A Builder Could Cancel a Flat Booking Over Unpaid Stamp Duty, but Must Refund It All, the Bombay High Court Said on 23 September

A buyer booked a flat in Airoli, Navi Mumbai in 2013 and waited six years for the building. When the builder asked him in 2019 to pay stamp duty and register the agreement, he did not. On 23 September 2026 the Bombay High Court held the builder's cancellation valid and set aside two regulator orders in the buyer's favour. It also held the builder cannot keep any earnest money and must return the full Rs 12,30,000 with interest.

The case

The judgment is JP Builders and Developers v. Santosh Amarsingh Sandhu, Second Appeal No. 116 of 2025 with Second Appeal No. 603 of 2025, Bombay High Court, 2026:BHC-AS:38974, CNR HCBM010427492025, decided by Sandeep V. Marne J. It was reserved on 16 September 2026, pronounced on 23 September 2026 and runs to 30 pages. The builder and the buyer each appealed against the Maharashtra Real Estate Appellate Tribunal's order of 22 October 2024.

The facts, at paragraphs 2 to 9:

• Flat A-502 was planned in a proposed 30-storey building on Plot No. 1, Sector 19, Airoli. Earlier buyers booked it in 2011 at Rs 48,75,000 and paid Rs 12,30,000.
• They lost interest when construction stalled over a society's pending writ petition. On 11 July 2013 the builder issued a fresh allotment letter to the new buyer, who paid Rs 12,30,000.
• The project was registered under RERA on 31 July 2017. The building was scaled down to 19 floors, the revised commencement certificate came on 26 April 2019, and A-502 was never built. The buyer chose Flat 1208 instead.
• The builder terminated the booking by notice of 30 July 2019. MahaRERA, on 6 March 2020 and 8 October 2020, told the builder to execute a registered agreement for sale. The Appellate Tribunal upheld that and added interest.

The five notices

Paragraph 41 lists them: 3 May, 28 May and 24 June 2019 asking the buyer to pay stamp duty and registration charges, then 2 July and 9 July 2019. On 30 June 2019 the buyer wrote that he did not have the cash and asked the builder to wait three months or to bear the stamp duty until his home loan was disbursed (paragraph 38).

On 9 July 2019 he emailed that he had paid. The court found otherwise. Paragraphs 25 to 27: Rs 4,65,000 went to a bank account from which the challan was to be generated, no challan was ever generated, and on 18 January 2020 he asked the bank to return the money, which it did. Paragraph 30: moving the money to the banker "does not mean" the stamp duty and registration charges were paid.

What the court held

Stamp duty was not paid. Paragraph 33: the buyer did not pay stamp duty and registration charges before the 30 July 2019 termination. Paragraph 32 notes that neither MahaRERA nor the Tribunal examined that point.

The cancellation was valid. Paragraph 41: the booking predated RERA, the building's plans were settled only on 26 April 2019, and the builder asked for the agreement within days, with no demand at that stage for further price. The regulators "mechanically referred to the provisions of Section 13 of RERA". Paragraph 42: "The promoter is not expected to wait endlessly." Paragraphs 44 and 45: MahaRERA and the Tribunal erred in directing the builder to execute the agreement.

The builder keeps nothing. Paragraph 48: though the termination was valid, the builder "is not entitled to retain the booking amount" and "is also not entitled to deduct any amount towards EMD." The builder had refunded Rs 11,07,000 after deducting Rs 1,23,000 as earnest money (paragraph 40).

Interest. Paragraph 49: in the normal course interest would run only up to 30 July 2019, when the buyer became responsible for the failure. Because he waited years for construction, the court kept the Tribunal's rate and start date, SBI MCLR plus 2% from 12 July 2016, running until the money is returned.

No credit for the earlier buyers' payment. Paragraphs 50 to 54: the buyer's claim to credit for the Rs 12,30,000 paid by the earlier buyers failed. They had asked for and received a refund, and the 2013 allotment letter recorded no such adjustment.

The order, at paragraphs 55 and 56: the MahaRERA and Tribunal orders are set aside, the builder must return Rs 12,30,000 with interest at SBI MCLR plus 2% from 12 July 2016 to the date of actual payment, the builder's appeal is allowed in part, the buyer's appeal is dismissed, and there is no order as to costs.

What it means for an NRI buyer

An NRI who booked a flat before RERA, on an allotment letter, may be asked years later to pay stamp duty and register the agreement. This judgment shows that a buyer who does not pay across repeated notices can lose the flat, even where the regulator had first ordered the builder to sign. It also shows the other side: on these facts the court refused the builder any deduction for earnest money and kept interest running from 2016.

Paying into a bank account is not the same as paying the stamp duty. The court looked for the generated challan, and the buyer did not have one. And a booking bought from an earlier allottee carries only what the new allotment letter records.

For what RERA lets a buyer claim when a builder delays, read our guide on filing a RERA complaint against a builder. For the steps of buying from abroad, see buying property in India as an NRI. A dispute over a specific booking belongs with a lawyer who can read the allotment letter and the notices.

FAQ

Can a builder cancel a booking if the buyer does not pay stamp duty? On these facts, yes. The Bombay High Court held the 30 July 2019 termination valid after five notices went unanswered or unmet, and set aside MahaRERA's order to execute the agreement.

Can the builder keep the earnest money after a valid cancellation? Not in this case. Paragraph 48 held the builder is not entitled to retain the booking amount or deduct any amount towards earnest money. It must return the full Rs 12,30,000.

What interest did the court award? SBI MCLR plus 2% on Rs 12,30,000 from 12 July 2016 until the money is paid, the same rate and start date the Appellate Tribunal had set.

Was this project under RERA? The booking came first. The allotment letter is dated 11 July 2013 and the project was registered under RERA on 31 July 2017. Paragraph 41 held the regulators applied section 13 of RERA without looking at that history or at the builder's notices.

Does money sent to a bank for stamp duty count as payment? The court held it did not here. Paragraph 30: transferring the amount to the banker does not mean the stamp duty was paid, and no challan was generated.

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Sources

• JP Builders and Developers v. Santosh Amarsingh Sandhu, Second Appeal No. 116 of 2025 with Second Appeal No. 603 of 2025, Bombay High Court, Sandeep V. Marne J, pronounced 23 September 2026, 30 pages, 2026:BHC-AS:38974, CNR HCBM010427492025. The Court's own signed PDF was downloaded from the Bombay High Court's recent judgments page on 25 September 2026, 342,652 bytes, sha256 421418e34d6b2635d6e4234c19f400c8f0ae4d64679142dfba6bc8c72cb468e1, and read in full. The download link carries a session token, so we cite the listing page: https://bombayhighcourt.gov.in/bhc/front/recentjudgment
• The MahaRERA orders of 6 March 2020 and 8 October 2020 and the Appellate Tribunal order of 22 October 2024 are as the judgment above describes and quotes them. We did not open those orders ourselves.