable solely to the developer.

The tribunal directed the developer to refund the ₹26 lakh paid by Ashok Deshmukh. Interest on the amount is to be calculated from the date of each payment, at a rate equivalent to the State Bank of India’s highest marginal cost of lending rate (MCLR) plus 2%. The entire amount, including the accrued interest, must be paid within one month of the tribunal’s order dated May 7, 2025.

MREAT noted that even after several years, the developer failed to deliver possession, and the buyer had merely sought a refund of the money he paid—along with applicable interest—due to the project's non-completion. The tribunal found this to be a reasonable demand in light of the circumstances.

The ruling reinforces that developers cannot escape liability by relying on technicalities such as the absence of a registered agreement, particularly when documentation like a booking form reflects clear mutual intention. It places the burden on developers to fulfill their commitments and cautions against indefinite project delays without accountability.

The decision also strengthens the legal standing of homebuyers who rely on booking forms or other preliminary documents, especially in cases where developers delay formal agreements.

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