Raghuwanshi, a Dubai-based homebuyer, waited years for two Mumbai flats that never arrived on time, then found his refund held hostage by a contract clause designed to keep his money locked away indefinitely. On July 1, 2026, the Maharashtra Real Estate Appellate Tribunal (MahREAT) struck down that clause and ordered the builder to return more than Rs 115 lakh, a ruling that carries direct consequences for every homebuyer navigating one-sided builder contracts in Maharashtra.
The facts of the case are straightforward. In 2015, Raghuwanshi booked two flats through the builder’s Dubai office on Sheikh Zayed Road, paying approximately 20 percent upfront: Rs 48.73 lakh on one unit priced at Rs 2.35 crore, and Rs 66.56 lakh on another priced at Rs 3.17 crore. No formal sale deed was ever executed. The promised delivery date was April 2017. The occupancy certificate arrived in May 2018, more than a year late. When Raghuwanshi reviewed the draft sale agreement, he found terms that did not match his original allotment. He requested cancellation and a full refund.
What followed was a trap. Clause 12 of the allotment letter allowed the builder to forfeit 10 percent of the purchase price as liquidated damages, charge interest at 18 percent annually from the allotment date until termination, and deduct both amounts from any eventual refund. Worse, the refund itself was not guaranteed at all. It would only materialize once the builder found a new buyer and collected the full amount from that person. The buyer’s capital could sit with the builder indefinitely, earning nothing for the person who paid it and everything for the party who failed to deliver.
Raghuwanshi filed a complaint with MahREAT, represented by Advocate Aman Kacheria. The tribunal, in a decision delivered by Justice S.S. Shinde and Dr. Rajagopal Devara, found the clause unenforceable and ordered the builder to return both amounts with interest at the State Bank of India’s Marginal Cost of Lending Rate plus 2 percent, along with Rs 25,000 in costs.
The tribunal identified three distinct failures on the builder’s part. It violated the Maharashtra Ownership of Flats Act, 1963, by accepting 20 percent payment without executing a registered sale agreement as the law requires. It breached the Real Estate (Regulation and Development) Act by failing to deliver possession on the promised date. And it attempted to enforce a clause the tribunal described as “arbitrary, unreasonable and unconscionable.”
MahREAT’s reasoning cuts to the heart of the public interest at stake. Clause 12 placed the entire burden of delay and resale risk on the buyer while the builder retained use of the buyer’s money, free of any obligation to pay interest or compensation during the waiting period. The homebuyer had no corresponding right to damages for the builder’s own breach. The tribunal held that a builder cannot use contractual clauses to defeat a buyer’s statutory right to a refund when the builder itself has violated its legal obligations.
Advocate Kacheria cited precedent from Dinesh R. Humane v. Piramal Estate Pvt., a prior MahREAT case establishing that one-sided, unreasonable and unfair terms cannot be enforced against flat purchasers who have no meaningful choice but to accept a builder’s standard-form contract. The tribunal agreed the principle applied directly here.
By contrast, the regulatory landscape has since shifted in buyers’ favor. In September 2024, the Maharashtra Real Estate Regulatory Authority issued a model allotment letter under Order 60/2024 that all builders must now follow. It caps cancellation deductions at just 2 percent of the unit cost, with a graduated scale depending on when the cancellation is made, and requires any balance to be refunded within 45 days. If the builder misses that window, the buyer earns interest at MCLR plus 2 percent. These protections stand in sharp contrast to the 10 percent forfeiture and 18 percent annual interest the builder had imposed on Raghuwanshi under the old arrangement.
The ruling reinforces a principle that courts are increasingly willing to enforce: accepting a part payment creates a duty. The builder assumed an obligation to execute a proper sale agreement and deliver on time. Failure to do so cannot be remedied by trapping the buyer’s refund behind an indefinite resale contingency that the builder alone controls.
For the many homebuyers who sign standard-form contracts without the leverage to negotiate individual terms, the question now is whether this ruling, and the MahaRERA model letter, will be applied consistently enough to change how builders draft their agreements in the first place.