The Bombay High Court has upheld an order allowing a home-buyer to withdraw funds deposited by a developer as a pre-condition for filing an appeal under the Real Estate (Regulation and Development) Act (RERA), holding that such withdrawal is not barred during the pendency of appellate proceedings.
In an order on Monday, justice NJ Jamadar says, "...this Court finds that the appellate tribunal has exercised the discretion in a judicious manner. A party that has deprived the adversary of his hard-earned money for over a decade cannot be heard to urge that, if the amount is released in favour of the allottee, and, eventually, he succeeds, he would find it difficult to recover the amount. Thus, in the considered view of this Court, no substantial question of law arises for consideration. The appeals, therefore, deserve to be dismissed."
The ruling clarifies that amounts deposited by developers in RERA appeals need not remain locked until the final outcome and may, in appropriate cases, be released to home-buyers, subject to safeguards. The issue frequently arises in disputes involving delayed housing projects.
The case arose from appeals filed by Rare Townships Pvt Ltd against a common order of the Maharashtra Real Estate Appellate Tribunal, which had permitted allottee Mitul Gada to withdraw amounts deposited by the developer, subject to an undertaking to return the money with interest if the developer ultimately succeeds. The allottee was represented by advocate Mithil Sampat, while the developer was represented by advocate Rubin Vakil.
The dispute relates to a project named ‘North Sea Heights (A1)’ registered with Maharashtra Real Estate Regulatory Authority (MahaRERA). According to the case record, Mr Gada had agreed to purchase two flats under agreements executed on 2 November 2015. The agreed consideration was ₹1.56 crore for one flat and ₹1.60 crore for the other. Mr Gada had subsequently paid ₹69.66 lakh and ₹98.92 lakh towards these flats, respectively.
Possession was contractually due by 31 December 2018. Mr Gada alleged that the developer failed to complete construction within the stipulated time, that the project had stalled and that requisite approvals were not in place. He approached the MahaRERA seeking refund of the amounts paid along with interest and compensation.
Following earlier proceedings, including a remand by the High Court on the issue of jurisdiction, MahaRERA, by an order dated 9 September 2025, directed the developer to refund the amounts paid along with interest at the prescribed rate. The developer challenged this order before the appellate tribunal. Under RERA, a promoter is required to deposit the amount directed to be refunded as a precondition for the appeal to be entertained. In this case, and pursuant to the High Court's earlier directions, the developer deposited ₹1.76 crore and ₹1.50 crore in two matters.
While granting a stay on further recovery beyond the deposited amount, the appellate tribunal allowed Mr Gada to withdraw the deposited sum, subject to safeguards. The developer challenged this aspect of the order before the High Court, contending that the statutory pre-deposit requirement under Section 43(5) of RERA is intended solely to secure the allottee’s interest, and that permitting withdrawal would render the appeal meaningless.
Rejecting these submissions, justice NJ Jamadar held that the requirement of pre-deposit is a condition for entertaining an appeal and cannot be equated with a condition governing the grant of stay. The Court observed that the statutory provision does not expressly prohibit release of the deposited amount and that the appellate tribunal is not divested of the discretion to permit withdrawal in appropriate cases.
The Court noted that the amount directed to be refunded represents money originally paid by the allottee, often years earlier, and that interest compensates for the deprivation of its use. It further observed that the exercise of discretion to permit withdrawal would depend on the facts of each case, including the period of delay, the stage of the project, and whether the amount paid is in dispute.
In the present case, the Court took note of the prolonged delay in completion of the project, observing that more than a decade had elapsed since execution of the agreements and that possession had not been delivered. It also referred to the tribunal’s observation that the allottee continued to bear financial obligations such as loan repayments while the invested amount remained blocked.
The High Court held that, in such circumstances, the tribunal’s decision to permit withdrawal of the deposited amount, subject to an undertaking, could not be said to be improper or beyond jurisdiction. It also noted that an earlier order of the Court had allowed the regulatory authority to appropriate or disburse the deposited amount, which supported the tribunal’s approach. Finding that no substantial question of law arose, the Court dismissed the appeals and upheld the tribunal’s order. The interim applications were also disposed.
The judgement is expected to guide similar cases involving withdrawal of amounts deposited during RERA appeals, particularly in disputes arising from delayed housing projects.
