Bombay High Court Allows Stamp Duty Refund To Flat Purchaser Beyond Time Limit, Says Delay Caused By Developer's Default

Justice NJ Jamadar observed that the petitioner had diligently pursued remedies before RERA and the delay in executing the Cancellation Deed was not attributable to him. Impossibility of performance of a statutory condition is a ground to relieve a person from penalty, he said.

“High Court in exercise of the extraordinary writ jurisdiction cannot be denuded of the power to delve into the question as to whether the non-compliance of the stipulation as to time was brought about by factors which were beyond the control of the affected party and to insist performance would have amounted to compelling such party to do impossible and, thus, relieve such party of the hardship in deserving cases, where injustice is writ large. In the backdrop of the circumstances which are adverted to above, refusal to grant refund would be wholly unjust and unconscionable”, the court held.

Satish Buba Shetty, a retired bank official, entered into an Agreement to Purchase a flat in the "ERA" building with M/s. Vijaykamal Properties Private Limited on November 10, 2014. The agreement was registered on November 19, 2014, accompanied by the payment of stamp duty amounting to Rs. 4,76,000 and registration charges of Rs. 30,000. However, the developer neither developed the building nor refunded the money.

Shetty approached the Real Estate Regulatory Authority (RERA). RERA ordered the developer to refund the consideration and execute a Deed of Cancellation. Developer's appeal against this order was dismissed by the appellate authority on October 16, 2018. When the developer still didn't comply with RERA orders, Shetty filed an execution application before the RERA Appellate Tribunal and the parties reached a settlement resulting in the execution of a Deed of Cancellation on March 9, 2021.

On March 31, 2021, Shetty sought a refund of the stamp duty paid, but the Collector of Stamps rejected his claim on the ground that the agreement was not cancelled within five years as mandated by the proviso to section 48(1) of the Maharashtra Stamp Act, 1958. The Chief Controlling Revenue Authority upheld this decision. Thus, Shetty approached the high court.

Section 48 of the Maharashtra Stamp Act establishes the period for making an application for relief under section 47. The proviso to section 48(1) mandates the cancellation of the Agreement for Sale within five years through a registered Cancellation Deed in order to seek refund of stamp duty.

The court noted the petitioner and his wife had booked a flat in the evening of their life and had parted with 25 percent of the total consideration of Rs. 95 lakhs. However, due to the developer's default, the petitioner had to approach RERA. Despite RERA's order to refund and execute a Deed of Cancellation, the developer did not comply, leading to a prolonged legal process, the court noted.

The court emphasized the maxims "actus curiae neminem gravabit" (an act of the court shall prejudice no man) and "lex non cogit ad impossibilia" (the law does not compel a man to do what he cannot possibly perform). The court opined that time spent pursuing legitimate remedies should not be counted against the petitioner.

Non cancellation of the Agreement for Sale within five years cannot be construed as a default on the part of the petitioner, the court added. The court recognized that the authorities do not have discretion and have to strictly adhere to statutory provisions.

However, the court held that in cases where a party would suffer consequences due to judicial delay or would be prejudiced for non-compliance with a condition impossible to perform, refusing relief would violate equity, justice, and fairness. The court, therefore, allowed the claim for a refund, quashing the orders of the Chief Controlling Revenue Authority and the Collector of Stamps.

Case no. – Writ Petition No. 9657 of 2022

Case Title – Satish Buba Shetty v. Inspector General of Registration and Collector of Stamps and Ors.