RERA Disputes: Withdrawal Is Conditional, Not Guaranteed

Realty Quarter Bureau - April 3, 2026

When law is tested by real-world challenges, discretion becomes the real authority.

In a key observation, the Bombay High Court has clarified that buyers and developers cannot be treated equally when it comes to financial disputes under RERA.

The court stated that allowing a buyer to withdraw money deposited by a builder during an appeal is not an automatic right. Such decisions depend on the facts of each case and must be guided by judicial discretion.

At the center of this ruling is the interpretation of the Real Estate (Regulation and Development) Act (RERA). The HC made it clear that while the appellate tribunal has the power to allow withdrawal, this power is not absolute and cannot be applied uniformly.

“The discretion would depend on facts of each case,” the HC clarified, adding that factors such as payment disputes and project delays must be considered.

The Case

The ruling comes from a long-standing dispute involving a delayed residential project.

Gaida in 2015 booked, for over Rs 3 crore, two flats on the 15th floors of a project called North Sea Heights (A1), developed by Rare Townships. The possession was due on Dec 31, 2018. He paid almost Rs 2 crore.

Due to the delay, the buyer approached MahaRERA seeking a refund under Section 18 of RERA along with interest and compensation.

In March 2021, MahaRERA ordered the refund with interest. The builder then filed an appeal and deposited the required amount. In 2026, the tribunal allowed the buyer to withdraw the amount, following which the builder approached the High Court.

Relief vs Reality

On March 30, Justice N J Jamadar observed,

“it is no solace to an allottee that the amount ordered to be refunded is secured and kept in a deposit. The release of the amount ameliorates the situation of the allottee by relieving him of the financial constraints and also the mental anguish caused by the breach of obligations.”

This highlights that the court recognizes not only financial hardship but also the emotional stress faced by buyers due to delays.

Not an Absolute Right

The court firmly rejected the argument that withdrawal should be treated as a guaranteed right.

The builder argued that permitting withdrawal was a “transgression of the jurisdiction”. The buyer’s lawyer responded that safeguards exist, including returning the amount with interest if required.

However, the HC clearly stated:
“A party (the builder in this case), who 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,” the HC ruled.

Pre-Deposit Matters

The HC also explained the intent behind Section 43(5) of RERA.

“A vowed object of the provision of Section 43(5) of RERA 2016 is to obviate a situation where the allottee, despite succeeding before the Authority as well as the Appellate Tribunal, is left in the lurch.”

This means the deposit requirement protects buyers during long legal processes.

At the same time, the tribunal is not bound to allow withdrawal in every case—it must decide based on merit.

Financial Fairness

The court also clarified the nature of the refund amount:

“The character of the amount which is ordered to be refunded by the Authority under Section 18 of the RERA 2016 is of critical salience.”

It further stated:

“The HC said what is thus ‘directed to be refunded is the amount which was, in the first place, paid by the allottee to the promoter, and, in a fair number of cases, like the case at hand, years ago.”

And importantly:

“At heart is the liability to pay interest on amounts received from buyers… ‘In law, interest whether statutory or contractual, represents the profit the person deprived of the money.”