Bombay High Court Says Delayed Project Homebuyers Can Get RERA Refund Without Waiting for OC

Court Protects Homebuyers’ Refund Rights Under RERA

The Bombay High Court has ruled that homebuyers who choose to withdraw from a delayed housing project cannot be forced to wait for the developer to receive an Occupation Certificate (OC) before getting their refund.

Justice Sandeep Marne made the observation while dismissing an appeal filed by Sanklecha Constructions Pvt. Ltd. and its directors. The case involved two homebuyers who had booked flats in the Waterways project in Nashik and later sought a refund after the developer failed to deliver possession within the promised timeline.

The court upheld the direction requiring the developer to return Rs 22.58 lakh to the buyers, along with interest from January 1, 2018.

Homebuyers Paid Rs 22.58 Lakh for Nashik Housing Project

The two buyers had booked flats with a total agreed value of Rs 43.13 lakh. They had already paid Rs 22.58 lakh to the developer.

Their Agreement for Sale was signed on May 16, 2016, with possession scheduled for December 31, 2017. However, the project was not completed within the agreed period.

Due to the delay, the buyers approached the Maharashtra Real Estate Regulatory Authority (MahaRERA) in 2019. They requested permission to exit the project and sought a refund of the amount they had already paid.

MahaRERA Ordered Refund With Interest

In August 2021, MahaRERA accepted the buyers' request and directed the developer to refund Rs 22.58 lakh along with interest from January 1, 2018.

The interest was to be calculated at the rate prescribed under Rule 18 of the Maharashtra RERA Rules.

However, the original order allowed the developer to make the refund after obtaining the Occupation Certificate. It also gave the developer the option to make the payment earlier.

The homebuyers challenged this condition before the Maharashtra Real Estate Appellate Tribunal.

Tribunal Removes Condition Linked to Occupation Certificate

In November 2023, the appellate tribunal removed the concession given to the developer and directed it to make the refund.

Sanklecha Constructions then approached the Bombay High Court against the tribunal's decision.

The developer argued that it had been making genuine efforts to complete the project. It also claimed that ordering an immediate refund could affect the project's cash flow and create difficulties for other homebuyers.

The developer's lawyer told the court that two of the five buildings were around 95% complete, another was about 85% complete, while Building C-1 was around 70% complete.

The homebuyers maintained that once they exercised their legal right to withdraw because of the delay, the developer could not postpone repayment until the OC was received.

Bombay High Court Upholds Homebuyers' RERA Rights

Justice Sandeep Marne agreed with the homebuyers' position and upheld the refund order.

The court observed that Section 18(1) of the Real Estate (Regulation and Development) Act, or RERA, does not provide a developer with discretion to decide when a refund should be made after a buyer exercises the right to withdraw because of delayed possession.

The court held that once a promoter fails to complete a project or cannot provide possession within the agreed period, an allottee has the right to seek a refund, while the promoter has an obligation to fulfill that demand.

Court Says Refund Cannot Be Delayed Over Project Completion

The Bombay High Court also made a distinction between a refund and compensation.

According to the court, returning the amount paid by the homebuyer along with applicable interest represents the basic entitlement available under Section 18 of RERA.

The court held that the right to seek a return of the money paid with interest is "absolute and unqualified."

It also rejected the argument that efforts to complete the project or concerns about cash flow could be used as reasons to delay the refund.

Rs 22.58 Lakh Refund With Interest Upheld

The High Court ultimately dismissed the developer's appeal and upheld the direction to refund Rs 22.58 lakh to the two homebuyers, along with interest calculated from January 1, 2018.

The ruling reinforces the protection available to homebuyers under RERA when developers fail to provide possession within the agreed timeframe. It also makes clear that buyers who legally choose to withdraw from a delayed project cannot be required to wait for an Occupation Certificate before receiving their eligible refund.