An Allotment Letter, Rs 5.51 Crore Paid, and a Rs 38.18 Crore Deposit: Bombay HC on the 10% Rule

On January 20, 2010, a buyer received a letter of allotment for a flat on the 46th NW level of Palais Royale in Worli, priced at Rs 76.36 crore. The letter required Rs 38.18 crore immediately, for execution and registration of the agreement for sale. Between January 2010 and July 2011 the buyer paid Rs 5.51 crore. No agreement for sale was ever registered. Sixteen years later, on November 5, 2026, the Bombay High Court decided what that buyer must deposit to keep the flat from being sold while the dispute continues: the full Rs 38.18 crore.

The judgment, Sachin Bajla v. Honest Shelters Private Limited and Ors, Second Appeal No. 534 of 2024, was pronounced by Justice Sandeep V. Marne. For Mumbai buyers, its most useful part is what it says about the 10 percent rule in Section 13(1) of the Real Estate (Regulation and Development) Act, 2016, and about letters of allotment that never become registered agreements.

The short answer. The court dismissed the allottee's appeal and upheld the Maharashtra Real Estate Appellate Tribunal's order of 8 August 2024 granting status quo on the flat only if Rs 38.18 crore was deposited. It held that the 10 percent cap in Section 13(1) restricts what a promoter may accept without a registered agreement, but "is not applicable to the adjudicatory powers of REAT". It also said Section 4 of MOFA and Section 13 of RERA "do not impose any upper limit" on what may be paid when an agreement is executed and registered. The trade-off: buyers keep the 10 percent protection against promoters, but a tribunal can still demand large deposits to test a buyer's readiness to complete a sale.

How did a 2010 allotment end up in the High Court?

According to the judgment, the original owner and developer, Shree Ram Urban Infrastructure Limited, was building Palais Royale on about 13,376 sq m at Worli Estate. It had borrowed from Indiabulls Housing Finance against the property. In 2016-17 the High Court directed its winding up. Indiabulls took possession under the SARFAESI Act and auctioned the property, and Honest Shelters Private Limited emerged as the successful bidder and assumed the role of promoter.

The project received part occupancy certificate up to 38 upper floors from the municipal corporation on 12 August 2022. The new promoter terminated the letter of allotment by notice dated 6 October 2022 and sent a cheque refunding Rs 5.51 crore, which the buyer disputed. MahaRERA dismissed the buyer's complaint on 16 April 2024, holding that there was no allottee and promoter relationship after termination. On appeal, the tribunal granted status quo on the flat subject to a deposit of Rs 38.18 crore. The buyer challenged that condition in the High Court, which had kept third-party rights frozen while the appeal was pending.

What did the buyer argue?

The buyer's counsel argued that the tribunal "has grossly erred" in directing a deposit of Rs 38.18 crore, and that the order was contrary to Section 13 of RERA. The argument, as recorded in the judgment, was that 10 percent of the flat's price is Rs 7.64 crore, and that counting Rs 5.51 crore paid plus Rs 12.01 crore claimed as delayed interest, the buyer had effectively paid Rs 17.52 crore. Counsel also argued that until a registered agreement is executed under Section 13, the promoter cannot demand any further amount.

When the High Court admitted the appeal on 6 September 2024, it framed three questions of law, including whether a tribunal's deposit condition "can exceed the maximum quantum contemplated by Section 13(1) of the RERA Act" and whether the terms of a letter of allotment can be enforced despite being contrary to MOFA and RERA. The answers below come from the final judgment.

What does Section 13(1) protect, according to the court?

It protects against a promoter taking too much money before a registered agreement. The court said: "The restriction is applicable only on the act of acceptance of monies in excess of 10% without registering an agreement." It noted that when the allotment letter was issued in 2010, Section 4 of MOFA prohibited a promoter from accepting more than 20 percent before an agreement for sale, and that this "was reduced to 10% by virtue of provisions of Section 13 of RERA."

The court then said that Section 4 of MOFA and Section 13 of RERA "do not impose any upper limit on acceptance of consideration at the time of execution and registration of Agreement for Sale." Where an apartment is ready, it said, a promoter can demand full consideration against execution and registration of the agreement. On these facts, the court held that the earlier promoter's demand of Rs 38.18 crore against registration did not violate either law.

Why could the tribunal ask for more than 10 percent?

Because the court treated the tribunal's deposit order as an exercise of its powers to grant interim relief, not as a promoter's demand. It held that "the prohibition under Section 13 of RERA on a promoter has no correlation with the exercise of discretion by the REAT while making an interim order", relying on the tribunal's powers under Sections 44(3) and 53 of RERA. It said: "Circumstantial flexibility is the key and not rigid application of 10% limit prescribed under Section 13(1) of RERA."

The court described the condition as a test of "readiness and willingness" to complete the sale. It noted that 100 percent of the price was now due because the flat was fit for occupation, and said the tribunal "has still taken an extremely lenient view by directing deposit of just about 50% of the consideration payable."

What did the court say about the buyer's own conduct?

The court said the buyer, despite having the draft agreement for sale, "failed to pay the stamp duty on the same" and "showed no interest in paying the first tranche of Rs.38.18 crores". It held that if the agreement was not executed and registered, the buyer "himself is responsible for the said act and not the erstwhile promoter." It also noted the buyer did not seek interim protection during almost two years while the complaint was pending before MahaRERA.

The court was careful to limit the reach of these views. It clarified that its findings "are only prima-facie for testing the correctness of interim order made by the REAT" and "would not bind the REAT while deciding the Appeal finally." It also declined to continue its own interim protection, but allowed the buyer two weeks to make the deposit, in which case the tribunal's status quo order would continue. PropNewz recently covered how deposits work in the other direction, when a promoter appeals, in a report on the Section 43(5) pre-deposit released to an allottee.

What does this mean for buyers holding only an allotment letter?

An allotment letter without a registered agreement is a weaker position than many buyers assume, especially in a project that changes hands. Here the court said that under the allotment letter's own terms, rights in the flat arose "only upon payment of amount of Rs.38.18 crores". It also distinguished another buyer in the same project who had paid Rs 54.40 crore of the price under a registered agreement, and who had obtained relief from the tribunal on 23 October 2026, saying that buyer was not similarly situated.

For a remedy, the court pointed out that even if the flat is sold, the appellant can seek enforcement against another unsold flat, and that if all are sold the tribunal or MahaRERA "would be empowered to mould the relief appropriately" by directing refund with interest, compensation and damages. For a separate Mumbai ruling this week on title and conveyance, see PropNewz's report on the Andheri deemed conveyance judgment.

1. Do not treat a letter of allotment as a substitute for a registered agreement for sale.
2. Read what the allotment letter says must be paid before the agreement is executed.
3. Pay stamp duty and register the agreement when the letter requires it, or record in writing why not.
4. Keep proof of every payment and every request for the agreement to be registered.
5. If the project is sold, auctioned or taken over, ask the new promoter in writing how your allotment will be honoured.
6. If you need interim protection in a dispute, seek it early and be ready for deposit conditions.
7. Take legal advice before refusing a refund cheque or filing an appeal.

Frequently asked questions

What did the Bombay High Court decide about the Palais Royale flat on November 5, 2026?

Justice Sandeep V. Marne dismissed the allottee's second appeal and upheld the appellate tribunal's order making status quo on the Worli flat conditional on depositing Rs 38.18 crore. The court said its findings are only prima facie and will not bind the tribunal when it decides the appeal finally.

Does the 10 percent limit in Section 13(1) of RERA apply to tribunal deposit orders?

Not according to this judgment. The court held that the prohibition under Section 13(1) applies to a promoter accepting more than 10 percent without a registered agreement, and is not applicable to the adjudicatory powers of the appellate tribunal when it sets conditions for an interim order.

Can a promoter ask for more than 10 percent when the sale agreement is registered?

The court said Section 4 of MOFA and Section 13 of RERA do not impose any upper limit on consideration accepted at the time of execution and registration of the agreement for sale. The restriction applies only to accepting more than 10 percent without registering an agreement.

What happens to the buyer's claim if the flat is sold to someone else?

The court said the appellant can still prosecute the appeal without interim relief, and could seek enforcement against another unsold flat in the project. If all flats are sold, it said the tribunal or MahaRERA could mould relief by directing refund of the amount paid with interest, compensation and damages.

This article summarises a court judgment for general information and is not legal advice. The court's findings are prima facie, and the appeal before the tribunal remains to be decided.

Last updated 2026-11-07. PropNewz Team.