Bombay High Court Upholds ₹38.18 Crore Deposit Condition For Interim Protection Of Palais Royale Flat, Holds RERA’s 10% Advance Cap Restricts Promoters, Not Appellate Tribunal
Bombay High Court Dismisses Homebuyer’s Appeal, Rules MahaREAT May Require Deposit Exceeding 10% Of Flat Price To Test Bona Fides And Balance Equities Before Granting Status Quo
Facts
Sachin Bajla was allotted a 46th-level flat in the Palais Royale project, Worli, Mumbai, under a Letter of Allotment (LOA) dated 20 January 2010 issued by Shree Ram Urban Infrastructure Ltd. (SRUIL). The agreed price was ₹76.36 crore, with ₹38.18 crore payable at the time of execution and registration of the agreement for sale. The allottee paid only ₹5.51 crore between January 2010 and July 2011. Following SRUIL’s winding-up proceedings and enforcement of a mortgage under the SARFAESI Act, Honest Shelters Pvt. Ltd. acquired the project through auction and became its promoter. It terminated the LOA on 6 October 2022, offering a refund of ₹5.51 crore. MahaRERA dismissed Bajla’s complaint on 16 April 2024, holding that the terminated allotment meant no existing promoter–allottee relationship. In the ensuing appeal, the Maharashtra Real Estate Appellate Tribunal (REAT) directed status quo in respect of the flat on 8 August 2024, conditional on deposit of ₹38.18 crore. Bajla challenged that condition before the Bombay High Court under Section 58 of RERA.
Issues
Whether REAT, while granting interim protection against third-party dealings, may order an allottee to deposit more than 10% of the flat price without a registered agreement for sale; whether such a condition circumvents Section 13(1) of the Real Estate (Regulation and Development) Act, 2016 (RERA); and whether the Court should examine the validity or enforceability of the LOA and the merits of MahaRERA’s rejection while hearing a second appeal confined to an interim deposit condition.
Appellant’s Arguments
Bajla argued that Section 13(1) prohibited collecting more than 10% of the price before executing and registering an agreement for sale, and that the Tribunal could not achieve indirectly what the promoter could not lawfully demand directly. He said his ₹5.51 crore payment, together with claimed delay interest of ₹12.01 crore, represented ₹17.52 crore against the sale consideration. He maintained that the absence of a registered agreement arose from the promoter’s default, that the termination was invalid and that Section 11(5) of RERA permitted an allottee to challenge cancellation. He claimed continued readiness and willingness to complete the purchase; the REAT should have maintained unconditional protection and examined the merits or remanded the complaint instead of requiring ₹38.18 crore as an interim deposit.
Respondents’ Arguments
Honest Shelters contended that Bajla had paid less than 10% of the agreed ₹76.36 crore, failed to pay the first ₹38.18 crore tranche or stamp duty and did not execute the agreement for sale despite receiving its draft. With the project substantially complete and an occupancy certificate issued for the flat on 17 December 2024, preserving it indefinitely for a purchaser who had made a small payment would unfairly prejudice the promoter. The respondent relied on Sections 44(3) and 53 of RERA to support REAT’s power to impose proportionate conditions while granting interim relief, and argued that the deposit legitimately tested readiness and willingness. It also urged that a second appeal from an interlocutory order could not become an appeal on the substantive merits of MahaRERA’s decision.
Analysis of the Law
Section 13(1) of RERA forbids a promoter from accepting an advance or application fee exceeding 10% of the apartment’s cost without first entering into and registering a written agreement for sale. The Court distinguished this protective restriction on a commercial counterparty from the independent judicial function of the REAT. Section 44(3), read with Section 53, enables the Tribunal to make appropriate interim orders and to regulate its procedure according to principles of natural justice. In exercising that discretionary power, REAT may require a deposit, security or undertaking to safeguard both sides and examine the appellant’s bona fides. The quantum is fact-dependent and is not mechanically capped at 10%. A deposit into the Tribunal as a condition for an interim injunction is not the same as acceptance of advance consideration by a promoter. Section 58 permits an appeal even from an interim REAT order, but the High Court’s interference with discretionary interim relief remains limited to cases of arbitrariness, perversity or disregard of legal principles.
Precedent Analysis
Man Global Ltd. v. Ram Prakash Joukani, 2023:BHC-AS:9136, established that an appeal under Section 58 lies against an interim REAT order. Mohan Overseas Pvt. Ltd. v. Goyal Tin & General Industries, 2009 SCC OnLine Del 3846, and Bal Krishan Gupta v. Vikas Aggarwal, 2014 SCC OnLine Del 3081, supported the use of deposits and undertakings to balance equities in property disputes. U.N. Krishnamurthy v. A.M. Krishnamurthy, (2023) 11 SCC 775, emphasised continuous readiness and willingness, including financial capacity, in specific-performance claims. Wander Ltd. v. Antox India, 1990 Supp SCC 727, and the Bombay High Court Full Bench in UTO Nederland B.V. v. Tilaknagar Industries Ltd., 2025 SCC OnLine Bom 6140, limited appellate substitution of discretion in injunction matters. Authorities invoked by Bajla on statutory limits did not displace the distinct interim powers conferred by RERA.
Court’s Reasoning
Justice Sandeep V. Marne found no breach of Section 4 of MOFA or Section 13 of RERA in the LOA’s stipulation that ₹38.18 crore be paid simultaneously with execution and registration of the sale agreement: those provisions prohibit excessive advances before registration, not consideration payable upon registration. Bajla had not paid even 10% of the price and had failed to stamp or proceed with the draft agreement. In circumstances where the flat was ready for occupation, the REAT could require approximately half the agreed price to test his ability and willingness to complete the transaction before preventing the developer from creating third-party rights. The ₹12.01 crore interest claim was unadjudicated and could not be treated as money already paid. The Court also distinguished another Palais Royale allottee who had paid about 90% of the price and held a registered agreement. The proposed deposit was an equitable condition for protection, not a statutory prerequisite for maintaining the REAT appeal; Bajla remained free to prosecute that appeal without interim restraint. The validity of termination and the underlying MahaRERA decision remained for the REAT to determine.
Conclusion
The Bombay High Court dismissed Second Appeal No. 534 of 2024 and upheld REAT’s condition requiring a ₹38.18 crore deposit for status quo over the specified flat. It held expressly that the 10% restriction in Section 13(1) binds the promoter and does not limit REAT’s power to impose a higher deposit when awarding discretionary interim relief under Sections 44(3) and 53. The Court declined to continue its own interim restraint against third-party rights. It nevertheless permitted Bajla to make the deposit within two weeks of pronouncement, in which event REAT’s status-quo order would continue during the pending appeal. All findings on the underlying allotment, termination, monetary claims and substantive complaint were declared prima facie only and not binding on REAT at final hearing. The ruling concerns the price of interim protection, not compulsory pre-deposit for filing an allottee’s appeal.
Case: Sachin Bajla v. Honest Shelters Pvt. Ltd. & Anr.
Court: High Court of Judicature at Bombay, Civil Appellate Jurisdiction
Case Number: 2026:BHC-AS:45353; Second Appeal No. 534 of 2024
Bench: Justice Sandeep V. Marne (Single Judge)
Date: 5 November 2026 (reserved on 26 October 2026)
Result: Second appeal dismissed; ₹38.18 crore interim deposit condition upheld; two weeks granted to deposit.
