Bombay High Court Ruling on Unilateral Cancellation of Registered Sale Agreements by MahaRERA
Introduction
The Bombay High Court recently addressed a significant procedural question regarding the enforcement powers of the Maharashtra Real Estate Regulatory Authority (MahaRERA) in the matter of Macrotech Developers Ltd. Vs Joint Sub-Registrar and Ors. The central issue revolved around whether MahaRERA possesses the authority to direct a Sub-Registrar to unilaterally cancel a registered agreement for sale, or whether it must follow the conventional route of appointing a fit person to execute a cancellation deed.
This judicial pronouncement has far-reaching implications for real estate developers, allottees, and regulatory authorities operating under the Real Estate (Regulation and Development) Act, 2016 (RERA). The decision clarifies the boundaries of execution powers vested in MahaRERA and the proper procedure for cancelling registered instruments when allottees default on their payment obligations.
Factual Background of the Dispute
The Real Estate Transaction
Macrotech Developers Ltd., functioning as the promoter of "Lodha Bellmondo," a real estate development project situated near the Mumbai-Pune Expressway in Pune, registered the project with MahaRERA under Registration No. P52100000283. The respondents in this matter (Respondent Nos. 4 and 5) had been allotted Flat No. 404 on the fourth floor of this project. An agreement for sale was formally executed and registered on 9th May 2018, bearing Registration No. LNL/1889/2018.
Payment Defaults and Termination Notice
The developer encountered repeated defaults from the allottees concerning the payment of agreed instalments. In response to these continuing breaches, the developer issued a termination notice dated 13th May 2021, formally communicating its intention to cancel the transaction due to non-payment.
Initiation of MahaRERA Proceedings
Following the termination notice, the developer approached MahaRERA by filing Complaint No. CC0000005279868/2023 under Section 31 of the Real Estate (Regulation and Development) Act, 2016. The complaint sought specific relief requiring the allottees to execute and register a cancellation deed with respect to the agreement for sale dated 9th May 2018.
Recognizing the possibility that the allottees might not voluntarily comply with such an order, the developer also sought alternative relief. This alternative prayer requested the appointment of a suitable person, potentially an officer of MahaRERA itself, who would be empowered to execute and register the necessary cancellation deed on behalf of the non-complying parties. Additionally, the complaint sought directions to the concerned Sub-Registrar to effect registration of such cancellation deed.
MahaRERA's Original Order
MahaRERA granted relief to the developer through its final order dated 14th August 2024. This order addressed the developer's complaint along with another similar complaint (bearing No. CCOO5000000279885) concerning a different flat in the same project. The authority allowed the complaints and granted the reliefs sought, including both the primary relief and the alternative relief regarding appointment of a fit person.
The Execution Proceedings and Controversy
Non-Compliance by Allottees
When the allottees failed to comply with MahaRERA's order dated 14th August 2024, the developer was compelled to file a non-compliance application invoking Section 40 of RERA. This provision deals with the enforcement of orders passed by regulatory authorities under the Act.
The Problematic Execution Order
MahaRERA's executing authority passed an order dated 28th November 2024 to address the non-compliance. However, this execution order deviated significantly from the original relief granted. Instead of implementing the alternative relief by appointing a fit person to execute and register a cancellation deed, the executing authority suo motu (on its own initiative) directed the Sub-Registrar to directly cancel the registered agreement for sale.
This direction essentially required the Sub-Registrar to make a unilateral entry in the official register canceling the registered instrument without the execution or presentation of any cancellation deed.
Refusal by Sub-Registrar
When the execution order dated 28th November 2024 was served upon the Joint Sub-Registrar for compliance, the Sub-Registrar refused to act upon it. Through a communication dated 13th February 2025, the Sub-Registrar articulated concerns that MahaRERA lacked the legal authority or power to direct unilateral cancellation of a registered instrument. This refusal created an impasse, leaving the developer unable to enforce MahaRERA's decision.
Approaching the High Court
Confronted with this deadlock between the regulatory authority's direction and the registration officer's refusal, the developer approached the Bombay High Court under Article 226 of the Constitution of India, seeking directions to compel the registration of cancellation.
Legal Framework Examined by the Court
Relevant Provisions of RERA
The Court undertook a comprehensive examination of the statutory framework governing the matter. Several key provisions of the Real Estate (Regulation and Development) Act, 2016 were scrutinized:
Section 11(5) delineates the functions and duties of a promoter and specifically prescribes that a promoter may cancel allotments only in accordance with the terms of the agreement for sale. This provision establishes the contractual foundation for cancellation.
Section 34(g) addresses the functions of the regulatory authority, particularly its responsibility to ensure compliance with the powers conferred under the Act.
Section 37 empowers the authority to issue directions for performing its statutory functions, which directions are binding upon promoters, allottees, and real estate agents.
Sub-Section 2 of Section 40 is particularly crucial as it deals with enforcement mechanisms. This provision states that when any Adjudicating Officer, Authority, or Appellate Tribunal issues orders directing any person to perform or refrain from performing any act, and there is non-compliance, such orders shall be enforced in the prescribed manner.
MahaRERA Rules on Enforcement
The Maharashtra Real Estate (Regulation and Development) (Recovery of Interest, Penalty, Compensation, Fine Payable, Forms of Complaints and Appeal, etc.) Rules, 2017 provide the procedural mechanism for implementing RERA provisions.
Rule 4 of the MahaRERA Rules is of paramount importance. It establishes that for the purposes of Section 40(2) of RERA, every order passed by the Adjudicating Officer, Authority, or Appellate Tribunal shall be enforced in the same manner as if it were a decree or order made by the principal civil court of original jurisdiction in a suit. This creates a direct parallel between enforcement of MahaRERA orders and civil court decrees.
Code of Civil Procedure Provisions
Given that Rule 4 of the MahaRERA Rules creates equivalence between MahaRERA orders and civil court decrees, the provisions of the Code of Civil Procedure, 1908 become applicable for enforcement purposes.
Rule 34 of Order XXI of the CPC deals specifically with decrees for execution of documents. This rule prescribes the procedure an executing court must follow when implementing an order directing the execution of a document and the judgment-debtor fails to comply. The standard procedure involves appointing a suitable person to execute the required document on behalf of the non-complying party.