A) ABSTRACT / HEADNOTE

The Supreme Court of India in Jawala Real Estate Pvt. Ltd. & Anr. v. Haresh (2025) addressed a prolonged dispute concerning the allotment, cancellation, and substitution of a residential apartment under the Maharashtra Ownership of Flats Act, 1963 (MOFA). The appellant-developer had allotted an apartment in 2013 to the respondent-buyer upon part-payment of consideration. However, disputes arose due to the developer’s failure to provide necessary documents and the buyer’s withholding of the balance payment. Despite interim restraint orders from the National Consumer Disputes Redressal Commission (NCDRC), the developer alienated the originally allotted apartment to a third party, complicating the proceedings.

The NCDRC initially set aside the cancellation and directed execution of the sale agreement. Later, when substitution of a similar apartment was sought, the Commission declined citing contempt. On appeal, the Supreme Court allowed substitution but the implementation was delayed due to disagreements over documents, clearances, and payments. The Court was ultimately tasked with determining the exact amount payable by the buyer, balancing equities between both parties who had contributed to delay and hardship.

The Court directed the respondent to pay Rs. 1,40,71,000/- towards all outstanding dues, taxes, and charges up to the date of possession, along with liability for future dues post-handover. The ruling underscores judicial emphasis on equitable adjustment, compliance with MOFA, and balancing of consumer rights with developer’s obligations, while condemning willful disobedience of judicial orders.

Keywords: Allotment of flat; Cancellation of allotment; NCDRC stay violation; Substitution of apartment; MOFA compliance; Consumer protection; Adjustment of equities; Outstanding dues.

B) CASE DETAILS

C) INTRODUCTION AND BACKGROUND OF JUDGEMENT

The dispute arises in the real estate sector where consumers often face hardships due to developers’ non-compliance with statutory obligations under MOFA. The case presents a typical scenario of imbalance between a developer’s commercial practices and a buyer’s consumer rights. In 2013, the respondent-buyer booked a three-bedroom apartment by paying a significant advance. However, despite repeated requests, the developer failed to provide mandatory documentation like building plans, carpet area details, and NOCs, preventing execution of a registered agreement as mandated by Section 4 of MOFA. In retaliation, the developer demanded balance payment, threatening cancellation, and eventually cancelled the allotment.

The NCDRC, seized of the consumer complaint, restrained the developer from creating third-party rights. Despite this, the developer alienated the apartment in violation of the interim order, prompting strong judicial disapproval. The Commission set aside the cancellation and directed execution of the sale agreement. Later, when substitution of an alternate flat was sought due to the earlier alienation, the NCDRC rejected it on grounds of contempt.

The Supreme Court intervened in 2018, allowing substitution and directing compliance under MOFA. However, disputes persisted as the developer demanded outstanding dues with interest and charges, while the buyer insisted on compliance with statutory obligations and denied liability for excessive charges. The matter lingered until 2025 when the Court was compelled to balance equities and determine the final amount payable, ensuring neither party unduly benefitted from its own default.

D) FACTS OF THE CASE

In 2013, the respondent Haresh booked Flat No. 6403, B Wing, Lodha Allura (Alpha Tower) in the developer’s project Lodha Codename Blue Moon, Worli, Mumbai, for Rs. 4,64,86,145/-. He paid Rs. 92,50,744/- upfront. The developer, Jawala Real Estate Pvt. Ltd. (later amalgamated with Macrotech Developers Ltd.), failed to provide crucial documents, frustrating execution of the registered agreement under MOFA. Instead, the developer issued notices demanding the balance, culminating in cancellation on 28 June 2013.

The buyer approached the NCDRC (CC No. 210/2013). On 19 November 2013, NCDRC restrained the developer from alienating the flat. Nonetheless, the developer sold it on 24 November 2014. In 2016, NCDRC set aside the cancellation, directed execution of the agreement within 90 days, and imposed Rs. 1 lakh compensation for harassment, along with interest @ 9% p.a. The developer, facing contempt allegations, sought substitution of Flat No. 6503 (above the original one). NCDRC refused, but the Supreme Court in 2018 allowed substitution.

Implementation stalled as the developer pressed for payment of outstanding dues (nearly Rs. 5 crores, including interest and charges), while the buyer insisted on statutory compliance, denying liability for inflated demands. In 2024, the Court directed deposit of balance consideration (Rs. 3.72 crores) and later ordered handover of possession of Flat No. 6503. The buyer accepted possession on 5 February 2025, subject to final orders.

The sole question remaining was quantification of dues payable by the buyer. The developer claimed Rs. 4.96 crores, while the buyer admitted only Rs. 2.15 lakhs and conditionally agreed to Rs. 15.37 lakhs. The Supreme Court in May 2025 finally adjudicated upon equitable adjustment of liabilities, directing a lump sum payment of Rs. 1.40 crores to clear all outstanding dues up to possession.

E) LEGAL ISSUES RAISED

i. Whether the cancellation of allotment by the developer despite non-supply of statutory documents under MOFA was valid?
ii. Whether alienation of the apartment in violation of NCDRC’s interim stay order constituted contempt and affected the developer’s claims?
iii. Whether the buyer was liable to pay interest, taxes, and charges when the developer failed to provide statutory disclosures?
iv. Whether substitution of an alternate apartment could be allowed in place of the original allotment despite earlier alienation?
v. How should equities be adjusted between the developer and buyer when both parties contributed to delay?
vi. What is the final amount payable by the buyer towards the allotment?

F) PETITIONER/ APPELLANT’S ARGUMENTS

i. The counsel for the appellant contended that the buyer defaulted in paying the balance sale consideration despite repeated reminders, leading to lawful cancellation.
ii. It was argued that even after substitution of an alternate apartment was allowed by the Supreme Court, the respondent refused to comply by withholding payment and raising unreasonable demands for documents.
iii. The developer claimed entitlement to interest @ 9% per annum on outstanding dues, apart from infrastructure charges, legal charges, CAM, society registration expenses, and taxes.
iv. It was contended that the buyer’s occupation of the apartment without clearing dues amounted to unjust enrichment, warranting payment of nearly Rs. 5 crores.
v. The appellant further urged that the alienation of the original apartment was a bona fide error and should not deprive it of legitimate dues.

G) RESPONDENT’S ARGUMENTS

i. The counsel for the respondent argued that under Sections 4 and 6 of MOFA, execution of a registered agreement with necessary disclosures was a statutory obligation of the developer, which was willfully ignored.
ii. The respondent claimed that he withheld payment only because the developer failed to furnish documents relating to building plan approval, carpet area, and NOCs, making the demand for balance payment illegal.
iii. It was urged that alienation of the flat in 2014 despite an explicit restraint order of NCDRC amounted to contempt, disentitling the developer to equitable relief.
iv. The respondent denied liability for inflated charges like additional CAM, club membership, delayed payment penalties, and excessive interest, asserting these were contrary to MOFA and consumer law.
v. The respondent insisted he was willing to pay the admitted dues of Rs. 2.15 lakhs, and conditionally Rs. 15.37 lakhs, but not the exaggerated figure demanded by the developer.

H) RELATED LEGAL PROVISIONS

i. Maharashtra Ownership of Flats Act, 1963 – Section 4 (obligation to execute agreement before accepting more than 20% of consideration), Section 6 (liability to provide disclosures regarding title, plans, and area).
ii. Consumer Protection Act, 1986 / 2019 – Principles relating to deficiency in service and unfair trade practices.
iii. Civil Procedure Code, 1908 – Provisions regarding execution of orders and contempt implications.

I) JUDGEMENT

The Supreme Court held that both parties contributed to prolongation of the dispute. The developer violated NCDRC’s interim stay by alienating the flat, failed to provide crucial statutory documents, and delayed compliance with judicial directions. The buyer, while deprived of timely possession, also retained substantial unpaid consideration, thereby preventing closure of the transaction.

The Court considered the inflated claims of nearly Rs. 5 crores by the developer to be untenable given its non-compliance with MOFA. At the same time, it held that the buyer could not escape liability altogether, since he had withheld the balance consideration and enjoyed possession thereafter. In exercise of its equitable jurisdiction under Article 142 of the Constitution, the Court directed payment of a consolidated sum of Rs. 1,40,71,000/- to settle all outstanding dues up to the date of possession (05.02.2025).

It further clarified that any post-possession dues (maintenance, society charges, utilities) must be borne by the buyer in addition. Execution of the sale deed was directed within two months, with stamp duty and registration costs payable by the buyer. The Court thus sought to balance equities, prevent unjust enrichment, and bring quietus to a 12-year-old litigation.

a. RATIO DECIDENDI

The ratio of the case is that in real estate disputes under MOFA, where both the developer and buyer have contributed to delay and hardship, courts must balance equities to prevent either party from unjust enrichment. Non-compliance with statutory obligations by the developer disentitles it to exaggerated claims, but the buyer, having withheld substantial consideration, must still compensate fairly.

The Court established that alienation of property in violation of judicial orders aggravates the developer’s liability and undermines its claims. Nevertheless, substitution of an alternate apartment is permissible if no contempt proceedings are initiated, ensuring consumer’s substantive rights are preserved.

Thus, equitable adjustment through lump-sum determination of dues was the guiding principle, ensuring justice despite procedural lapses.

b. OBITER DICTA

The Court observed that developers routinely flout MOFA obligations by withholding crucial disclosures, compelling buyers into litigation. Such practices constitute deficiency in service under consumer law. Further, the Court emphasized that alienation of property despite judicial restraint undermines the administration of justice, though absence of formal contempt proceedings prevents punitive action.

The Court also remarked that prolonged litigation in consumer housing disputes erodes the very purpose of consumer protection. Timely disclosure, compliance with statutory duties, and good faith dealings are essential to prevent recurrence of such disputes.

c. GUIDELINES

i. Developers must strictly comply with Sections 4 and 6 of MOFA, executing registered agreements and disclosing sanctioned plans, carpet area, and approvals before demanding further payment.
ii. Developers must scrupulously comply with judicial restraint orders; alienation during pendency of proceedings shall weigh heavily against their equitable claims.
iii. Buyers withholding payment must deposit balance consideration within court-specified timelines to demonstrate bona fides.
iv. Courts, while adjudicating, may apply Article 142 to balance equities where both parties have defaulted, avoiding protracted execution disputes.
v. Compensation in the form of lump-sum dues may be imposed to put an end to long-standing disputes.

J) CONCLUSION & COMMENTS

The judgment represents a significant balancing act in real estate disputes under MOFA. It underscores that while consumers deserve protection from exploitative practices of developers, they cannot withhold payment indefinitely without consequences. The ruling harmonises statutory compliance, consumer rights, and equitable justice.

The Court’s application of Article 142 is notable, showing its willingness to transcend strict legal claims to achieve finality in a matter lingering for over a decade. The decision also reflects the judiciary’s intolerance towards developers’ violations of judicial orders and statutory duties.

From a broader perspective, the ruling reinforces the consumer-friendly spirit of MOFA and the Consumer Protection Act, while cautioning buyers against strategic defaults. It paves the way for a jurisprudence of equitable adjustment in real estate litigation, where rigid enforcement of one-sided claims would otherwise result in injustice.

K) REFERENCES

a. Important Cases Referred

i. DLF Homes Panchkula Pvt. Ltd. v. D.S. Dhanda, (2019) 18 SCC 357.
ii. Emaar MGF Land Ltd. v. Aftab Singh, (2019) 12 SCC 751.
iii. Fortune Infrastructure v. Trevor D’Lima, (2018) 5 SCC 442.
iv. Kolkata West International City Pvt. Ltd. v. Devasis Rudra, (2019) 18 SCC 613.

b. Important Statutes Referred

i. Maharashtra Ownership of Flats Act, 1963 (Sections 4, 6).
ii. Consumer Protection Act, 1986 & 2019.
iii. Civil Procedure Code, 1908.
iv. Constitution of India – Article 142.