k 1/28 SA (St) 8825 of 2025 with IA

IN THE HIGH COURT OF JUDICATURE AT BOMBAY

CIVIL APPELLATE JURISDICTION

SECOND APPEAL (STAMP) NO.8825 OF 2025

1. Sanklecha Constructions Pvt. Ltd.

2. Vijay Kachardas Sanklecha

3. Dilip Kachardas Sanklecha

4. Puneet Ajit Sanklecha ....Appellants

V/S

1. Nitin Madhukar Shewale

2. Shital Nitin Shewale

3. Bhimashankar Laxman Janmali

4. Shrikrishna Laxman Janmali

5. Sitabai Laxman Janmali

6. Pushpa Jaggannath Janmali

7. Devemdra Jaggannath Janmali

8. Anil Laxman Janmali

9. Dinkar Laxman Janmali ....Respondents

WITH

INTERIM APPLICATION NO.7869 OF 2025

IN

SECOND APPEAL (STAMP) NO.8825 OF 2025

(FOR STAY)

1. Sanklecha Constructions Pvt. Ltd.

2. Vijay Kachardas Sanklecha

3. Dilip Kachardas Sanklecha

4. Puneet Ajit Sanklecha ....Applicants

V/S

1. Nitin Madhukar Shewale

2. Shital Nitin Shewale

3. Bhimashankar Laxman Janmali

4. Shrikrishna Laxman Janmali

5. Sitabai Laxman Janmali

6. Pushpa Jaggannath Janmali

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2026:BHC-AS:39337

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7. Devemdra Jaggannath Janmali

8. Anil Laxman Janmali

9. Dinkar Laxman Janmali ....Respondents

_________

Mr. Abhishek Pungaliya for the Appellants/Applicants.

Mr. Akshay R. Kapadia for Respondent Nos.1 and 2.

__________

CORAM : SANDEEP V. MARNE, J.

RESERVED ON : 17 SEPTEMBER 2026.

PRONOUNCED ON : 28 SEPTEMBER 2026.

J U D G M E N T

THE CHALLENGE

1.This Appeal is filed under provisions of Section 58 of the Real

Estate (Regulation and Development) Act, 2016 (RERA) by the

Appellants—Promoters, challenging the judgment and order dated 7

November 2023 and Review Order dated 28 November 2024 passed by

the Maharashtra Real Estate Appellate Tribunal, Mumbai, (Appellate

Tribunal) partly allowing the Appeal preferred by the allottees and

modifying the order dated 24 August 2021 passed by the Maharashtra

Real Estate Regulatory Authority (MahaRERA). By the impugned Order,

the Appellate Tribunal has withdrawn the option granted to them by

MahaRERA to return the paid consideration to the allottees alongwith

interest after obtaining occupation certificate (OC) for the project.

2.The Appeal involves the Appellants-Promoters being aggrieved by

the ultimate direction for refund of the entire amount to the allottees

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along with interest thereon with effect from 1 January 2018. Since the

ultimate direction contemplates immediate return of amounts with

interest to the allottees and since option of returning the amount at the

time of securing OC is deleted, the Appellants have filed the present

Appeal.

3.It must be observed at the very outset that the Appellate Tribunal

has rather passed confusing orders posing challenge to comprehend the

same. Initially, MahaRERA had granted option to the promoter to refund

the paid consideration to the allottee along with interest after securing

OC for the project. By the main judgment and order dated 7 November

2023, the Appellate Tribunal withdrew that option by directing deletion

of portion of direction from MahaRERA’s Order and directed that the

promoter must refund the paid consideration with interest from the

dates of receipt of payments within 23 days of the Order. The main Order

is later reviewed by the Appellate Tribunal deleting the direction for

payment of interest from the date of receipt of payments. Thus, the net

effect of the Order passed by MahaRERA as modified twice by the

Appellate Tribunal is that the promoter needs to ‘forthwith’ refund the

paid consideration with interest w.e.f. 1 January 2018.

4.Appellants are not aggrieved per se by the direction for return of

amount and interest to the allottees. They are willing to return the

amount with interest, however, after obtaining the OC for the project.

The Appeal is filed contending that there are mitigating circumstances

beyond the control of the Promoters which have resulted in delay in

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completion of the project and they desire that option of returning the

amount with interest after obtaining OC for the project must be made

available to them. Thus, the limited scope of inquiry in the Appeal is

whether the Appellate Tribunal was justified in withdrawing the option

made available to the Appellants to return the amount with interest to

the allottees after obtaining the OC for the project.

FACTS

5.The case of the Complainants/Allottees, as set out in their

Complaint, is that they booked Flat No.702 in Building No.C-1 in the

project named “Waterways” situate at Anusaya Nagar, Tapovan Road,

Dwarka, Nashik. Petitioner No.1-Sanklecha Constructions Private

Limited is the developer/promoter, who undertook construction of the

‘Project’. Appellant Nos. 2 to 4 are the directors of Appellant No. 1. Flat

No.702 in Building No. C-1 of the Project was booked by the Allottees for

total consideration of Rs.43,13,200/- and they paid part consideration of

Rs.22,58,178/- to the Promoter. Agreement for Sale dated 16 May 2016

was executed between the Promoter and Allottees, in which it was

agreed that the Promoter shall deliver possession of the flat on or before

31 December 2017, subject to reasonable extension of time based on

certain force majeure events. It appears that the Promoter was unable to

deliver possession of the flat within the agreed timeline. Therefore,

Allottees approached MahaRERA by filing a Complaint under Section 31

of RERA, which was registered as Complaint No.CC001000000000102. It

appears that the Appellants did not file any reply opposing the

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Complaint. It appears that another Complaint was filed by other allottees

in respect of the same project.

6.MahaRERA proceeded to jointly hear both the Complaints and

decided them by passing common order dated 24 August 2021.

MahaRERA permitted the Allottees to withdraw from the project and

held them entitled to refund of the entire amount paid by them with

interest with effect from 1 January 2018 along with interest at the rate as

prescribed in Rule 18 of the Maharashtra Real Estate (Regulation and

Development) (Registration of Real Estate Projects, Registration of Real

Estate Agents, Rate of Interest and Disclosures on Website) Rules, 2017

(Rules of 2017). However, MahaRERA took into consideration the

mitigating circumstances beyond the control of the Promoter and

ensured that the project is not jeopardized due to outflow of finances

and is completed keeping in mind the interest of other buyers in the

project. Accordingly, MahaRERA directed that the amount of refund and

interest can be paid by the Promoter to the Allottees upon the Promoter

obtaining OC for the project. However, an option was left open to the

Promoter to pay the amount of refund and interest before obtaining OC.

7.The Allottees/Respondent Nos.1 and 2 got aggrieved by order

dated 24 August 2021 passed by MahaRERA and filed Appeal No.

AT006000000053455 of 2021 before the Appellate Tribunal. This time,

the Promoter appeared before the Appellate Tribunal and opposed the

Appeal. By judgment and order dated 7 November 2023, the Appellate

Tribunal partly allowed the Appeal filed by Complainants / Respondent

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Nos.1 and 2 and modified order dated 24 August 2021 passed by

MahaRERA. The Appellate Tribunal directed deletion of portion of

operative part of MahaRERA’s order which gave option to the Promoter

to refund the amount with interest upon obtaining OC for the project.

Instead, the Appellate Tribunal directed the Promoter to refund the

entire amount to the allottees within 23 days along with interest from

the date of receipt of the payments at Marginal Cost of Lending Rate

(MCLR) of State Bank of India plus 2%, failing which the Promoter is

directed to pay interest at the directed rate on the total amount due and

outstanding as on 30 November 2023 till its complete refund.

8.Appellant No.1-Promoter preferred Review Application No.14 of

2023 before the Appellate Tribunal seeking review of judgment and order

dated 7 November 2023. By order dated 28 November 2024, the Appellate

Tribunal has partly allowed the Review Application. It has set aside

direction No.15(b)(ii) of the judgment and order dated 7 November 2023.

Thus, the final effective direction against the Appellants/Promoter is for

refund of entire payment received by them to Respondent Nos.1 and 2

with interest from 1 January 2018 as per the Rules of 2017.

9.Appellants/Promoters are aggrieved by the main judgment and

order dated 7 November 2023 as well as by the review order dated 28

November 2024 and have accordingly filed the present Second Appeal.

10.The Second Appeal has been admitted by order dated 17

September 2026, by framing the following substantial questions of law:

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1) Whether the obligation for the Promoter to return to the

allottee the amount received by him with interest on demand

made by the allottee under Section 18(1) of the Real Estate

(Regulation and Development) Act, 2016 (RERA Act) is absolute

and unqualified or whether the Real Estate Regulatory Authority

and/or the Appellate Tribunal has discretion to take into

consideration any mitigating circumstances or genuine efforts

made by the Promoter in completing the project in time for the

purpose of claiming any relaxation either in respect of period of

interest or rate of interest or the date on which the refund is to be

made?

2) Whether the observations made by the Hon’ble Apex Court in

paragraph 25 of the judgment in Newtech Promoters and

Developers Private Limited vs. State of U.P. & Ors. Etc.

1

are

obiter dicta and whether the findings recorded by Division Bench

of this Court in paragraph 137 of the judgment in Neelkamal

Realtors Suburban Pvt. Ltd. and Anr. vs. Union of India and

Ors.

2

shall continue to operate even after observations made by

the Hon’ble Apex Court in paragraph 25 of the judgment in

Newtech Promoters and Developers Pvt. Ltd.?

3) Whether it is permissible for the Real Estate Regulatory

Authority and/or the Appellate Tribunal to direct that return of

1

IV (2021) CPJ 21 (SC) : 2021 SCC OnLine SC 1044

2

2017 SCC OnLine Bom 9302

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the amount with interest shall be only after securing occupation

certificate of the project and not upon demand by the allottee

under provisions of Section 18(1) of the RERA Act?

11.After framing of substantial questions of law, the learned counsel

appearing for the respective parties have been heard on those questions.

It would be apt to record the gist of submissions canvassed by the

learned counsel appearing for the rival parties.

SUBMISSIONS

12.Mr. Pungaliya, the learned counsel appearing for Appellants

submits that the Appellate Tribunal has erroneously withdrawn the

option made available to the Appellants to refund amount with interest

to the allottees upon securing Occupation Certificate for the project.

That the impugned orders direct the Promoters to refund the received

amount with interest immediately. That Promoter is willing to refund

the received amount with interest upon receipt of OC for the project. He

submits that prior to the judgment of the Apex Court in Newtech

Promoters and Developers Private Limited (supra), the Regulatory

Authority as well as the Appellate Tribunal used to exercise the

discretion of molding the relief. That the observations made by the Apex

Court in paragraph 25 of the judgment in Newtech Promoters are being

misread by the Appellate Tribunal to mean as if the same constitutes

declaration of law. That the observations made in paragraph 25 of the

judgment in Newtech Promoters are mere obiter dicta having no

relevance for deciding the five questions framed in paragraph 31 of the

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judgment. Mr. Pungaliya further submits that even if the entire

observations in paragraph 25 of the judgment in Newtech Promoters are

removed, the same would have no consequence on conclusions/answers

rendered by the Apex Court on the issues involved in the case. That

therefore the observations in paragraph 25 of the judgment in Newtech

Promoters will have to be necessarily treated as a mere obiter. He relies

on the judgment of the Apex Court in Career Institute Educational

Society v. Om Shree Thakurjee Educational Society

3

. That in the present

case, the Appellate Tribunal has committed the same mistake by treating

that observation in paragraph 25 of the judgment in Newtech Promoters

is a ratio decidendi or constitutes binding precedent. By misreading the

observations in paragraph 25 of the judgment in Newtech Promoters,

the Appellate Tribunal has refused to take into consideration the

mitigating circumstances put forth by the Appellants resulting in delay

in project completion and accordingly, the Appellate Tribunal has

erroneously withdrawn the molded relief granted by MahaRERA in the

order dated 24 August 2021.

13.Mr. Pungaliya further submits that MahaRERA had correctly

permitted Appellants to refund the amount and interest after obtaining

the occupation certificate by taking into consideration the mitigating

circumstances beyond the control of the Appellants. He relies on the

judgment of the Division Bench of this Court in Neelkamal Realtors

(supra) in support of his contention that it is permissible for courts to

take into consideration mitigating circumstances, where the developer

3

SLP (C) Nos.7455–7456 of 2023

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makes genuine efforts to complete the project. He submits that it is

necessary to protect a promoter making genuine efforts to complete the

project within agreed timelines. That a balanced approach needs to be

adopted in the facts of the present case. That in the present case, two of

the five buildings of the Waterways project are 95% complete, and one

building is 85% complete. That even Building C-1, in which the flat was

booked by Respondent Nos.1 and 2, is also 70% complete. That in such

circumstances, forcing the developer to refund the entire received

amount with interest at this stage would seriously prejudice the fund

flow and harm the interests of more than hundred other flat buyers.

14.Mr. Pungaliya further submits that Section 18 of RERA came into

force in May 2017, whereas the Waterways project was registered on 19

August 2017 under MahaRERA. However, the registered Agreement for

Sale was executed on 16 May 2016. That since the Agreement for Sale

was executed before coming into effect of Section 18 of RERA and prior

to the registration of the project, the contractual obligation to hand over

possession had occurred prior to coming into force of Section 18 of

RERA. That therefore observations made in paragraph 137 of the

judgment in Neelkamal Realtors (supra) would apply to the present

case. That the possession date of 31 December 2017 was always

understood to be a tentative date. That mitigating circumstances were

totally ignored by the Appellate Tribunal. Mr. Pungaliya accordingly

prays for setting aside the impugned orders passed by the Appellate

Tribunal.

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15.The Appeal is opposed by Mr. Kapadia, the learned counsel

appearing for Respondent Nos.1 and 2. He submits that MahaRERA had

grossly erred in giving option to the Promoter to refund the amount

after securing OC for the project. That once allottees are permitted to

withdraw from the project, they must receive their payments alongwith

interest without having to wait for securing the OC. He submits that

provisions of Section 18 of RERA are clear and unambiguous, which do

not permit withholding of amount by the promoter and makes the

allottee entitled to receive the entire amount along with interest on

making a demand. He submits that the findings recorded by the Apex

Court in Newtech Promoters in paragraph 25 of the judgment are not

obiter dicta, as erroneously sought to be suggested by the Appellants.

That the same constitute declaration of law. He also relies on several

other findings recorded by the Apex Court in Newtech Promoters in

support of his contention that the Apex Court has laid down a law that

the allottee has an unqualified right to secure a refund of the entire

amount alongwith interest by mere making of a demand. Mr. Kapadia

accordingly prays for dismissal of the Appeal.

CONSIDERATION OF SUBMISSIONS

16.The case involves non-completion of project by the Appellants-

Promoter. Respondent Nos.1 and 2 (allottees) booked Flat No.702 in

Building C-1 in the project ‘Waterways’ on 14 January 2015. Thereafter,

an Agreement for Sale was executed and registered on 16 May 2016. The

agreed consideration for the flat was Rs.43,13,200/-. Out of the agreed

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amount of consideration, the allottees have paid an amount of

Rs.22,58,178/- to the Appellants from time to time.

17.The Appellants were required to hand over possession of the flat

to the allottees by 31 December 2017. However, admittedly, the Project

has not been completed by the Appellants even till date. After waiting

for a substantial time, Respondent Nos.1 and 2 approached MahaRERA

in 2019 and lodged a Complaint. While allowing the Complaint,

MahaRERA issued a rather confusing direction. It would be apposite to

reproduce the operative part of MahaRERA's order dated 24 August

2021:

Thus, the present complaints are allowed to withdraw from the said Project

and the Complainants are entitled to refund of the entire amount paid by

them with interest from 01.07.2021 for complaint No.CC001000000000100 and

from 01.01.2018 complaint No.CC001000000000102 at the rate as presribed

under Rule 18 of the Maharashtra Real Estate (Regulation and Development)

(Registration of Real Estate Projects, Registration of Real Estate Agents, Rate of

Interest and Disclosures on website) Rules 2017. However, in view of the

mitigating circumstances beyond the control of the Respondent and also to

ensure that the said Project is not jeopardised due to the outflow of finances

and is completed keeping in mind the interest of the other buyers of the said

Project at large, it is directed that the amounts of refund and the interest

thereupon shall be paid by the Respondent to the Complainant upon the

Respondent obtaining occupation certificate (OC) for the said Project.

However, in case the Respondent so desires to pay the same before obtaining

OC the period of interest calculation shall be from 07.07.2021 for complaint

No.CC001000000000100 and from 01.01.2018 complaint

No.CC001000000000102 up to date of refund of the entire amount together

with interest as aforesaid.

(underlining added)

18.As observed above, two Complaints have been simultaneously

decided by MahaRERA, and Respondent Nos.1 and 2 were Complainants

in Complaint No.CC001000000000102. Thus, the final order passed by

MahaRERA allowed Respondent Nos.1 and 2 to withdraw from the

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Project and also held that they are entitled to a refund of the entire

amount paid by them along with interest with effect from 1 January 2018

at the rate as prescribed under the Rules of 2017. However, in the

subsequent part of operative directions, the MahaRERA gave two

options to the Appellants/Promoters. Under the first option, the refund

and interest was payable upon obtaining OC for the project. The second

option was to make immediate payment of the amount with interest.

Thus, MahaRERA left it to the Promoter to decide when to grant the

refund along with interest. Though the Promoter was granted the option

to refund the received amount upon obtaining the OC for the project,

the Promoter was required to bear the interest burden up to the date of

actual payment. The directions were apparently issued with a view to

ensure that the flow of funds for the project is not disturbed and the

direction to return the amount with interest does not result in the

promoter getting incapacitated to complete the remaining project,

thereby affecting other flat purchasers.

19.Respondent Nos.1 and 2 / allottees got aggrieved by the option

given to the Promoter to refund the amount after obtaining the OC, and

accordingly, filed an Appeal before the Appellate Tribunal. As if the

confusion created by MahaRERA was not enough, the Appellate Tribunal

added its share of confusion while passing two orders. In the original

order dated 7 November 2023, the Appellate Tribunal directed deletion

of the portion (underlined below) which granted two options to the

Promoter for making a refund of the amount and interest. Instead, the

Appellate Tribunal directed the Promoter to refund the entire paid

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amount together with interest ‘from the date of receipt of the

payments’, along with interest, within a period of 23 days. The operative

part of the order dated 7 November 2023 passed by the Appellate

Tribunal reads thus:

a) Appeal is partly allowed.

b) Impugned order dated 24th August 2021 passed in Complaint No. CC

006000000000102 is modified as hereunder.

i. Following directions / observations provided in para 13 [final order] in the

operative part of the impugned order dated 24th August 2021 providing

options to promoters for refund of the paid amounts to allottees are quashed,

set aside and accordingly stands deleted; -

“ in view of the mitigating circumstances beyond the control of the Respondent and

also to ensure that the said project is not jeopardised due to the outflow of

finances and is completed keeping in mind the interest of the other buyers of the

said project at large, it is directed that the amounts of refund and the interest

thereupon shall be paid by the Respondent to the Complainant upon the

Respondent obtaining occupation certificate (OC) for the said Project. However, in

case the Respondent so desires to pay the same before obtaining OC the period of

interest calculation shall be from 01.01.2018 up to date of refund of the entire

amount together with interest as aforesaid. ”

ii. Respondent Promoter is directed to refund the entire paid amounts within

23 days to Appellants allottees together with interest from the date of receipt

of the payments at the rate of highest marginal cost of lending rate of State

Bank of India plus 2%, failing which, promoter will pay interest at this rate on

the total amount due and outstanding as on 30th November 2023 till its

complete refund/ realisation of these outstanding amounts along with

interest.

c) No order as to costs.

d) In view of the provisions of Section 44(4) of the Act of 2016, a copy of this

order shall be sent to the parties and to MahaRERA.

(underlining added)

20.Deletion of only underlined portion from operative direction of

MahaRERA’s order resulted in conflicting directions in the retained

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portion of MahaRERA’s order and new direction issued in Para 15(b) (ii)

by the Appellate Tribunal. the retained/portion of MahaRERA’s order

contemplated payment of interest from ‘1 January 2018’, whereas

direction in Para 15(b)(ii) of the Appellate Authority’s order

contemplated payment of interest from ‘the date of receipt of payments’

i.e. from 2015-2016.

21.The Promoter applied for a review of the order dated 7 November

2023, and the Review Application has been partly allowed by the

Appellate Tribunal by passing the following operative directions:

a) Captioned review application stands partly allowed.

b) The direction to the applicant promoter in para no. 15(b) (ii) of the

judgment dated 7

th

November 2023, stands deleted.

c) Parties to bear their own costs.

Thus, the direction in paragraph 15(b)(ii) of the judgment and order

dated 7 November 2023 is now deleted.

22.This Court does not appreciate the manner in which the Appellate

Tribunal has given operative directions, which are unclear and capable

of causing confusion. One has to undertake a complex exercise to

comprehend the exact final direction which the Promoter is expected to

comply. It took some time for this Court to understand what exactly the

final direction is, which the Promoter is expected to comply/implement.

This Court was required to repeatedly go back and forth between the

orders passed by MahaRERA, the main order passed by the Appellate

Tribunal, and the review order passed by the Appellate Tribunal. With

some degree of effort, this Court has finally understood the exact

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purport and final outcome of the litigation between the parties. Now, the

only direction which is capable of being implemented is the direction of

MahaRERA allowing Respondent Nos.1 and 2 to withdraw from the

Project and direction to the Promoter to refund the entire amount paid

by Respondent Nos.1 and 2 alongwith interest from 1 January 2018 as

per the rate prescribed in Rule 18 of the Rules of 2017.

23.If clear and unambiguous directions were to be issued by the

Appellate Tribunal, the time spent by this Court in comprehending the

exact nature of directions would have been saved. Be that as it may. Now

I proceed to decide whether there is any interference warranted in the

final direction given to the Promoter for refund of entire amount

alongwith interest from 1 January 2018.

24.As observed above, Appellants are not averse to refunding the

amount received from the allottees. They are also not averse to paying

interest at the rate prescribed in Rule 18 of the Rules of 2017. They are

only aggrieved by withdrawal of the option given to them by MahaRERA

to pay the amount and interest after obtaining OC for the Project. I

proceed to examine whether withdrawal of the said option by the

Appellate Tribunal is in order or not.

Question Nos. 1, 2 and 3

25.Since all the questions are interconnected, the same are taken up

for decision together.

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26.The first question formulated is whether the obligation of the

Promoter to return to the allottee the amount received by him alongwith

interest on demand made by the allottee under Section 18(1) of RERA is

absolute and unqualified or whether the Regulatory Authority or the

Appellate Tribunal has any discretion to take into consideration the

mitigating circumstances or genuine efforts made by the Promoter in

completing the project for granting some relaxation either in respect of

period of interest or the rate of interest or the date on which the refund

is to be made. This question is interconnected with question No.2. Since

it is sought to be suggested by and on behalf of the Appellants that

observations made by the Hon’ble Apex Court in paragraph 25 of the

judgment in Newtech Promoters (supra) are in the obiter, it is also

sought to be suggested by the Appellants that the finding recorded by

Division Bench of this Court in Neelkamal Realtors (supra) can be

followed and and it is open for the Regulatory Authority and/or the

Appellate Tribunal to take into consideration genuine efforts of a

promoter and grant relaxation while issuing directions under Section

18(1) of RERA. It is therefore contended on behalf of the Appellants that

MahaRERA was right in granting option to the Promoter to refund the

amount and interest only after securing OC for the project.

27.To answer the questions, it would be necessary to take into

consideration the provisions of Section 18 of RERA, which provides thus:

18. Return of amount and compensation.—

(1) If the promoter fails to complete or is unable to give possession of

an apartment, plot or building,—

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(a) in accordance with the terms of the agreement for sale or, as the

case may be, duly completed by the date specified therein; or

(b) due to discontinuance of his business as a developer on account of

suspension or revocation of the registration under this Act or for any

other reason,

he shall be liable on demand to the allottees, in case the allottee wishes to

withdraw from the project, without prejudice to any other remedy available, to

return the amount received by him in respect of that apartment, plot, building,

as the case may be, with interest at such rate as may be prescribed in this

behalf including compensation in the manner as provided under this Act:

Provided that where an allottee does not intend to withdraw from the

project, he shall be paid, by the promoter, interest for every month of delay, till

the handing over of the possession, at such rate as may be prescribed.

(2) The promoter shall compensate the allottees in case of any loss

caused to him due to defective title of the land, on which the project is being

developed or has been developed, in the manner as provided under this Act,

and the claim for compensation under this subsection shall not be barred by

limitation provided under any law for the time being in force.

(3) If the promoter fails to discharge any other obligations imposed on

him under this Act or the rules or regulations made thereunder or in

accordance with the terms and conditions of the agreement for sale, he shall

be liable to pay such compensation to the allottees, in the manner as provided

under this Act.

28.A plain reading of Section 18(1) of RERA would indicate that

promoter has an obligation to return the amount received by him

alongwith interest on demand by the allottee. Section 18(1) of RERA

does not leave any option or discretion about the timeline at which

refund is to be made. Once the promoter fails to complete the project or

is unable to give possession of the apartment within the timeline agreed,

allottee has a right to demand refund of amount paid by him, and the

promoter has an obligation to fulfill that demand by refunding the

amount received by him alongwith interest immediately on making such

demand. In that sense, there is an unqualified right created in favour of

the allottee to seek the refund under Section 18(1) of RERA.

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29.Section 18 of RERA talks of two amounts viz. (i) amount received

by the promoter from the allottee, and (ii) compensation to be recovered

by the allottee from the promoter. A plain reading of Section 18(1) and

18(2) of RERA would indicate that return of amount and interest thereon

is the bare minimum which the allottee must receive from the Promoter.

If the allottee is in a position to prove cause of loss and entitlement to

receive compensation, the same can be pressed before the Adjudicating

Authority under Section 18(2) of RERA. Thus, while payment of

compensation amount may await adjudication, return of amount

received by the Promoter and interest thereon must be paid immediately

on raising of a demand. Section 18(1) of RERA thus does not leave any

discretion for the Promoter or to the Regulatory Authority or to the

Appellate Tribunal to delay return of the paid amount or to direct that

the refund can be made only after obtaining OC for the project.

30.Thus, on plain reading of Section 18 of RERA, in my view, the right

to seek return of amount with interest is absolute and unqualified. The

right cannot be diluted by the Regulatory Authority or by the Appellate

Authority or even by the High Court by giving any concession to the

promoter to return the amount only after securing OC for the project.

31.The issue of unqualified nature of allottee’s right to seek refund is

also recognised by the Apex Court in Newtech Promoters (supra). In that

case, the Apex Court essentially took up for consideration the issue as to

whether RERA is retrospective or retroactive in operation. The Apex

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Court also took up for consideration the issue as to whether the

Regulatory Authority had jurisdiction to direct return/refund of the

amount or whether such jurisdiction lies exclusively with the

Adjudicating Officer. The issue before the Apex Court was also whether a

single member of the Authority can hear complaints instituted under

Section 31 of RERA. The fourth issue for consideration before the Apex

Court was whether condition of pre-deposit under proviso to Section

43(5) of RERA for entertaining substantive right of appeal was

sustainable in law. The last issue for consideration was whether

Regulatory Authority has power to issue Recovery Certificate for

recovery of principal amount under Section 40(1) of RERA. The issues

taken up for consideration are listed in paragraph 31 of the judgment of

Apex Court in Newtech Promoters (para 30 of SCC Report). Relying on

the list of five issues, it is sought to be contended by Mr. Pungaliya that

the Apex Court did not take up for consideration the issue as to whether

Regulatory Authority and/or the Appellate Tribunal has any discretion to

grant relaxation to a promoter making genuine efforts to complete the

project or whether they have the power of molding the relief. This

argument on behalf of the Appellant is necessitated on account of the

fact that in paragraph 25 of the judgment (Paragraph 24 in SCC Report),

the Apex Court has held that right of the allottee to seek refund under

Section 18(1) of RERA is absolute and not dependent on any

contingencies or stipulations. For the sake of convenience, paragraph

number ‘24’ of judgment in Newtech Promoters of the SCC report is

referred. In paragraph 24 of the judgment the Apex Court held as under:

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24. The unqualified right of the allottee to seek refund referred under Section

18(1)(a) and Section 19(4) of the Act is not dependent on any contingencies or

stipulations thereof. It appears that the legislature has consciously provided

this right of refund on demand as an unconditional absolute right to the

allottee, if the promoter fails to give possession of the apartment, plot or

building within the time stipulated under the terms of the agreement

regardless of unforeseen events or stay orders of the court/tribunal, which is in

either way not attributable to the allottee/homebuyer, the promoter is under

an obligation to refund the amount on demand with interest at the rate

prescribed by the State Government including compensation in the manner

provided under the Act with the proviso that if the allottee does not wish to

withdraw from the project, he shall be entitled for interest for the period of

delay till handing over possession at the rate prescribed.

32.Since the findings recorded in paragraph 24 of the judgment do

not leave any discretion for the Regulatory Authority and/or the

Appellate Tribunal to grant any relaxation to promoters making genuine

efforts to complete the project, it is sought to be suggested by Mr.

Pungaliya that those observations are mere obiter dicta as they have no

connection with the five issues taken up for consideration by the Hon’ble

Apex Court. I am unable to agree. The Apex Court was equally concerned

with the interpretation of provisions of Section 18 of RERA. In paragraph

72 of the judgment, the Apex Court has held that refund and

compensation are two distinct rights under the Act and cannot be

conflated. The Apex Court, while deciding the issue as to whether the

Regulatory Authority has jurisdiction to direct return/refund, has held in

paragraphs 71, 72 and 74 of the judgment as under:

71. Thus, refund and compensation are two distinct rights under the Act and

cannot be conflated. The manner in which the two are to be determined would

require a different process and involve different considerations. According to

her, the determination of compensation involves a full-fledged adjudicatory

process which is more complex than that involved in determining refund. To

do so, it would tantamount to regressing into the very malaise that the

legislature intended to liberate the allottees-homebuyers from. The result of

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conflating the rights and/or relegating the allottees to the adjudicating officer

would amount to a compromise of the timeliness of the right to refund on

demand. It would also deter and daunt allottees from seeking compensation

because in the process the remedies would be clubbed and the availability of

refund would get relatively delayed as compensation requires a more elaborate

adjudication process (even though the same is required to be completed in 60

days). The Authority to determine a claim for refund on demand while the

adjudicating officer to determine the claim for compensation.

72. The expression “on demand” which follows the right to “return of amount”

is indicative of the priority, immediacy and expediency which is accorded to

the right to refund. Thus, according to her, the expressions “refund” and

“return of amount” is an act of restitution, and the obligation to restitute lies

on the person or the Authority that has received unjust enrichment or unjust

benefit.

74. The legislature in its wisdom has made a specific provision delineating

power to be exercised by the Regulatory Authority/adjudicating officer.

“Refund of the amount” and “compensation” are two distinct components

which the allottee or the person aggrieved is entitled to claim if the promoter

has not been able to hand over possession with a nature of enquiry and

mechanism provided under the Act. So far as the claim with respect to refund

of amount on demand under Sections 18(1) and 19(4) of the Act is concerned,

it vests within the jurisdiction of the Regulatory Authority. Section 71 carves

out the jurisdiction of the adjudicating officer to adjudge compensation under

Sections 12, 14, 18 and 19 after holding enquiry under Section 71(3) of the Act

keeping in view the broad contours referred to under Section 72 of the Act.

33.Thus, it cannot be said by any stretch of imagination that what is

observed by the Apex Court in paragraph 24 of the judgment in Newtech

Promoters (supra) is a mere obiter. The Apex Court in Newtech

Promoters lays down a law that there is a priority, immediacy and

expediency accorded to the right of the allottee to seek refund. The Apex

Court has interpreted the expression “on demand” appearing in Section

18(1) of RERA. Therefore, observations of the Hon’ble Apex Court in

paragraph 24 of the judgment are also required to be read in conjunction

with the findings recorded in paragraphs 71, 72 and 74 of the judgment.

Merely because the findings in paragraph 24 precede the formulation of

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questions/issues in paragraph 30, it would be erroneous to assume that

the observations made in paragraph 24 are mere obiter. The Apex Court

has declared a law in Newtech Promoters (supra) that an allottee has an

unqualified right to seek refund under Section 18(1) of RERA and if the

promoter fails to give possession of the apartment within time

stipulated under the terms of agreement, regardless of unforeseen

events or stay orders of Court/Tribunal (not attributable to the allottee),

the promoter is under obligation to refund the amount on demand with

interest.

34.Mr. Pungaliya has strenuously relied on the judgment of Division

Bench of this Court in Neelkamal Realtors (supra), in which the

constitutional validity of certain provisions of RERA were challenged.

While questioning the constitutional validity of provisions of Section 18

of RERA, it was sought to be suggested that Section 18 of RERA did not

contemplate taking into consideration genuine efforts made by the

Promoter to complete the project. While dealing with the argument, this

Court held in paragraph 137 as under:

137. The another plea raised is as to why a promoter shall pay interest for the

past contractual rights, in case of failure to complete the project after

registration under RERA, till the possession is handed over. Under the scheme

of the RERA it is clear by now that a promoter has to self assess and declare

time period during which he would complete the project. But in case, inspite of

making genuine efforts, a promoter fails to complete the project, then the

concerned authorities, adjudicators, forums, tribunals would certainly look

into genuine cases and mould their reliefs accordingly. We do not find that on

that count the provisions of Section 18(1)(a) are to be declared as contrary and

violative of Articles 14 and 19(1)(g). Considering the scheme of the RERA and

the provisions of Section 18(1)(b), we are of the view that the same are not

contrary to Articles 14 and 19(1)(g) of the Constitution. The provisions cannot

be struck down on the ground of challenge that its operation is retroactive in

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nature. Neither the provisions of Section 18(1)(a) and (b) violate Article 20 of

the Constitution. The payment of interest under Section 18 is compensatory in

nature [Abati Bezbaruah v. Director General, Geological Survey of India-(2003) 3

SCC 148 (para 18) and Alok Shanker Pandey v. UOI-(2007) 3 SCC 545 (para 9)].

35.By relying on findings recorded by this Court in paragraph 137 of

the judgment in Neelkamal Realtors (supra), it is sought to be suggested

by Mr. Pungaliya that the Regulatory Authority as well as the Appellate

Tribunal has power to take into consideration genuine cases and mould

the reliefs accordingly. In my view, findings recorded by the Division

Bench of this Court in Neelkamal Realtors (supra) in paragraph 137 of

the judgment cannot be read to mean as if any relaxation is permissible

when it comes to return of the amount received by the promoter from

the allottee along with interest. The right would always continue to

remain absolute and unqualified. Right to seek refund of what is paid to

the promoter is the bare minimum which an allottee must receive under

any circumstances. Even if the promoter may not be at fault in not

completing the project within the agreed timeline, the minimum that he

must do is to return the amount received by him from the allottee

together with interest. In a given case, an allottee may suffer other

losses. He may have to bear the burden of paying rent or interest to

banks and housing loan companies. In a given case, a home buyer may

have to bear a double whammy of paying loan installments as well as

rent. In such circumstances, an allottee may suffer consequences of sale

of his/her assets on account of inability to repay loan installments, and

may suffer mental torture as well as financial losses. In such

circumstances, the allottee can prove cause of loss and claim

damages/compensation from the promoter. If a promoter makes genuine

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efforts to complete the project and is not at all responsible for delay, in

such circumstances, the Adjudicating Authority, Tribunal, or the Court

may relieve the promoter from liability to compensate the allottee.

However, return of amount received by the promoter from the allottee

together with interest is the bare minimum which the promoter must

perform in every case, including a case where the promoter has made

genuine efforts to complete the project within the agreed timeline. In

my view therefore, the judgment of the Division Bench of this Court in

Neelkamal Realtors (supra) cannot be read to mean as if any relaxation

is permissible for a promoter on a case-to-case basis in respect of

liability to return the amount received from the allottee along with

interest.

36.Reliance by Mr. Pungaliya on order passed by the Apex Court in

Career Institute Educational Society (supra) in support of his contention

that observations in paragraph 24 of the judgment in Newtech

Promoters (supra) are obiter, is clearly misplaced. In Career Institute

Educational Society, the Apex Court has underscored the distinction

between an obiter dicta and a ratio decidendi in a judgment. Referring to

its judgments in State of Gujarat and Others v. Utility Users’ Welfare

Association

4

and Jayant Verma and Others v. Union of India and

Others

5

, the Apex Court has discussed “the inversion test”, which

contemplates removal of the proposition from the text of the judgment

and to examine whether the conclusion of the case would still remain

the same. In such circumstances, the removed proposition cannot be

4

(2018) 6 SCC 21

5

(2018) 4 SCC 743

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treated as ratio decidendi. In Jayant Verma, the Apex Court has held that

only the statements of principle of law applicable to the legal problems

disclosed by the facts would operate as a precedent. It is held that not

everything said by a judge when giving the judgment would constitute a

precedent. However, in the present case, the findings recorded by the

Apex Court in paragraph 24 of the judgment in Newtech Promoters

(supra), when read in conjunction with other findings recorded at

paragraphs 71, 72, and 74 make it clear that the Apex Court was

concerned with the interpretation of provisions of Section 18 of RERA,

and interpretation made by it would constitute a binding precedent to be

followed by all Courts in India. Therefore, I am unable to accept the

contention of Mr. Pungaliya that the findings recorded in paragraph 24

of the judgment in Newtech Promoters (supra) is an obiter by any stretch

of imagination.

ANSWERS TO THE QUESTIONS FORMULATED

37.Thus, in view of the above discussion, the questions of law are

answered as under:

i)The obligation of a promoter to return to the allottee the amount

received by him with interest on demand made by the allottee

under Section 18(1) of RERA is absolute and unqualified. The

Regulatory Authority and/or the Appellate Tribunal does not have

discretion to take into consideration any mitigating circumstances

or genuine efforts made by the promoter in completing the project

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in time for the purpose of granting any relaxation, either in

respect of the period during which interest is payable, or in the

rate of interest or the date on which refund is to be made.

ii)The observations made by the Hon’ble Apex Court in paragraph 24

of the judgment in Newtech Promoters (supra) are not obiter dicta

and they constitute ratio decidendi. Findings recorded by the

Division Bench of this Court in paragraph 137 of the judgment in

Neelkamal Realtors (supra) cannot be read to mean as if any

discretion exists with the Regulatory Authority or with the

Appellate Tribunal in granting any relaxation to the promoter,

who makes genuine efforts in completing the project in time in

the matter of either period during which interest is payable or in

the rate of interest or the date on which refund is to be made.

iii)It is impermissible for the Regulatory Authority and/or the

Appellate Tribunal to direct that return of amount with interest

shall only be after securing Occupation Certificate of the project

and not upon demand made by the allottee under Section 18(1) of

RERA.

38.In view of the above answers to the questions formulated, in my

view, the ultimate direction given to the Appellants-Promoter to refund

the entire amount received by them from the allottees alongwith

interest at the rate prescribed under Rule 18 of Rules of 2017 with effect

from 1 January 2018 is valid and does not warrant any interference.

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ORDER

39.Resultantly, the Second Appeal is dismissed. In the facts and

circumstances of the case, there shall be no order as to costs.

40.In view of the disposal of the Second Appeal, nothing would

survive in the Interim Application for stay and the same is also

accordingly disposed of.

(SANDEEP V. MARNE, J.)

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