As per case facts, an allottee appealed against an order by the Real Estate Regulatory Authority, which had directed adherence to a development agreement. The Appellate Tribunal subsequently allowed the ...
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-SA-153-2026.DOC
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
CIVIL APPELLATE JURISDICTION
SECOND APPEAL NO. 153 OF 2026
WITH
INTERIM APPLICATION (ST) NO. 9456 OF 2026
M/s Sai Enterprises
701, 7
th
Floor, Centre Plaza,
Shivaji Chowk, Daftary Road,
Malad (East), Mumbai – 400 097.
And also at Sethia Pride,
CTS No. 161/1 & 2, W.E. Highway,
Opp Poisar Metro Station,
Kandivali (East), Mumbai 400 101. ..Appellant
Versus
1. Sangeeta Ravi Punjabi
37, Prem Court, 4
th
Floor,
Peddar Road, Mumbai – 400 026.
2. M/s Super Constructions
G-35, Shagun Arcade,
A.K. Vaidya Marg, Dhindoshi Depot,
Malad (East), Mumbai – 400 097.
3. Najma Haroon Malkani
Flat No. 704, Sahyadri Apartments,
Malkani Estate, Malad (East),
Mumbai – 400 097.
4. Alamgri Ali Mohammad Malkani,
Flat No. 105, Sunshine Apartments,
Malkani Estate, Malad (East),
Mumbai – 400 097.
5. M/s Frission Finance and Investment Pvt Ltd
A-203 Prabhu Darshan, Opp City Hospital,
ARS 1/18
ARUN
RAMCHANDRA
SANKPAL
Digitally signed by
ARUN
RAMCHANDRA
SANKPAL
Date: 2026.04.22
22:31:42 +0530
-SA-153-2026.DOC
173/D, S.V. Road, Jogeshwari (W),
Mumbai – 400 102.
6. Ramaswrny Seshan Pallaur
Director, M/s Frission Finance and Investment
Pvt Ltd
A-203, Prabhu Darshan,
Opp City Hospital, 173/D,
S.V. Road/Jogeshwari (West),
Mumbai – 400 102.
7. Sunil Tansukhrai Vankawala,
Director,
M/s Frission Finance and Investment
Pvt Ltd,
A-203, Prabhu Darshan, Opp City Hospital,
173/D, S.V. Road, Jogeshwari (West),
Mumbai – 400 102.
8. Trichur Ramaswamy Ananth Narayan,
Director, M/s Frission Finance and
Investment Pvt Ltd
A-203, Prabhu Darshan Opp City
Hospital, 173/D, S.V. Road,
Jogeshwari (West),
Mumbai – 400 102.
…Respondents
Mr. Rubin Vakil, with Abir P (through VC) and Kartik Joshi, i/b Wadia
Ghandy & Co, for the Appellant.
Mr. Manish Gala, with Minil Shah and Nilesh Gala, for Respondent
No.1.
CORAM:N. J. JAMADAR, J.
RESERVED ON :1
st
APRIL 2026
PRONOUNCED ON :22
nd
APRIL 2026
JUDGMENT:
1.This Appeal is directed against a judgment and order dated 26
th
November 2025 passed by the Maharashtra Real Estate Appellate
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-SA-153-2026.DOC
Tribunal, Mumbai (“the Appellate Tribunal”), whereby the Appeal
preferred by Respondent No.1-allottee against an order dated 3
rd
August
2021 passed by the Maharashtra Real Estate Regulatory Authority (“the
Authority”) in Complaint No. CC006000000057896, came to be allowed
and the Respondents therein including Respondent No. 8-the Appellant
herein have been directed to allot a flat admeasuring 775 sq ft and
execute a registered Agreement for Sale in favour of Allottee in “Sethia
Imperial Avenue” (“the project”), upon receipt of balance consideration,
and also to pay interest to the Allottee on the amount of Rs.
12,78,750/- parted with by the Allottee from 26
th
September 2013 till
the delivery of possession of the subject flat, at the rate of State Bank of
India’s Marginal Cost of Lending Rate plus 2%.
2.The Appeal arises in the backdrop of the following facts.
2.1 M/s Super Constitution, Respondent No.2, had started
development of a project known as “Sun Gates” on the plot of land
bearing CTS No. 9, 9-A, 9A/1 to 57, 123A and 123B of village
Bandongiri, Malad (East), Taluka Borivali, under a slum rehabilitation
scheme.
2.2 Upon receipt of part consideration of Rs.12,78,750/-, Respondent
No.2 issued an allotment letter, thereby allotting Flat No. 1701,
admeashing 775 sq ft at the rate of Rs.5,500/- per sq ft, aggregating to
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the value of Rs.42,62,500/-, upon the terms and conditions
incorporated therein, on 25
th
September 2010.
2.3 On 28
th
April 2013, Respondent No.2 executed a Development
Agreement with the Appellant and thereunder sold 50% FSI of the sale
component of the said project to the Appellant. Under a further
Agreement dated 5
th
April 2016, Respondent No.2 sold the balance 50%
FSI also to the Appellant.
2.4 Pursuant to the aforesaid Agreements, a Development Agreement
dated 17
th
October 2017, came to be executed between Respondent
Nos. 3 and 4, the owners of the subject land, Respondent No.2-first
developer, and the Appellant-the second developer.
2.5 In accordance with the terms of the said Development Agreement
dated 17
th
October 2017, the Appellant claims, Respondent No.2-first
developer had agreed to settle all the debts and claims of the investors
and the Appellant was only to provide the agreed consideration for
refund of the amount along with interest to the parties with whom the
first developer had entered into the transactions.
2.6 Thus, on 23
rd
March 2018, Respondent No.2 informed
Respondent No.1-Allottee that the project was stalled, it was handed
over to the Appellant and the Allottee shall approach either Respondent
No. 2 or the Appellant, for refund of the amount paid by the Allottee. In
response, as emerges from the record, the Allottee addressed
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communications on 27
th
April 2018 and 18
th
June 2018 conveying her
willingness to complete the transaction and accept the flat after
payment of balance consideration.
2.7 On 29
th
January 2019, the Appellant addressed a communication
to the Allottee (R2) apprising her that on account of the passage of time
and phenomenal increase in the construction cost, it was impossible to
complete the transaction on the agreed terms. Thus, the Allotment
dated 25
th
September 2010 was sought to be terminated and the
Allottee (R1) was called upon to collect the amount paid by her along
with interest at the rate of 10.55% per annum. It was further added that
if the Allottee wished to purchase the flat in the project, the Appellant
would allot the same to the Allottee by giving a discount of 10% on the
then prevailing price of the flat.
2.8 The Allottee filed a complaint, being Complaint No.
CC006000000057896, before the Authority. By an order dated 3
rd
August 2021, the Authority disposed the Complaint directing the parties
to act in accordance with the terms and conditions of the Development
Agreement dated 17
th
October 2017, executed by and between the
Appellant-Respondent No.2 and Respondent Nos 3 and 4, the owners.
2.9 Being aggrieved, the Allottee preferred an Appeal before the
Appellate Tribunal.
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2.10 By the impugned order, the Appellate Tribunal was persuaded to
allow the Appeal. It was
inter alia held that the Appellant was bound by
the allotment made by Respondent No.2, the first developer under the
terms of the Development Agreement dated 17
th
October 2017 itself, the
Appellant had undertaken the responsibility to discharge the debts and
liabilities of the Allottees of Respondent No.2. The contentions of the
Appellant that there was no privity of contract, the complaint was
barred by the law of limitation, and that it was impossible to perform
the contract on account of the subsequent developments, were repelled
by the Appellate Tribunal.
2.11 Being aggrieved by, and dissatisfied with, the impugned order, the
Appellant-second developer is in Appeal.3.Heard Mr. Rubin Vakil, the learned Counsel for the Appellant, and
Mr. Manish Gala, the learned Counsel for the Respondent No.1. With
the assistance of the learned Counsel for the parties, I have perused the
material on record.
4. Mr. Rubin Vakil, the learned Counsel for the Appellant, mounted
multi-pronged challenges to the impugned order. First, Mr. Vakil would
urge, the Appellate Tribunal committed a manifest error in law in
fastening the liability on the Appellant in the absence of any privity of
contract between the Appellant and the Allottee. Second, the Appellate
Tribunal completely misconstrued the nature of the Development
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Agreement dated 17
th
October 2017. The Appellant was not a transferee
in interest of Respondent No.2, the first developer. The Appellant had
only purchased the FSI in the sale component in two tranches. Third,
even if the Development Agreement dated 17
th
October 2017 is
construed rather generously, yet, no prudent person can infer that the
Appellant had agreed to provide apartments to the purported Allottees
of the first developer (R2). Fourth, the Appellate Tribunal completely
misread the termination letter dated 29
th
January 2019 to infer an
obligation on the part of the Appellant to allot an apartment to the
Allottee. Lastly, the Appellate Tribunal completely lost sight of the fact
that the identity of the project, which was then being developed by the
first developer (R2), was completely lost and no flat of the dimension
agreed to be allotted to the Allottee was available in the buildings
constructed in accordance with the approval of the Planning Authority.
5.In the above circumstances, the Appellate Tribunal could not have
directed the Appellant to allot the flat and execute the Agreement and
also pay interest on the consideration parted with by the Allottee,
submitted Mr. Vakil.
6.In opposition to this, Mr. Gala, the learned Counsel for
Respondent No.1-Allottee, submitted that the defence of the Appellant
is dishonest and mala fide. On 30
th
September 2025, the Appellant had
disclosed the inventory of unsold flats in the project. Sensing the fact
ARS 7/18
-SA-153-2026.DOC
that the Appellant may be called upon to allot the flat, post-haste the
unsold flats were shown to have been sold surprisingly on the same day,
i.e., 14
th
November 2025, a fortnight prior to the impugned judgment
and order. The impossibility of performance thus sought to be pleaded
was brought about by deceitful means.
7.Mr. Gala took the Court through the recitals in the Development
Agreement dated 17
th
October 2017 to bolster up the case that under
the terms of the very Agreement, the Appellant had undertaken the
responsibility to not only discharge the liabilities of the first developer
(R2) but even indemnify the first developer (R2) and the owners (R3
and R4). In no circumstances, the Allottee’s rights can be extinguished
by referring to the an instrument to which the Allottee was never a
party. The Appellate Tribunal was thus fully justified in directing the
Appellant to discharge its statutory and contractual obligations. Thus,
no substantial question of law arises for consideration, submitted Mr.
Gala.
8.At the outset, it is necessary to note that there is no dispute over
the fact that the first developer (R2) had agreed to allot Flat No. 1701,
admeasuring 775 sq ft for a consideration of Rs.42,62,500/- under the
Allotment Letter dated 25
th
September 2010, and accepted a
consideration of Rs.12,78,750/-, which constituted 30% of the agreed
consideration. Nor there is any controversy over the fact that the said
ARS 8/18
-SA-153-2026.DOC
Agreement to allot was subsisting, on the date the Respondent No.2
addressed a letter dated 23
rd
March 2018 to the Allottee expressing its
inability to develop the project and calling upon the Allottee to accept
the refund. Incontrovertibly, the Allottee expressed her willingness to
complete the transaction, pay the balance consideration and accept the
delivery of the flat. Thus, on 29
th
January 2019, the Appellant professed
to terminate the allotment dated 25
th
September 2010 vide
communication dated 29
th
January 2019.
9.Cumulatively, the aforesaid facts lead to an inescapable inference
that the Agreement to allot the subject flat continued to subsist till 29
th
January 2019, at the least. Implicit in the action of the Appellant of
termination of the allotment is an admission that the said Agreement to
allot did subsist. In this backdrop, the submissions primarily premised
on the absence of privity of contract between the Appellant and the
Allottee, which constituted the fulcrum of the Appellant’s defence,
deserve to be appreciated.
10.Mr. Vakil placed reliance on Clauses 10 to 12 of the Development
Agreement dated 17
th
October 2017 to drive home the point that the
liability of the Appellant was restricted to the discharge of debts and
claims of investors, whose names were mentioned in the Annexure VII
to the said Development Agreement. Indubitably, the name of the
Allottee forms part of the said Annexure VII.
ARS 9/18
-SA-153-2026.DOC
11.In addition to the Clauses 10 to 12 of the Development
Agreement, it would be contextually relevant to note the recitals (EE)
and Clause 4 of the said Development Agreement. They read as under:
“EE” (A) SECOND DEVELOPER shall irrevocably agree and undertake to
takeover, pay, discharge and settle, within period of 12 months from
date hereof, the debts and liabilities of the First Developer towards the
investors etc. to the tune of Rs.17,94,00,325/- (Seventeen Crores Ninety
Four Lakhs and Three Hundred Twenty Five Only) out of that the
owners, First Developer and Second Developer has already paid
Rs.5,25,16,370/- (Five Crores Twenty Five Lakhs Sixteen Thousand and
Three Hundred Seventy Only) to the investors as mentioned in
Annexure ‘VII’ (Part 1 and Part 2) and the liabilities as mentioned in
Annexure VII (Part 3) annexed hereto or more in lieu of the liability of
the Second Developer to pay to the First Developer towards full
satisfaction of the balance consideration of Rs.13,90,94,988/- (Thirteen
Crores Ninety Lakhs Ninety Four Thousand and Nine Hundred Eighty
Eight Only) under the First Agreement within the period of 12 months
(twelve months). In the event, if any investor (s) is/are unable to get
settled due to his absence or due to any unreasonable demand, the
Second Developer shall take over the liability and hereby indemnifies
and keep indemnified the owners and First Developer.
… … ...
(4) The Owners and the First Developer have agreed to accept
consideration in following manner:
The Allottee and Second Developer shall irrevocably agree and
undertake to takeover, pay, discharge and settle, within period of 12
months from date hereof, the debts and liabilities of the First Developer
towards the investors etc to the tune of Rs.17,94,00,325/- (Seventeen
Crores Ninety Four Lakhs and Three Hundred Twenty Five Only) out of
ARS 10/18
-SA-153-2026.DOC
that the owners, First Developer and Second Developer has already
repaid R.5,25,16,370/- (Five Crores Twenty Five Lakhs Sixteen
Thousand and Three Hundred Seventy OnlY0 to the investors as
mentioned in Annexure ‘VII’ (Part 1 and Part 2) and the liabilities as
mentioned in Annexure VII (Part 3) annexed hereto or more in lieu of
the liability of the Second Developer to pay to the First Developer
towards the balance consideration of Rs.13,90,94,988/- (Thirteen
Crores Ninety Lakhs Ninety Four Thousand and Nine Hundred Eighty
Eight Only) under the First Agreement within the period of 12 months
(Twelve months). In the event, if any investor (s) is/are unable to get
settled dues in his absence or due to any unreasonable demand, the
Second Developer shall take over the liability and hereby indemnifies
and keep indemnified the Owners and the First Developer, if the
payment of amount of settlement exceeds Rs.13,90,94,988/- than such
excess payable towards settlement shall be borne and paid by the
Second Developer alone.
… …. ...
10. That it is mutually agreed and understood between the first
developer and second developer that with effect from 1
st
April 2016, the
First Developer in consultation with the Second Developer will settle all
the claims ___ investors as per the list annexed herewith as “Annexure
VII”, herein referred to as the said ___ to whom they have given
allotment in writings of their cumulative investments or otherwise. The
Funds as may be required for such settlement _____ defined in clause
4(a) will be provided by the Second Developer along with any
additional amount payable to them as may be settled with the Second
Developers and such investor with consultation of the First Developer.
Such claims shall be settled by the Second Developer within period of
12 months from the date of this Deed and that the Second Developer
shall provide proof of payment/settlement to the First Developer.
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11. It is agreed by the parties hereto that in the event the investors of
the First Developer as per list Annexed herewith desire to continue of
his/her/their investment with the Second Developer when the balance
receivable consideration & all other charges under the MOFA, shall be
receivable by the Second Developer of such terms and conditions which
may agree upon between such investor/s and the Second Developer and
further writings. MoU or Agreements will be executed between the
Second Developer. It is agreed, admitted and confirmed by the Second
Developer that the Owners/First Developer or their nominees has made
payment of Rs.21,69,500/- for such settlement on behalf of Second
Developer and that the Second Developer shall reimburse the same to
the Owners/First Developer or their nominees of confirmation of the
same on execution of this Agreement. The Second Developer do hereby
agree and undertake to indemnify and keep indemnified the
Owners/First Developers including the respective heirs, executors,
administrators and/or successors against any loss, damage, fine,
penalties, legal proceedings and expenses that may be suffered by,
imposed on or taken against the Owners/First Developer by any of the
investors/creditors mentioned in Annexure ‘VII’.
12. The Owners/First Developer hereby confirm and record that there
is no other investors save and accept shown in investors’ list being
Annexure VII hereto and the First Developer further undertake that if
any investor left or whose name is not in the list shall be settled by the
First Developers only at their own cost and expenses.”
12.A conjoint reading of the aforesaid clauses indicates that the
parties had agreed that the Appellant (Second Developer) shall pay,
discharge and settle, within a period of 12 months from the date of the
ARS 12/18
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said Agreement, the debts and liabilities of the first developer towards
the investors to the tune of Rs. 17,94,00,325/-. Part of the said amount
was already paid. The balance amount was to be paid by the second
developer for the said purpose.
13.What followed is of critical salience. The parties agreed that “if
any investor (s) is/are unable to get settled due to his absence or due to
any unreasonable demand, the second developer shall take over the
liability.” This recital clearly indicates that the parties were alive to the
fact that some of the investors may not agree to the settlement of their
claim in the manner proposed by Respondent No.2 and the Appellant
and, thus, a provision was made that the second developer-Appellant
would take over the liability arising out of the said claim.
14.The aforesaid intent of the parties is further fortified by the
express ‘indemnity’ given by the second developer. The Appellant
further agreed that it would indemnify and keep indemnified the
owners and first developer against any loss, damage, fine, penalties,
legal proceedings and expenses that may be suffered by, imposed on or
taken against the owners/first developer by any of the
investors/creditors mentioned in Annexure VII.
15.In the face of the aforesaid clear and explicit recitals in the
Development Agreement, the submission on behalf of the Appellant that
the liability of the Appellant-second developer was confined to payment
ARS 13/18
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of the consideration to facilitate the refund of the amount calculated by
the first developer (R1) cannot be acceded to, even without delving into
the aspect of the binding character of the said Development Agreement
inter se developers on the rights of Allottees.
16.On first principles, since the Allottees were not parties to the
Development Agreement dated 17
th
October 2017, the contract can
never be said to have been novated and, thus, the mutual
understanding between the first and second developer would not
impinge upon the rights of the Allottees.
17. From a perusal of the Development Agreement dated 17
th
October 2017, it also becomes abundantly clear that Respondent No. 2
and the Appellant intended to run roughshod over the rights of the
Allottees by terming them as investors. True, in the ultimate analysis,
the nomenclature is of no consequence. However, the repeated
reference to the Allottees, from whom the first developer (R2) had
accepted valuable consideration many years ago, and had also issued
the allotment letter with particulars of the apartment and the
dimensions thereof, as “investors” betrayed a devious design to trample
upon the rights of the Allottees.
18. In Clause(d) of Section 2 of the Real Estate (Regulation and
Development) Act, 2016 (“the RERA, 2016”), “allottee” in relation to a
real estate project
inter alia means a person to whom a plot, apartment
ARS 14/18
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or building, as the case may be, has been allotted, sold (whether as
freehold or leasehold) or otherwise transferred by the promoter.
Respondent No.1 was thus an Allottee as all the attributes of allotment
of the apartment were squarely met.
19.The thrust of the submission of Mr. Vakil that, under the terms of
the Development Agreement dated 17
th
October 2017, the liability of
the Appellant was restricted to refunding the amount along with
interest, is not borne out by the very terms of the Development
Agreement. Moreover, the submission is in the teeth of the statutory
mandate contained in the RERA, 2016 and, in fact, has the propensity
to render the protection to the consumers in the real estate sector
envisaged by the RERA, 2016, completely nugatory. Under no
circumstances, the promoter can be permitted to present a
fait accompli
to an Allottee in flagrant violation of the contractual and statutory
obligations.
20.Suffice to note that, under Section 18 of the RERA, 2016, it is the
choice of the Allottee to either seek a refund, alongwith interest and
compensation, or seek the delivery of the apartment in accordance with
the terms of the contract, and, in the latter case also the promoter is
liable to pay interest at such rate as may be prescribed.
21.The decision of the Supreme Court in the case of Newtech
Promoters and Developers Private Limited Vs State of Uttar Pradesh and
ARS 15/18
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Ors,
1
underscores an absolute and unqualified right of the Allottee to be
paid interest on the amount paid by Allottee in the event the Allottee
elects to seek the refund. The choice given to the Allottee under the
proviso to Section 18(1) of the RERA, 2016 cannot be diluted on the
premise that the only right of the Allottee is to seek the refund of the
amount paid along with interest. In substance, the right to seek the
apartment, agreed to be sold, is the primary right of the Allottee.
Therefore, the submission on behalf of the Appellant that the Appellate
Tribunal could not have directed the Appellant to deliver the possession
of the apartment to the Allottee does not merit countenance.
22. The desperate submissions on behalf of the Appellant that the
apartment, of the dimension agreed to be allotted to the Allottee by the
first developer, is not available in the buildings constructed by the
Appellant in accordance with the sanctioned plan, and that before the
passing of the impugned order all the apartments in the project have
been sold and, therefore, it is is impossible for the Appellant to comply
with the directions of the Appellate Tribunal, can only be said to be
disingenuous.
23.Firstly, it is imperative to note, the first developer professed to
offer a refund of the amount paid by the Allottee by expressly conceding
that the the project could not be developed on account of operational
difficulties and paucity of funds to develop the project. Secondly, the
1 (2021) 18 SCC 1.
ARS 16/18
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Appellant professed to terminate the allotment on the specious ground
that it was impossible to allot the apartment to the Allottee at the
agreed consideration in view of the increase in the cost of construction.
Alleged impossibility of performance was thus a subterfuge. Financial
unviability can never be a ground to sustain the defence of impossibility
of performance. No case of supervening impossibility so as to attract the
doctrine of frustration of contract was sought to be urged on behalf of
the Appellant. (Delhi Development Authority Vs Kenneth Builders And
Developers Private Limited and Ors)
2
24.What exacerbates the situation is the manner in which the unsold
apartments were shown to have been sold on 14
th
November 2025, a
fortnight before the passing of the impugned order. In the disclosure
made on 30
th
September 2025, a number of apartments were shown as
unsold. In the further disclosure, many of those apartments were shown
to have been sold on the same day, i.e., 14
th
November 2025. Thus, I
find substance in the submission of Mr. Gala that the clearance of the
entire inventory cannot be a matter of sheer coincidence.
25.Mr. Vakil attempted to salvage the position by canvassing a
submission that there was no restraint on the sale of the unsold units.
This submission is required to be noted to be repelled.
26.Having clearly undertaken the liability to satisfy the claims of the
Allottees, who did not agree to settle their claims and having also
2 (2016) 13 SCC 561.
ARS 17/18
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agreed to indemnify the first developer and the owners, it would be
naive to believe that the Appellant could not foresee the situation that
may unfold. The alleged impossibility of performance, now sought to be
urged, was thus brought about by disingenuous conduct of the
Appellant and Respondent No.2, which commenced with terming the
Allottees as “investors”.
27.For the foregoing reasons, this Court does not find any infirmity
in the impugned order. No question of law, much less a substantial
question of law, arises for consideration. The Appeal, therefore, deserves
to be dismissed with costs.
28.Hence, the following order:
: O R D E R :
(i) The Appeal stands dismissed with costs of Rs. 1,00,000/- (Rupees
One Lakh), to be paid by the Appellant to Respondent No.1, within a
period of four weeks from today.
(ii) In view of the dismissal of the Second Appeal, the Interim
Application does not survive and accordingly stands dismissed.
[N. J. JAMADAR, J.]
ARS 18/18
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