Bombay HC – Promoter Need Not Wait Endlessly – Stamp duty Default Ends Allotment

Judgment dated 23.9.2026 of the High Court of Bombay in Second Appeal No.116 of 2025 of IP Builders and Developers Vs.  Santosh Amarsingh Sandhu with connected second appeal.

A brief reference to the facts of the case would be necessary. By Agreement of Lease dated 14 May 2004, the City and Industrial Development Corporation (CIDCO) agreed to grant lease of land bearing Plot No.1 admeasuring 8200 sq.mts, Sector No.19, Airoli, Navi Mumbai for a tenure of 60 years for residential use to Airoli Cooperative Housing Society Ltd. The said Society was later divided into two distinct societies, namely, Airoli Co-operative Housing Society Ltd. and Nilambari Cooperative Housing Society Ltd., by dividing the plots into two parts, each admeasuring 4,100 sq. m. Plot 1 remained with Airoli CHSL, which executed Development Agreement dated 27 April 2004 with M/s. JP Builders and Developers (promoter). The promoter accordingly constructed building on Plot No.1 having 2 wings, Wing-C and Wing-D and obtained Occupancy Certi0cate from Navi Mumbai Municipal Corporation on 17 January 2007. Despite construction of Wings C and D, there was balance FSI of 824.00 sq.mts on Plot No. 1.

After coming into effect of the Real Estate (Regulation and Development) Act, 2016, (RERA) the promoter registered the Project on 31 July 2017. After securing revised Commencement Certi0cate, the promoter issued letter dated 3 May 2019 to the allottee calling him upon to pay stamp duty and registration charges for execution of Agreement for Sale. The allottee was also called upon to choose any other 9at in the building. The allottee chose Flat No.1208 on 12th 9oor of the building which the promoter agreed to allot subject to payment of 9oor rise charges of Rs.1,75,000/-. The promoter issued one more letter dated 28 May 2019 to the allottee for payment of stamp duty and registration charges for execution of the Agreement for Sale. It appears that the allottee was facing financial crunch and was not in a position to pay the stamp duty. He requested the promoter to bear the stamp duty with a promise to return the same upon disbursal of loan. The promoter however did not accept the request. The promoter finally terminated the transaction by notice dated 30 July 2019.

By order dated 6 March 2020, Maha RERA granted interim relief in favour of the allottee directing promoter to execute registered Agreement for Sale with the allottee. By 0nal order dated 8 October 2020, Maha RERA disposed of the Complaint directing implementation of the interim order.

The promoter cancelled the allotment for non payment of stamp duty and registration charges.

Considering the above chronology of events, in my view, the promoter was clearly justi0ed in terminating the transaction by notice dated 30 July 2019. Both Maha RERA as well as Appellate Tribunal, turned blind eye to the events that transpired before issuance of termination notice. They mechanically referred to the provisions of Section 13 of RERA for holding the promoter responsible for non-execution of the agreement, ignoring the position that the promoter was always ready and willing to execute Agreement for Sale. In the present case, the transaction of booking the 9at took place before the advent of RERA. The project got registered under RERA in 2017. However, there was absence of clarity about construction of the building and the clarity was achieved only on 26 April 2019 when plans were sanctioned by Navi Mumbai Municipal Corporation. Immediately after sanction of plans on 26 April 2019, the promoter wrote to the allottee on 3 May 2019 calling him upon to execute registered Agreement for Sale. At this juncture there was no demand by the promoter for payment of further consideration. The promoter issued three notices dated 3 May 2019, 28 May 2019 and 24 June 2019 requesting the allottee to execute the Agreement for Sale by paying the stamp duty and registration charges. Instead of complying with the requisition, the allottee expressed inability to arrange the funds for payment of stamp duty and registration charges. Thus, opportunity to execute and register Agreement for Sale was not availed by the allottee and both Maha RERA and Appellate Tribunal have egregiously erred in holding the promoter responsible for non-execution of Agreement for Sale.

More importantly, after receipt of termination notice dated 30 July 2019, the allottee maintained silence for about 6 long months and thereafter surreptitiously approached the bank and obtained refund of amount meant for stamp duty and appropriated the said amount for his own needs. Though a speci0c representation was made to the bank that the stamp duty would be paid through the speci0ed means/accounts, no such attempt was made by the allottee. While seeking retun of the amount from the Bank, the allottee stated in his letter that “I shall do NEFT from the Airoli branch to the Maha Govt statutory e-payment account.’ However there is nothing on record to indicate that the allottee paid the stamp duty after receipt of amount in his bank account. In my view therefore, the allottee himself is responsible for non-execution of the Agreement for Sale. The promoter was always ready and willing to execute the Agreement for Sale. In that view of the mater, termination of the transaction vide notice dated 30 July 2019 appears to be perfectly in order. The promoter is not expected to wait endlessly.