The Bombay High Court has upheld a builder’s decision to cancel the allotment of an Airoli flat after the prospective buyer failed to pay stamp duty and registration charges needed to complete the sale deed. Justice Sandeep Marne set aside orders passed by MahaRERA and its Appellate Tribunal directing JP Builders and Developers to complete the transaction and hand over the flat to buyer Santosh Sandhu.

Bombay HC upholds cancellation of Airoli flat over unpaid stamp duty (Photo for representational purposes only) (Pexels)

The court found that Sandhu had not actually paid the stamp duty and registration charges to the authorities, despite claiming that he had deposited the money with a bank. The builder had cancelled the transaction on July 30, 2019, after Sandhu said he was unable to pay the charges because of financial difficulties.

The flat was originally booked by Nagendra Khartmol, who later transferred the allotment to Sandhu. The builder told the court that it was ready to execute the agreement for sale, but could not proceed because Sandhu had not made the payments required for registration.

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MahaRERA, on October 8, 2020, accepted Sandhu’s complaint, set aside the cancellation and directed the builder to execute a registered sale deed and allot him a flat of his choice. The authority held that the allotment had been cancelled despite Sandhu having paid the stamp duty and registration charges.

The MahaRERA Appellate Tribunal later upheld the order and also awarded interest on the amount paid by Sandhu. The builder then approached the high court through advocate Rajesh Vanzara.

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Advocate Vishal Kanade, appearing for the builder, said the company had remained ready to execute the agreement but the transaction could not be completed because Sandhu failed to pay the required charges. He said the builder cancelled the transaction after giving Sandhu sufficient time to make the payment.

The court also found that when Sandhu approached the PNB branch to make the payment, the bank had already stopped the relevant service. The amount was eventually returned to his account in January 2020 at his request.

“Thus, from the documents placed on record, it becomes difficult to hold that the allottee actually ever paid stamp duty or registration charges to the concerned authorities,” Justice Marne said.

The court noted that had the charges been paid, specific challans would have been generated and would have been required to be attached to the agreement for sale at the time of execution and registration.

The court therefore held that the builder was “clearly justified in terminating the transaction” and set aside the orders of MahaRERA and the Appellate Tribunal.

Justice Marne observed that the authorities had “grossly erred” in directing the promoter to execute a registered agreement for sale in Sandhu’s favour.