Transfer Of Stamp Duty, Registration Amount To Bank Not Proof Of Payment: Bombay High Court
The Bombay High Court has recently held that transferring money to a bank account for payment of stamp duty and registration charges does not by itself establish that the charges were actually paid to the concerned authorities.
Justice Sandeep V. Marne made the observation while setting aside orders of the Maharashtra Real Estate Regulatory Authority (MahaRERA) and Maharashtra Real Estate Appellate Tribunal (MahaREAT) directing JP Builders and Developers to execute a registered agreement for sale with homebuyer Santosh Amarsingh Sandhu.
The court found that Sandhu had transferred ₹4.65 lakh to a Punjab National Bank account from which the statutory challans were to be generated. However, no challan or e-SBTR was generated, and the amount was never credited to the stamp or registration authorities.
“From the documents on record, it becomes difficult to believe that the allottee actually made payment of stamp duty and registration charges. Mere making provision for stamp duty and registration charges and transfer of the amount to the banker does not mean that stamp duty and registration charges were actually paid by the allottee,” Justice Marne observed.
The dispute arose over Flat No. A-502 in JP Builders' project at Airoli, Navi Mumbai. A fresh allotment letter issued to Sandhu on July 11, 2013 recorded the flat's consideration at ₹48.75 lakh and payment of ₹12.30 lakh.
Flat No. A-502 could not be constructed after the project was scaled down from ground plus 30 floors to ground plus 19 floors.
The developer therefore asked Sandhu to choose another flat. He opted for Flat No. 1208 and was called upon to complete the agreement for sale by paying the applicable stamp duty and registration charges.
The developer sent notices on May 3, May 28 and June 24, 2019. Sandhu responded on June 30 saying he did not have the funds to immediately pay the charges.
He sought three months to arrange the money. Alternatively, he asked the developer to initially bear the charges and recover them through his proposed home loan.
Sandhu later claimed that he had paid ₹4.65 lakh towards stamp duty and registration charges and informed the developer of the payment on July 9, 2019.
Bank records, however, showed that the money remained with Punjab National Bank and was not transferred to the concerned authorities.
In January 2020, Sandhu asked the bank to return the ₹4.65 lakh. The bank subsequently reversed the transaction.
The developer terminated the allotment on July 30, 2019, citing non-payment of the charges. Sandhu then approached MahaRERA, which directed the developer to execute a registered agreement for sale for an alternative flat.
Maharashtra REAT upheld that direction in October 2024. It also directed the developer to pay interest on the ₹12.30 lakh already paid by Sandhu at the SBI Marginal Cost Lending Rate (MCLR) plus 2% from July 12, 2016, until possession.
The High court found that neither RERA nor REAT had examined whether Sandhu had actually paid the stamp duty and registration charges.
The court also held that the developer had given Sandhu several opportunities to complete the transaction. Since he failed to complete the payment process, the developer was justified in terminating the allotment.
“The allottee himself is responsible for non-execution of the Agreement for Sale. The promoter was always ready and willing to execute the Agreement for Sale. In that view of the matter, termination of the transaction vide notice dated 30 July 2019 appears to be perfectly in order. The promoter is not expected to wait endlessly,” Justice Marne observed.
The court therefore set aside the directions requiring the developer to execute the agreement for sale and upheld the termination.
At the same time, the developer was not permitted to retain the ₹12.30 lakh already paid by Sandhu. The court also barred any deduction towards earnest money.
It directed JP Builders to refund the entire ₹12.30 lakh with interest at SBI MCLR plus 2% per annum from July 12, 2016 until the amount is actually returned.
For JP Builders and Developers: Advocates Vishal Kanade and Rajesh Vanzara, instructed by S.K. Legal Associates LLP.
For Santosh Amarsingh Sandhu: Advocate Kunal R. Maskar.