Buyer’s ₹5.51-Crore Payment Won’t Secure Interim Flat Protection: Bombay HC Upholds ₹38.18-Crore Deposit, Says RERA’s 10% Cap Doesn’t Limit REAT’s Interim Orders

In 2010, the Appellant received a letter of allotment (LOA) for a flat in the Palais Royale project for Rs.76.36 crores.

The LOA required Rs.38.18 crores at execution of the agreement for sale; the Appellant paid Rs.5.51 crores but did not execute the agreement or pay the first instalment.

Following the original promoter’s winding up and a SARFAESI auction, Respondent No.1 acquired the project.

It terminated the LOA in October 2022 and offered a refund.

MahaRERA dismissed the Appellant’s complaint, holding that the termination preceded the complaint and that no allottee-promoter relationship existed.

In the Appellant’s appeal, the REAT granted status quo over the flat subject to deposit of Rs.38.18 crores.

The Appellant challenged that condition under Section 58 of the RERA Act.

The High Court admitted the appeal on three questions of law.

Section 13(1) of the RERA Act prohibits a promoter from accepting more than 10% of the cost of a flat as advance payment or application fee before entering into and registering a written agreement for sale; the restriction governs the promoter’s acceptance of payment, not the REAT’s exercise of interim powers.

Sections 44(3) and 53 confer broad authority on the REAT to make interim orders and regulate its procedure, including imposing conditions to balance the parties’ interests.

Section 58 permits a second appeal on a question of law, while appellate interference with discretionary interim orders is limited to cases of arbitrary, capricious or perverse exercise of discretion, or disregard of settled principles [*Wander Ltd. v. Antox India P. Ltd.*; *Mohd. Mehtab Khan v. Khushnuma Ibrahim Khan*].

The Court also applied the principle that readiness and willingness to perform may include proof of financial capacity [*U.N. Krishnamurthy v. A.M. Krishnamurthy*].

Section 4 of MOFA was relevant to the 2010 allotment.

The Court held that Section 13(1) regulates what a promoter may accept before a registered agreement; it does not cap a deposit that the REAT may require as a condition of interim protection.

Sections 44(3) and 53 empower the REAT to shape interim relief to balance equities and test an appellant’s bona fides.

Given that the flat was ready for occupation, the Appellant had paid less than 10% of the agreed consideration, and the LOA contemplated payment of Rs.38.18 crores against execution of the agreement, the deposit condition served to test readiness and financial capacity while protecting the promoter from prejudice caused by restraint on dealing with a valuable asset.

The Court found no arbitrary or legally impermissible exercise of discretion.

It declined to decide whether the LOA or MahaRERA’s decision was substantively valid, holding that those matters were for the REAT in the pending appeal on merits.

It found it unnecessary to decide the third question on the merits.

The Second Appeal was dismissed, leaving the REAT’s condition of depositing Rs.38.18 crores in place; the High Court’s interim protection was not continued, but the Appellant could deposit that amount within two weeks, in which event the REAT’s status quo order would continue during the appeal.

The findings were stated to be prima facie and not binding on the REAT when deciding the appeal finally.