Bombay High Court Permits Flat Buyer to Withdraw Builder's Deposit in Delayed Project Dispute
The Bombay High Court has made a significant ruling, allowing a flat purchaser to withdraw an amount deposited by a builder during the pendency of an appeal. The court observed that builders and buyers cannot be placed on an equal footing, as buyers are generally very vulnerable in such disputes.
Key Ruling on RERA Provisions
On Monday, the High Court clarified that the provisions of the Real Estate (Regulation and Development) Act, 2016 (RERA) do not prevent the appellate tribunal from exercising its discretion to release amounts deposited by a builder in deserving cases. The discretion depends on the facts of each case, with factors including any dispute over amounts paid by the buyer for which a refund is ordered due to project delays.
Background of the Case
The builder, Rare Townships Private Limited, filed an appeal before the High Court to challenge a RERA appellate tribunal order. This order had permitted the buyer, Mitul Gada, to withdraw from a deposit during the pendency of the builder's appeal. The dispute originated from a Maharashtra Real Estate Regulatory Authority (MahaRERA) order in September 2025, which allowed Gada to withdraw pre-deposits made by the builder based on his complaint.
Gada had booked two flats in 2015 for over Rs 3 crore in the North Sea Heights (A1) project, with delivery due on December 31, 2018. He paid almost Rs 2 crore. Due to delays in possession, he complained to MahaRERA, seeking a refund under Section 18 of RERA, along with interest and compensation. In March 2021, MahaRERA ordered the refund with interest.
Court's Observations and Rationale
Justice N J Jamadar, in the ruling on March 30, noted that it is no solace to an allottee that the refund amount is merely secured in a deposit. The release of the amount helps alleviate the buyer's financial constraints and mental anguish caused by the builder's breach of obligations.
The builder argued that permitting withdrawal of the deposits was a transgression of jurisdiction and legally impermissible. However, the buyer's lawyer countered that the release is safeguarded by an undertaking to return the amount with interest if the builder succeeds in the appeal.
The High Court dismissed the builder's submission, stating that the RERA Tribunal is not only empowered to secure the pre-deposit but can also permit withdrawal. The court emphasized that the amount ordered to be refunded under Section 18 of RERA is critical, as it represents money originally paid by the buyer, often years ago.
Protection of Buyer Interests
The court highlighted that the avowed object of RERA provisions is to prevent situations where allottees, despite succeeding before authorities, are left in the lurch. To protect buyer interests when builders appeal against refund orders, the legislature mandates that promoters deposit the amount.
Justice Jamadar observed that the capacity to withstand deprivation of legitimate amounts vastly differs between buyers and builders. He noted that interest, whether statutory or contractual, represents the profit for the person deprived of the money, underscoring the financial imbalance in such disputes.
The High Court concluded that the RERA Appellate Tribunal exercised its discretion judiciously in this case, ensuring justice for the vulnerable buyer after over a decade of delay.
