Dubai-based homebuyer cancels 2 Mumbai flats after long delay, but builder kept him waiting for refund and wanted to deduct charges: MahaREAT orders full refund + Rs 1.33 crore in interest

Justice S.S. Shinde, Chairperson along with Dr Rajagopal Devara, member of Maharashtra Real Estate Appellate Tribunal (MahREAT), Mumbai in a recent judgement gave relief to a Dubai-based homebuyer from an arbitrary, one-sided clause incorporated by a builder in allotment letters.

In this case, as discussed in this article, the Dubai-based Indian homebuyer had booked two flats with a Mumbai-based builder. However, even after more than a year from the promised delivery date, the homebuyer did not get possession of the flats. Moreover, the homebuyer also had concerns about the draft sale agreement which reportedly contained discrepancies and did not accurately represent the terms he had initially agreed upon in the allotment letters.

For this reason, the homebuyer cancelled the bookings and asked for a refund. However, the builder said that the homebuyer can get refund if a new buyer is found for these flats and also then the refund is subject to the terms and conditions as specified in the allotment letters, more specifically clause-12.


The clause-12 which the builder had inserted in the allotment letters said that the builder has the power to forfeit 10% of the purchase price as liquidated damages and simultaneously charge interest at 1.5% per month (18% per annum) computed from the date of the allotment letter until termination, all deducted from whatever refund might eventually become payable to the homebuyer who cancelled his booking.

Feeling, aggrieved the homebuyer took legal action against the builder by filing a case in RERA tribunal in Mumbai. On July 1, 2026 the homebuyer won the case in MahaREAT tribunal.

Check out the full story to know how the Dubai-based homebuyer won the case in MahaREAT.

What is the background?

In 2015, Mr Raghuwanshi, decided to book two flats offered by a Mumbai, India based builder. Since Raghuwanshi resided in the Business Bay area of Dubai, United Arab Emirates (UAE) at that time the builder’s Dubai office in Sheikh Zayed Road did all the backend paperwork.

The builder’s Mumbai office is near Sion, Chunabhatti Signal, Mumbai. Raghuwanshi and the builder had agreed that the price for both these Mumbai flats would be Rs 2.35 crore and Rs 3.17 crore, respectively. So he paid about 20% of the amount (Rs 48.73 lakh and Rs 66.56 lakh) for the respective flats and signed the allotment agreement. However, no agreement for sale was signed.

As per the allotment letters the primised date of giving possession of this flat was before April 2017. However, the occupancy certificate was obtained on May 27, 2018, i.e. almost one year after it was promised. Moreover, Raghuwanshi found certain disputes and discrepancies with the terms and conditions of the allotment letter and the draft agreement for sale. So, he decided to cancel the booking and sought refund with interest and take legal action.

On July 1, 2026 Raghuwanshi won the case in MahaREAT as the authorities ordered the builder to refund Rs 48.73 lakh and Rs 66.56 lakh with State Bank of India's Marginal Cost of Lending Rate (MCLR) + 2% and Rs 25,000 cost to Raghuwanshi. Advocate Aman Kacheria represented Raghuwanshi in MahaREAT.

Keep reading to know why Raghuwanshi won the case in MahaREAT.

Also read: Man booked 11 shops for Rs 25 lakh in Mumbai in 1995 but didn't get possession even after 30 years; he fights back and wins full refund with 12% interest

Why Raghuwanshi won the case in MahaREAT?

Amit Wadhwani, Partner at Khaitan & Co, said to ET Wealth Online that Raghuwanshi (the homebuyer) won this case because MahaREAT held that one-sided clauses incorporated into an allotment letter cannot defeat a homebuyer's statutory right to a refund under RERA.

Wadhwani says: "The MahaREAT tribunal also struck down Clause 12 of the allotment letter as it was proved that this clause 12 is heavily loaded in the builder's favour and was also arbitrary, unreasonable, and unconscionable. Thus MahaRERA directed a full refund of the amounts paid together with interest."

Thus this one sided Clause 12 meant that the homebuyer by contrast, had no corresponding right to get any interest compensation or even recover damages for the builder's delays. Wadhwani says that this is the reason why MahaREAT held that such grossly inequitable terms incorporated in clause 12 are unenforceable against a flat purchaser who had no meaningful choice but to accept the builder's standard-form contract.

Wadhwani also highlights that in a order dated September 3, 2024, the MahaRERA has prescribed a model allotment letter which builders must issue following MahaRERA Order No. 60/2024, dated September 3, 2024, prescribes the model allotment letter that every promoter must issue under Clause (g) of Sub-section 2 of Section 4 of the Real Estate (Regulation and Development) Act, 2016.

According to Wadhwani, Clause 9 of that model allotment letter by MahaRERA, the authority has said that the maximum amount which a builder can deduct if the homebuyer has cancelled the booking is 2% of the cost of the unit. In this same order (2024) MahaRERA also gave a graduated scale which says how much money can a builder deduct depending on when the cancellation request is received.

So the balance money which can't be deducted, must be refunded within 45 days, and if the builder fails to do so, the buyer is entitled to interest at SBI's highest Marginal Cost of Lending Rate (MCLR) plus 2%. The table below, drawn from the model allotment letter prescribed under Order 60, sets out the maximum deductions that MahaRERA contemplates:

Sr. No.	Cancellation request received	Maximum deduction
1	Within 15 days of allotment letter	Nil
2	Within 16 to 30 days of allotment letter	1% of the cost of the unit
3	Within 31 to 60 days of allotment letter	1.5% of the cost of the unit
4	After 61 days of allotment letter	2% of the cost of the unit

Source: Khaitan & Co

As per Wadhwani, another reason why homebuyer (Mr Raghuwanshi) won this case is because the builder failed to execute registered agreements for sale despite receiving approximately 20% of the consideration, in violation of Section 4(1) of the Maharashtra Ownership of Flats Act, 1963. Possession was also not delivered by the promised date of April 2017, even though the Occupancy Certificate was obtained in May 2018.

The MahaREAT tribunal thus held that the builder cannot rely on contractual clauses to defeat the buyer's rights when the builder itself was in breach of its statutory obligations.

Wadhwani says that MahaREAT while arriving at its decision applied Section 18 of RERA, which entitles an allottee to get a refund with interest where the builder fails to give possession of the flat in accordance with the agreement.

Also read: Booked flats in 2005, still awaiting possession: Builder ordered to pay 10.05% interest to homebuyers for nearly 20-year delay

MahaREAT order and discussion

The MahaREAT judgement’s summary is as follows:

The builder violated the Maharashtra Ownership of Flats Act, 1963 by not signing the sale agreement when taking payment

MahaREAT observed that as per Section 4 (1) of the Maharashtra Ownership of Flats Act, 1963, the builder has a responsibility to sign a written agreement for sale with the homebuyers before accepting any sum of money as advance or deposit. In Raghuwanshi’s case, he paid about 20% of the money, yet the builder failed to sign the agreement for sale as prescribed under Section 4 (1).

Thus MahaREAT said that they are of the view that the builders have contravened the provisions of MOFA, 1963.

Also read: Booked flat for Rs 24 lakh in 2010, paid Rs 40 lakh over time, still no possession in 2026; homebuyers awarded full refund and Rs 2.5 lakh compensation each

Homebuyers are entitled to refund under Section 18 of RERA Act if cancelled due to delayed possession

MahaREAT said that based on the evidence, the builder has failed to complete the said project as agreed and hand over possession of flats to Raghuwanshi.

Therefore, the builder is liable to return the amount received in respect of the subject flats along with interest.

MahaREAT observed: “We 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.”

Clause-12 of allotment letter agreement is heavily loaded in builder’s favour

When MahaREAT read Clause-12 of the allotment letter agreement which both the builder and Raghuwanshi signed, MahaREAT said that this Clause-12 is heavily loaded in favour of the builder.

This is because the Clause-12 of the Allotment Letters indicates that even after termination, the homebuyer would not be entitled to immediate refund of the money paid by them as the refund was made contingent upon the builders securing a new buyer for the same flat and getting the full amount from the subsequent purchaser.

Simultaneously, Clause-12 also mentioned that the builder reserved the right to make deductions, adjustments and forfeiture of various amounts from such refunds.

Raghuwanshi’s advocate (Advocate Aman Kacheria) cited the case of MahaREAT in Dinesh R. Humane and Ors. v. Piramal Estate Pvt. (Complaint No. CC006000000089770] which said that the terms that are one-sided, unreasonable and unfair cannot be enforced against flat purchasers. MahaREAT said that Raghuwanshi’s advocate rightly cited this case and it applies to his case also.

Thus MahaREAT said that the builder cannot insist upon enforcement of Clause-12 which is against the rights of homebuyers under RERA framework. In the present case, they were of the view that the aforesaid principles apply.

The effect of the clause was that the refund of the part payment would indefinitely depend on the Respondent's finding a new buyer and recovering the entire amount from such a buyer.

MahaREAT said: “Such a condition is arbitrary, unreasonable and unconscionable. The builder has already availed and used part consideration amount of the Raghuwanshi for several years, and now cannot be permitted to postpone refund indefinitely by making it contingent upon future sale of the flats, which is solely within the builder's control.”

In the present case, MahaREAT said that the builders, having accepted part consideration amount, failed to execute agreements for sale and handover possession of the subject flats on agreed date of delivery, violating the provisions of MOFA, 1963 and RERA Act, 2016.

MahaREAT order:

• MahaREAT said MahaRERA authority committed an error by restricting the refund based on Clause-12’s satisfaction.
• MahaREAT ruled Raghuwanshi is entitled to full refund of all monies paid by him with interest as per RERA Act.
• MahaREAT said that the interest shall be SBI’s highest MCLR rate plus 2% from the respective dates of payment till final realisation.

Approximate calculation: The total amount of money for the two flats which the homebuyer had paid is Rs 48.73 lakh and Rs 66.56 lakh, which is Rs 1.15 crore. If we assume an average effective interest rate of around 10.5% (SBI's highest MCLR + 2%) and about 11 years of interest, it comes to approx Rs 1.153 crore × 10.5% × 11 years = Rs 1.33 crore interest (estimate).