Builder Cannot Terminate Allotment for Non-Payment Without First Executing and Registering Agreement for Sale: MahaREAT

 

Builder Cannot Terminate Allotment for Non-Payment Without First Executing and Registering Agreement for Sale: MahaREAT

Case: Manojkumar Singh v. Era Realtors Pvt. Ltd.
Appeal No.: AT006000000204882 of 2024
Arising from: Complaint No. CC006000000282178 of 2019
Forum: Maharashtra Real Estate Appellate Tribunal (MahaREAT)
Decision: 7 September 2026
Citation: 2026 LLBiz REAT (MH) 65

The dispute concerned a homebuyer whose allotment was terminated by Era Realtors Pvt. Ltd. on the ground of non-payment. MahaREAT held that the promoter could not rely upon the allottee's alleged default when the promoter itself had failed to comply with the statutory requirement under Section 13 of the RERA Act.

Key issue

Section 13 of RERA prohibits a promoter from accepting more than 10% of the cost of the apartment, plot or building as advance/application fee without first entering into a written Agreement for Sale and registering it under the applicable law.

The Tribunal found that the promoter had accepted amounts exceeding the statutory 10% threshold but had not executed and registered the Agreement for Sale.

Finding of MahaREAT

The Tribunal held that a promoter cannot terminate an allotment for alleged non-payment when the promoter itself has failed to execute the Agreement for Sale, as required under Section 13.

In other words, the promoter cannot simultaneously:

• accept more than 10% of the consideration without a registered Agreement for Sale;

• fail to comply with Section 13; and

• thereafter rely upon the allottee's failure to make further payments to terminate the allotment.

The Tribunal further held that the promoter's continuing failure to execute the Agreement for Sale amounted to a violation of Section 13 and constituted an unfair trade practice, attracting penalty under Section 61 of RERA.

Relief granted

MahaREAT allowed the homebuyer's appeal, set aside the MahaRERA order and directed the promoter to:

• refund ₹80.77 lakh to the homebuyer;

• pay interest on ₹1.008 crore at 2% above SBI's highest MCLR for the specified period;

• pay interest on the balance refund amount for the subsequent period up to the date of the order;

• pay a ₹10 lakh penalty under Section 61 for violation of Section 13; and

• pay ₹50,000 as costs.

Important RERA proposition

A promoter cannot take advantage of an allottee's alleged payment default to terminate the allotment when the promoter itself has failed to execute and register the Agreement for Sale after accepting more than 10% of the consideration, in violation of Section 13 of RERA.

This judgment is particularly relevant for cases involving cancellation/termination of allotment, payment defaults, Section 13 compliance, and the promoter's obligation to execute a registered Agreement for Sale.

RERA to have jurisdiction even where agreement for sale is cancelled prior to RERA ; Scope of RERA also extends to disputes arising prior to RERA, where consideration paid to developers was still with them, even after RERA came into force

 In the Matter of Champatlal Jain, Parvin Dumasia and 6 Others vs Suriti Developers Private Limited Complaint no. decided on 04.06.2018 Before Maharashtra Real Estate Regulatory Authority

The Complainants had purchased apartments in Respondent's project Universal Paradise in Mumbai, between 2007 and 2013.The Complainants stated that registered agreements for sale (Agreements for Sale) were entered into with the Respondent for purchasing the apartments and that sometime in February 2017, the Respondent unilaterally cancelled the Agreements for Sale. Aggrieved by the termination notices, the Complainants approached the MahaRERA seeking that the Agreements for Sale ought to be declared valid, legal, subsisting and binding.

The Complaint was disposed of by the MahaRERA stating That though the Agreements for Sale were cancelled by the Respondent before the RERA came into force, in view of the fact that the consideration paid by the Complainants was still with the Respondent, the MahaRERA had complete jurisdiction to hear and adjudicate the complaint. if the Complainants chose to continue, both parties should execute the Agreements for Sale in accordance with Section 13 of the RERA and in addition, do so within 45 (forty-five) days from the date of the Order.

The Order has clarified that the scope of RERA also extends to disputes arising prior to RERA, where consideration paid to developers was still with them, after RERA came into force.