Bought a Flat Through an LLP? Tribunal Says Changing Partners Is Not Selling the Flat
On 29 October 2026, the Maharashtra REAT held that a change of partners in an LLP that bought a Palais Royale flat did not transfer the flat, that a balance due on possession was no ground to terminate, and directed possession within 30 days. Lessons for Bengaluru buyers purchasing through an entity.
On 5 July 2012, a limited liability partnership signed a registered agreement to buy a flat on the 30th floor of Palais Royale in Worli for Rs 33,75,00,000. It paid Rs 21,95,00,000. The balance of Rs 11,80,00,000 was payable on possession, which was due by 31 December 2013. The original developer went into liquidation, a new company took over the project, and on 20 April 2024 the new company terminated the agreement. One of its reasons: the LLP had changed its partners, which, it said, amounted to a transfer of the flat without consent and without paying transfer charges.
On 29 October 2026, the Maharashtra Real Estate Appellate Tribunal set the termination aside. Under Section 3 of the LLP Act, it said, an LLP is "a legal entity separate from that of its partners" with "perpetual succession", and "any change in the partners... shall not affect the existence, rights or liabilities" of the LLP. The flat belonged to the LLP throughout. For Bengaluru buyers who purchase through an LLP, a company or a family firm, the ruling explains why the buyer's identity is the entity, not the people behind it.
The short answer. In M.A. No. 973 of 2024 in Appeal No. AT12500002 of 2025, the Maharashtra REAT held that a change of partners in an allottee LLP is not a transfer of the flat, that unpaid balance due "only on possession" was no ground to terminate, and that the termination of 20 April 2024 was unlawful. It directed the promoter to hand over possession within 30 days of the order on receipt of the Rs 11.80 crore balance and charges as per the agreement. The trade-off: the buyer must still pay the full balance and charges under the agreement before taking the keys.
What happened in the Palais Royale LLP case?
According to the Maharashtra REAT judgment in M.A. No. 973 of 2024, the appellant, Amit Gharkul Builders LLP, is registered under the Limited Liability Partnership Act, 2008. Its agreement for sale with the erstwhile promoter, Shree Ram Urban Infrastructure Limited, was registered on 5 July 2012. After the erstwhile promoter's liquidation, the project passed to Honest Shelters Private Limited, and the judgment records that possession of 142 flats was handed over to it by the Official Liquidator on 9 January 2024, following a Supreme Court order of 6 December 2023.
As reported by LiveLaw, the original developer had defaulted on a loan from Indiabulls Housing Finance and was ordered to be wound up by the Bombay High Court. Honest Shelters acquired the project through a SARFAESI auction in June 2019, excluding 142 flats that had already been sold, including this one. The Supreme Court's December 2023 order held that these flats were not part of the liquidation estate and made Honest Shelters responsible for completing the project and handing them over. That history is why a buyer who signed in 2012 was dealing with a different company a decade later.
The judgment records a possession letter dated 16 December 2022 stating that the promoter was ready to hand over possession on payment of the balance. Honest Shelters then terminated the agreement by notice dated 20 April 2024, alleging that the change in the LLP's partners was a transfer in breach of the agreement, and that the balance had not been paid. The buyer's complaint went to MahaRERA, which passed an interim order on 25 November 2024 treating the dispute as one arising under the LLP Act. The buyer appealed.
Is a change of partners in a buyer LLP a transfer of the flat?
No, according to this judgment. The tribunal quoted Section 3 of the LLP Act, 2008 in full and held that "the said flat is owned by the 'M/s. Amit Gharkul Builders LLP', appellant LLP and not by its partners in their individual capacities." The partners signed "in the capacity of authorized signatory of the appellant LLP and not in their personal capacities". It noted that the LLP's cheques were issued in its own name and signed by its authorised signatory.
It explained that "the partners' rights are in the nature of economic interests", such as profit share and management, and that partners "do not possess propriety or ownership rights over assets owned by the LLP". When partners change, "what changed was internal profit sharing and management structure". The promoter's argument that a change of partners transfers the flat to the new partners was "not legally sustainable". The LLP, the tribunal added, "continues to own the said flat irrespective of the changes in partners".
Could the builder terminate for the unpaid balance?
No. The tribunal held that non-payment of the Rs 11,80,00,000 balance "cannot be a ground for termination of the agreement for sale since there is no violation of Clause 4", because the balance was due on possession. It concluded the promoter "is not entitled to terminate the said agreement for sale under Section 11(5) of the RERA Act, 2016".
The judgment also records a fact every buyer in a tall building should note. The occupation certificate of 12 August 2022 covered the 13th to 27th floors and did not cover the 30th-floor flat. A later occupation certificate dated 17 December 2024 was obtained. The tribunal said the promoter "is entitled to only the balance consideration amount of Rs.11,80,00,000/- which is due and payable only on possession of the flat".
| Issue | Builder's position | Tribunal's finding | Legal basis | Buyer lesson |
|---|---|---|---|---|
| Partner change | Amounts to transfer of the flat | Not a transfer; LLP still owns the flat | Section 3, LLP Act 2008 | Buy in the entity's name and pay from its account |
| Transfer charges | Payable because of partner change | No transfer, so the ground fails | Separate legal entity | Read the transfer clause against your structure |
| Unpaid balance | Ground to terminate | Due only on possession; no breach of Clause 4 | Agreement for sale; Section 11(5) | Know exactly when each instalment is due |
| Occupation certificate | Possession letter of 16 Dec 2022 | 2022 OC covered only floors 13 to 27 | Record before the tribunal | Check the OC covers your floor and tower |
| Result | Termination on 20 Apr 2024 | Termination set aside; possession in 30 days | Operative order | Pay the balance and take possession on time |
Why did the tribunal say MahaRERA should have decided the dispute?
MahaRERA's interim order had treated the dispute as one under the LLP Act. The tribunal disagreed. It said the complaint "pertains purely to non-delivery of possession, illegal termination, and enforcement of rights of the appellant under the registered agreement for sale", which are "squarely covered under the provisions of RERA Act, 2016". RERA's adjudication, it said, "extends to all acts and omissions of the promoter affecting the rights of the allottees irrespective of the promoter's internal corporate structure".
The dispute, it added, "does not emanate between the appellant LLP or its partners under the LLP Act, 2008" but between the promoter and the allottee. The interim order was quashed, and both sides were directed not to create third-party rights in the flat until MahaRERA decides the complaint.
What should a Bengaluru buyer purchasing through an LLP or company check?
Our report on the Ten BKC ruling on holding companies applied the same separate-entity logic on the builder's side. Our explainer on when a builder can cancel an allotment under Section 11(5) covers termination. Use this list if you buy through an entity.
- Make sure the agreement for sale names the LLP or company as the buyer, not its partners or directors.
- Pay every instalment from the entity's own bank account, with cheques signed by its authorised signatory.
- Keep the board or partners' resolution authorising the purchase and the signatory.
- Read the agreement's transfer clause and any transfer charges, and note how it treats changes in the entity's ownership.
- Record partner or director changes formally, and keep the filings, in case the builder raises them.
- Note exactly which payments are due on possession rather than on construction milestones.
- Before taking possession, check that the occupancy certificate covers your floor and tower.
How far does this Maharashtra ruling reach in Karnataka?
It is a Maharashtra appellate order, so Bengaluru buyers should read it as guidance rather than a Karnataka ruling. But Section 3 of the LLP Act, 2008 and Section 11(5) of the RERA Act are central laws that read the same in Karnataka. The reasoning about who owns a flat bought by an LLP follows directly from Section 3, and the point about checking the occupancy certificate's floor coverage applies to any high-rise.
The judgment was reserved on 14 October 2026 and pronounced on 29 October 2026 by Chairperson Justice S.S. Shinde and Member Shrikant M. Deshpande. For advice on buying through an entity, speak to a lawyer who handles property and corporate matters.
Frequently asked questions
Is a change of partners in an LLP a transfer of a flat it bought?
Not according to the Maharashtra REAT's 29 October 2026 judgment. Relying on Section 3 of the LLP Act, 2008, it held that the LLP is a separate legal entity with perpetual succession, that a change of partners does not affect its rights, and that the flat remained the LLP's.
Why was the builder's termination of the agreement set aside?
The tribunal held that the partner change was not a transfer, and that the Rs 11.80 crore balance was payable only on possession, so there was no breach of the agreement. The builder was therefore not entitled to terminate under Section 11(5), and the 20 April 2024 termination was held unlawful.
What did the tribunal order the builder to do?
It directed the builder to hand over possession to the LLP within 30 days of the order, after accepting the balance of Rs 11,80,00,000 and any possession charges or taxes strictly as per the agreement, and barred both sides from creating third-party rights until MahaRERA decides the complaint.
Why should I check whether the occupancy certificate covers my floor?
In this case, the occupancy certificate of 12 August 2022 covered only the 13th to 27th floors, while the flat was on the 30th floor; a later certificate came on 17 December 2024. Checking coverage shows whether the certificate the builder relies on actually applies to your unit.
Last updated 2026-11-15. PropNewz Team.
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