News: MahaRERA: Financial Investors Cannot Seek RERA Refund-28-06-2026
The Maharashtra Real Estate Regulatory Authority (MahaRERA) has held that investors who enter commercial funding arrangements dressed up as flat bookings cannot use the Real Estate (Regulation and Development) Act, 2016, to claim a refund from a developer.
MahaRERA chairperson Manoj Saunik passed the order on a complaint against the current and former developers of a project in Panvel, near Mumbai. The complainant sought a refund of over Rs 2 crore, claiming the deceased buyer had booked eight flats under memoranda of understanding (MoUs) executed in September 2018 and paid the full consideration of over Rs 1.42 crore.
According to the complaint, the former developer did not execute registered sale agreements, provide sanctioned plans and approvals, or complete the project on time. After follow-ups went unanswered, the bookings were terminated in August 2021 and a refund with interest was sought. A partner of the developer had issued refund cheques, acknowledging liability.
The new developer argued the complaints were not maintainable because it is a separate, independent partnership firm unconnected with the earlier one. It said it bought the project land in December 2022 through a registered conveyance deed after extensive due diligence, including title verification and inquiries with the secured lender, which revealed no claim by the complainant. It also disputed the 2018 MoU as unregistered, inadequately stamped, unsigned by the complainant and witnesses, and carrying several discrepancies, and therefore incapable of creating enforceable rights.
MahaRERA found that the complainant did not meet the definition of an "allottee" under Section 2(d) of the Act, which covers a person to whom a plot, apartment or building has been allotted, sold or otherwise transferred by the promoter. That protection, it said, does not extend to pure financial investors, and close scrutiny showed the relationship with the erstwhile promoter was "purely financial".
Though the MoUs mentioned broad flat numbers, the order noted that a lump sum was paid for an aggregate bulk area, unlike the construction-linked payments of a regular homebuyer. It also recorded that Rs 1.25 crore was advanced on March 11, 2016, well before the project’s Commencement Certificate (CC), whose date appears in the order as "September 30, 20216".
When the funds were deployed, there was no valid sanction or building permission to support allocation of any inventory, the authority said. A specific unit cannot be legally or physically allotted to a genuine buyer without foundational permissions such as the CC, which showed the transaction was an investment risk taken on a floating area calculation.
MahaRERA concluded that the matter had become a civil money recovery dispute against the partners of the former developer and lay entirely outside its purview.
CA Ashwin Shah, who represented the new developer, said the authority weighed the unproved payment of around 1.25 crore made much before the CC, the unstamped, unregistered and unsigned MoU, and the voluntary termination before the change of promoter.
