Supreme Court settles dispute over apartment allotment and dues under MOFA: Jawala Real Estate vs. Haresh (2025) INSC 669 (13 May 2025)

Introduction

Date of the Judgment: 13 May 2025
Citation: 2025 INSC 669
Judges: Vikram Nath, J., Prasanna B. Varale, J.

When a property developer fails to provide essential documents and violates court orders by alienating the originally allotted property, how should the dues be calculated when an alternate property is offered? The Supreme Court of India addressed this question in a dispute between Jawala Real Estate Pvt. Ltd. (now Macrotech Developers Ltd.) and a homebuyer, Haresh, concerning the allotment of an apartment in Mumbai. The court considered the responsibilities of both parties under the Maharashtra Ownership of Flats Act, 1963 (MOFA), and the principles of equity to arrive at a fair resolution.

Case Background

In 2013, Haresh booked an apartment (Flat No. 6403, B Wing) in the “Lodha Codename Blue Moon” project developed by Jawala Real Estate Pvt. Ltd. He paid Rs. 92,50,744 as an advance against the total sale consideration of Rs. 4,64,86,145. Haresh requested Jawala Real Estate to provide the necessary documents for executing the registered agreement. However, Jawala Real Estate issued notices demanding the balance payment, failing which the allotment would be cancelled.

On 28.06.2013, Jawala Real Estate cancelled the allotment. Consequently, Haresh filed a complaint with the National Consumer Disputes Redressal Commission (NCDRC), registered as CC No. 210 of 2013.

Timeline:

Course of Proceedings

During the proceedings before the NCDRC, Jawala Real Estate’s right to file a written statement was forfeited on 19.11.2013 for failing to submit it within the granted time. The NCDRC also issued an ad interim order restraining Jawala Real Estate from creating any third-party rights concerning apartment No. 6403. Despite this, Jawala Real Estate alienated the apartment on 24.11.2014.

The NCDRC allowed Haresh’s complaint on 17.02.2016, setting aside the cancellation of allotment and directing Jawala Real Estate to execute the sale agreement as per the MOFA Act and Rules. The NCDRC also directed Jawala Real Estate to charge interest at 9% per annum from the due date and awarded Rs. 1 lakh as compensation to Haresh for the agony and harassment suffered.

As Jawala Real Estate had already alienated the apartment, it applied for modification of the order to substitute apartment No. 6403 with apartment No. 6503. The NCDRC rejected this application on 16.12.2016, noting that Jawala Real Estate was in contempt of the stay order.

Jawala Real Estate then appealed to the Supreme Court, which, on 20.03.2018, allowed the appeal and set aside the NCDRC’s order, directing that the agreement be executed for the alternate apartment (Flat No. 6503) under the same terms as the original agreement, in accordance with MOFA.

Legal Framework

The case primarily revolves around the interpretation and application of the Maharashtra Ownership of Flats Act, 1963 (MOFA). Key provisions include:

• Section 4 of MOFA: This section mandates that a builder must enter into agreements with flat purchasers, specifying details such as the carpet area of the flat, amenities, and the date of possession. It aims to protect the interests of homebuyers by ensuring transparency and accountability on the part of the builder.
• Section 6 of MOFA: This section deals with the builder’s responsibility to form a cooperative society or company of the flat purchasers and to convey the title and possession of the property to the society or company.

The respondent (Haresh) relied on Sections 4 and 6 of MOFA to argue against the additional charges claimed by the appellant (Jawala Real Estate), contending that the appellant had failed to comply with the requirements of MOFA regarding the provision of necessary documents and information.

Arguments

Arguments by Jawala Real Estate (Appellant):

• Claimed a total amount of Rs. 4,96,52,565, which included:
  • Interest @ 9% per annum on the consideration value and other charges: Rs. 3,98,42,426
  • Other charges (infrastructure, legal, utility connection, club membership, society formation, CAM, property tax): Rs. 65,67,208
  • Taxes on consideration value: Rs. 23,17,990
  • Delayed payment admin charges of 2%: Rs. 9,24,941
• Contended that repeated letters of demand were sent to the respondent to make the balance payment and execute the agreement, but the respondent did not comply.

Arguments by Haresh (Respondent):

• Admitted liability to pay Rs. 2,15,884 towards legal charges, utility connection charges, and society formation charges.
• Agreed to pay an additional Rs. 15,37,126 towards infrastructure charges and club membership charges if the Court directed.
• Denied liability for the remaining amounts, relying on Sections 4 and 6 of MOFA, arguing that the appellant failed to provide necessary clearances, maps, and carpet areas of both apartments.
• Contended that he had repeatedly written to the appellant to provide necessary clearances, the relevant maps, and the carpet areas of both the original and alternate apartments, but received no response.

Issues Framed by the Supreme Court

The Supreme Court addressed the central issue of determining the amount due and payable by the respondent (Haresh) to the appellant (Jawala Real Estate) in light of the facts and circumstances of the case.

Treatment of the Issue by the Court: “The following table demonstrates as to how the Court decided the issues”

Authorities

The Court considered the following legal provisions:

• Maharashtra Ownership of Flats Act, 1963 (MOFA): The Court considered the provisions of MOFA, particularly Sections 4 and 6, which outline the obligations of the builder to provide necessary documents and execute agreements with flat purchasers.

Judgment

What weighed in the mind of the Court?

The Supreme Court’s decision was influenced by several factors, including:

• The appellant’s failure to provide the relevant documents requested by the respondent from the beginning.
• The appellant’s violation of the NCDRC’s stay order by alienating the original allotted apartment.
• The appellant’s failure to provide the specific carpet area of the original and alternate apartments even after court orders.
• The need for equitable adjustment between the parties, considering that the respondent held the balance consideration while the appellant maintained the apartment.

The Court directed the respondent to pay a total amount of Rs. 1,40,71,000 to the appellant within 8 weeks from the receipt of the order. This payment was provided in lieu of clearance of all outstanding dues of interest, taxes, and other charges up to 05.02.2025, the date on which possession was handed over to the respondent. The Court clarified that any charges accruing after the handover of possession would be the respondent’s liability.

The parties were directed to execute the sale agreement/sale deed within two months after the payment was made, with the expenses for stamp duty and registration to be borne by the respondent.

The restriction imposed on structural changes was discharged.

“We feel that there is no point in dealing with each and every issue raised by both the parties. However, in order to do complete justice between the parties, in the peculiar facts and circumstances of the case, we direct that the respondent shall pay the following amounts…”

“As such, the respondent is directed to pay the total amount of Rs. 1,40,71,000/- (Rupees One crore forty lakhs seventy-one thousand only) to the appellant within 8 weeks from the receipt of this order.”

“The parties are further directed to get the agreement to sale/sale deed executed within two months after the aforesaid payment is made.”

Key Takeaways

• Builders must comply with the provisions of MOFA and provide all necessary documents and information to homebuyers.
• Violation of court orders, such as stay orders, can have serious consequences and may impact the calculation of dues.
• Courts may consider equitable adjustments to balance the interests of both parties in disputes involving property transactions.

Directions

• The respondent (Haresh) was directed to pay Rs. 1,40,71,000 to the appellant (Jawala Real Estate) within 8 weeks from the receipt of the order.
• The parties were directed to execute the sale agreement/sale deed within two months after the payment was made.
• The restriction imposed on structural changes was discharged.

Development of Law

The ratio decidendi of this case is that in disputes involving property transactions, courts will consider the conduct of both parties, compliance with relevant laws like MOFA, and the need for equitable adjustments to arrive at a fair resolution. Non-compliance with legal obligations and court orders can negatively impact a party’s claims.

Conclusion

The Supreme Court disposed of the Miscellaneous Application, directing Haresh to pay an additional Rs. 1,40,71,000 to Jawala Real Estate to clear all outstanding dues. The Court emphasized the importance of complying with MOFA and court orders, and it balanced the equities between the parties to ensure a just outcome.