Sanklecha Constructions Pvt. Ltd. & Ors. v. Nitin Madhukar Shewale & Ors.

What happened

Nitin and Shital Shewale booked Flat No. 702 in Building C-1 of a project by Sanklecha Constructions Pvt. Ltd. for ₹43,13,200 and paid ₹22,58,178. By the agreement for sale of 16 May 2016 the promoter was to deliver possession by 31 December 2017, subject to reasonable extension. The allottees withdrew from the project, and MahaRERA by an order of 24 August 2021 held them entitled to refund of the entire amount with interest from 1 January 2018 at the rate in Rule 18 of the 2017 Rules, but gave the promoter the option to make the refund only after obtaining the occupation certificate. The Maharashtra Real Estate Appellate Tribunal, by a judgment of 7 November 2023 and a review order of 28 November 2024, withdrew that option and directed immediate refund with interest. The promoters appealed under section 58 of the Act.

Questions before the court

• Is the promoter's obligation to refund on demand under section 18(1) absolute, or can the Authority or Tribunal take account of mitigating circumstances and the promoter's genuine efforts?
• Can the refund be directed to be made only after the occupation certificate is secured?

Why the court ruled this way

The Court held that on a plain reading of section 18 the right to seek return of the amount with interest is absolute and unqualified, and cannot be diluted by the Authority, the Appellate Tribunal or the High Court by allowing the promoter to refund only after securing the occupation certificate (paragraph 30). It relied on the Supreme Court's reading of section 18(1)(a) and section 19(4), which treat the right to refund on demand as an unconditional right of the allottee where possession is not given within the agreed time, regardless of unforeseen events or stay orders not attributable to the allottee, and which allows interest at the prescribed rate (paragraph 24). It answered the questions of law accordingly and held that the direction to refund with interest from 1 January 2018 under Rule 18 was valid (paragraphs 37 and 38).

Controlling point

The promoter's obligation to return the amount with interest on the allottee's demand under section 18(1) of the RERA Act is absolute and unqualified, and cannot be postponed until the occupation certificate is obtained.

Order and next steps

The second appeal was dismissed and the direction to refund the entire amount received, with interest at the Rule 18 rate from 1 January 2018, was upheld. The application for stay did not survive and was disposed of. There was no order as to costs.

Practical implications

A homebuyer who has withdrawn from a delayed project can seek refund with interest on demand under section 18(1), and the promoter cannot make the refund depend on getting an occupation certificate. A promoter's efforts to complete the project do not reduce the interest or defer the date of refund.

Limits of this ruling

• The ruling concerns an allottee who has demanded a refund under section 18(1); an allottee who stays in the project is entitled to interest for delay until possession.