Termination of allotment was valid where the allottee failed to pay stamp duty and registration charges.

CIDCO leased Plot No. 1 at Airoli, Navi Mumbai, to Airoli Cooperative Housing Society, which entered into a development agreement with JP Builders and Developers.

The promoter initially proposed a 30-storey building and allotted Flat A-502 to Vandana and Nagendra Kharatmol for ₹48,75,000; they paid ₹12,30,000 as booking amount.

Owing to litigation concerning additional FSI and subsequent reduction of the sanctioned building to 19 floors, Flat A-502 was not constructed.

The Kharatmols thereafter arranged for transfer of the booking, and the promoter issued a fresh allotment letter dated 11 July 2013 in favour of Santosh Sandhu, recording payment of ₹12,30,000 by him.

After the project was registered under RERA and revised plans were sanctioned, the promoter called upon Sandhu to select another flat and execute a registered Agreement for Sale by paying stamp duty and registration charges.

Sandhu selected Flat No. 1208 but did not initially pay the required charges.

Although he claimed to have transferred ₹4,65,000 towards stamp duty and registration, the amount remained with the bank and was never credited to the stamp and registration authorities.

The amount was subsequently refunded to him by the bank.

The promoter terminated the transaction by notice dated 30 July 2019 and refunded ₹11,07,000 after deducting ₹1,23,000 as earnest money.

Sandhu approached MahaRERA, which directed the promoter to execute a registered Agreement for Sale in respect of another flat of his choice.

The Maharashtra Real Estate Appellate Tribunal upheld that direction and additionally awarded interest on ₹12,30,000 at SBI MCLR plus 2% from 12 July 2016 until possession, with adjustment against the balance consideration.

Both parties filed second appeals.

The promoter challenged the direction to execute the agreement, while Sandhu claimed adjustment of amounts allegedly paid by him to the original allottees and sought recognition of a total payment of ₹28,75,281.

Whether the allottee had proved payment of stamp duty and registration charges before termination of the transaction?

Whether the promoter was justified in terminating the allotment by notice dated 30 July 2019?

Whether MahaRERA and the Appellate Tribunal were justified in directing the promoter to execute an Agreement for Sale in respect of a flat chosen by the allottee?

Whether the Appellate Tribunal was justified in awarding interest on ₹12,30,000 and directing adjustment of that interest against the balance consideration?

Whether the amount paid by the original allottees, the Kharatmols, was required to be adjusted in the transaction subsequently entered into between the allottee and the promoter?

The Court applied Section 13 of the Real Estate (Regulation and Development) Act, 2016, which requires the promoter to execute a registered Agreement for Sale before accepting more than the prescribed percentage of the consideration and protects the allottee against unregulated demands or transactions.

However, the statutory obligation to execute the agreement presupposes the allottee’s cooperation and compliance with the necessary formalities, including payment of stamp duty and registration charges.

The Court also applied the principle that a promoter cannot retain the booking amount after termination of the transaction where the amount is otherwise refundable, though interest may be determined having regard to the parties’ conduct and circumstances.

The Court distinguished Laureate Buildwell Private Limited v. Charanjeet Singh, (2021) 20 SCC 401, holding that its principle concerning continuation of contractual timelines upon transfer of allotment did not require automatic adjustment of every amount paid by an earlier allottee in a fresh allotment made to a subsequent allottee.

The Court found that Sandhu had not actually paid stamp duty or registration charges to the competent authorities.

The bank records and his own letter dated 18 January 2020 showed that no challan or statutory e-payment receipt had been generated and that the amount remained with the bank before being returned to him.

His conduct also demonstrated non-compliance: despite repeated notices, he initially expressed inability to arrange the funds, failed to produce proof of payment, remained silent after termination, and did not subsequently pay the charges even after receiving the refund.

Accordingly, the promoter was ready and willing to execute the Agreement for Sale, while the allottee’s failure to complete the required formalities justified termination.

The authorities below therefore erred in mechanically relying on Section 13 to compel execution of an agreement after valid termination.

As to the monetary claim, the Court held that only ₹12,30,000 was proved as having been paid to the promoter.

The allotment letter did not record any adjustment of the Kharatmols’ payment, and Sandhu’s own email stating that approximately ₹33 lakhs remained payable contradicted his later claim that ₹28,75,281 had already been paid.

Nevertheless, the promoter could not retain the ₹12,30,000 booking amount or deduct earnest money.

Considering the prolonged delay in the project and the circumstances of the case, the Court maintained interest at SBI MCLR plus 2% from 12 July 2016, but directed that it be paid with the principal upon refund rather than adjusted against the price of a future flat.

It held that the promoter was justified in terminating the allotment on 30 July 2019 and that the directions of MahaRERA and the Appellate Tribunal requiring execution of an Agreement for Sale for another flat were unsustainable.

The claim for adjustment of the Kharatmols’ payments and the alleged total payment of ₹28,75,281 was rejected.

The orders of MahaRERA dated 8 October 2020 and the Appellate Tribunal dated 22 October 2024 were set aside.

The promoter was directed to refund ₹12,30,000 to the allottee with interest at SBI MCLR plus 2% from 12 July 2016 until actual payment, without deduction of earnest money.

Second Appeal No. 116 of 2025 filed by the promoter was partly allowed, Second Appeal No. 603 of 2025 filed by the allottee was dismissed, and there was no order as to costs.