One of my clients recently had a case which I am explaining below and if you are stuck in such similar situation, here is what to do.
Note: Due to attorney-client privilege, I cannot disclose complete case details or identify the actual parties involved. However, I am sharing the essential facts and legal approach so that if you find yourself in a similar situation, you can understand the available solutions and legal remedies.
TL;DR: A builder cannot terminate the sale agreement for a minor unpaid fit‑out deposit when the allottee has already paid the full sale consideration and possession is delayed. That kind of termination is arbitrary and won’t stand before the RERA Authority. You have strong grounds to get the termination complaint dismissed and secure your possession with interest.
A flat in Pune’s Wakad area. A handover deadline of 15 March 2025 that came and went without so much as a phone call. Rohan Gupta and his wife had already transferred the entire sale consideration of Rs. 1.58 crore to Galaxy Infra Developers by January 2025. Yet the keys never arrived. No explanation. Just silence. After months of follow‑up, Rohan filed a complaint before the Maharashtra RERA Authority under Section 18 of the RERA Act, seeking interest on the delayed possession and a direction to hand over the flat. That was when things took a turn. Instead of complying, the builder slapped him with a separate termination complaint—alleging that a Rs. 1,00,000 fit‑out deposit remained unpaid. The demand was sudden, never raised before, and the builder now argued that failure to pay this deposit entitled them to scrap the entire agreement. Unsure whether the builder could actually terminate the deal over a disputed amount comprising less than 0.7% of the total consideration, Rohan approached the Chamber of Advocate Sudhir Rao. The core strategy was simple but required a deep reading of the RERA Act and contractual terms. Advocate Sudhir Rao and his office argued that the builder’s own breach—delayed possession despite full payment—disentitled them from treating a minor non‑payment as a fundamental breach. The fit‑out deposit, they showed, was a peripheral obligation, never made time‑essential in the agreement, and its non‑payment did not go to the root of the contract. After hearing both sides, the RERA Authority dismissed the builder’s termination complaint. It held that the builder’s attempt was mala fide and a pressure tactic, while directing possession within thirty days and awarding interest for the entire delay period.Key Facts of the Case
- Allottee paid the entire sale consideration of Rs. 1.58 crore well before the handover deadline.
- Possession was promised by 15 March 2025 but not delivered; the builder gave no written notice of delay.
- The allottee filed a RERA complaint for interest and possession under Section 18 RERA.
- The builder then filed a counter‑complaint seeking termination of the agreement for non‑payment of a Rs. 1 lakh fit‑out deposit.
- The fit‑out deposit was never a condition precedent to possession under the agreement.
- The RERA Authority ruled the termination complaint was unsustainable and directed possession with interest.
The Direct Legal Answer
Can the builder terminate the agreement for not paying a fit‑out deposit?
In this exact fact pattern—full payment already made, possession delayed—the builder’s right to terminate for a small deposit is virtually non‑existent. RERA Authorities consistently treat such moves as colourable attempts to escape performance. Under Section 19(4) of the RERA Act, a promoter cannot unilaterally cancel an agreement without giving the allottee a reasonable opportunity and obtaining the allottee’s consent or following the contractual termination clause strictly. When the promoter itself is in breach of the delivery timeline, courts and Authorities lean strongly in favour of the allottee. The deposit, if genuinely due, can be settled; it does not give a licence to tear up a fully paid deal.
What should the allottee do if a termination case is already filed?
Immediately file a detailed reply and an application for interim relief before the Authority. Show that the full consideration stands paid, that the builder is in default, and that the so‑called unpaid deposit was never treated as an essential term earlier. The Authority can stay the termination proceedings and, as in this case, ultimately dismiss them while granting the allottee’s original complaint.
Advice in Such Cases
Consult with Lawyer: The very basic and important step to start is talk to Lawyer / advocate. You should not hesitate in paying his consultation fee i.e. might be in range of Rs. 10,000 to 50,000 depends case to case. He is helping you in this situation to come out. He is expert in the domain and can help you explain the procedure which you might have never explored. A good lawyer can get the issues resolved much faster than you think.
Don’t ignore the builder’s termination complaint or treat it as a mere retaliation. It needs a point‑by‑point rebuttal. Gather every payment receipt and all communication—it’s the simplest way to establish who breached first.
Never agree to pay the disputed deposit under pressure without legal advice. Paying it can sometimes be misinterpreted as admitting that it was an essential term, which can muddy the record. A well‑structured reply challenging the very basis of the termination is often the better move.
Matters before RERA Authorities involve specific pleading strategies and an understanding of how the Authority evaluates builder default. A general practitioner who rarely handles real‑estate complaints may miss procedural shortcuts—like securing interim possession through an urgent application—that can change the whole timeline.
Applicable Sections of Law
- Section 18 of the Real Estate (Regulation and Development) Act, 2016 – Allottee’s right to refund or interest and compensation when the promoter fails to give possession on time.
- Section 19(4) of RERA Act – Restricts unilateral termination; the promoter must follow the agreement and provide an opportunity to the allottee.
- Section 31 of RERA Act – Right to file a complaint before the Authority for any violation of the Act or the agreement.
- Section 14 of the Specific Relief Act, 1963 – In contracts performable, the court may grant specific performance; the builder’s own breach strengthens the allottee’s case for enforcement.
- Section 73 of the Indian Contract Act, 1872 – Compensation for breach; the builder’s delayed possession entitles the allottee to damages, not the other way around.
Jurisdiction — Where to File the Case
For disputes under RERA, the complaint goes to the RERA Authority of the state where the project is registered. The Allottee’s complaint was already filed in Maharashtra RERA. The builder’s termination complaint is also maintainable before the same Authority. Pecuniary jurisdiction is not a bar because RERA Authorities can entertain claims regardless of amount. If the Authority’s order is adverse, an appeal lies to the Real Estate Appellate Tribunal within sixty days. Territorial jurisdiction hinges on the project location, not the parties’ residences. Filing in the correct Authority avoids preliminary objections that can delay real relief.
Limitation Period
A complaint before the RERA Authority can be filed within two years of the cause of action arising—typically the date of possession promised or the date when the allottee becomes aware of the breach. Under Article 137 of the Limitation Act, 1963, any other civil suit for specific performance is governed by a three‑year period from the date fixed for performance. Missing the limitation window can be fatal, though the Authority has power to condone delay if sufficient cause is shown. If you’re already well past the handover date, don’t sit on it. File now.
Interim Reliefs Available
- Stay on the builder’s termination proceedings – The Authority can restrain the builder from cancelling the agreement until the complaint is decided.
- Direction to hand over possession – Under Section 35 and 36 read with Section 19, the Authority can order interim possession if the allottee’s case is strong.
- Injunction against third‑party sale – The Authority can prohibit the builder from creating any third‑party rights over the flat during the proceedings.
- Status quo orders – To prevent any physical dispossession or alteration of the unit.
Interim relief is often the quickest way to turn the tables. Once the Authority restrains termination, the builder’s leverage evaporates.
How RERA Authorities Typically Approach Such Cases
RERA Authorities view builder‑initiated terminations with suspicion when the builder itself has defaulted on the delivery date. The approach is equitable: a party cannot enforce a termination clause that it provoked through its own breach. Authorities examine whether the Fit‑Out deposit was communicated as an essential term at the time of booking, and whether the builder ever demanded it before filing the complaint. Post‑hoc demands for minor sums to justify cutting off the allottee’s rights are routinely struck down. Expect the Authority to focus on who breached the agreement first and whether the termination is disproportionate.
If You Are the Victim
- Do not ignore the builder’s RERA notice or complaint. File a reply through an advocate.
- Collect every payment proof—bank statements, RTGS confirmations, challans—and build a timeline of when possession was due.
- File your own complaint for delayed possession and interest if you haven’t already. Don’t wait; use the builder’s complaint as an opportunity to cross‑claim.
- Don’t vacate the property if you already received symbolic possession, unless there’s a binding court order.
- Maintain a single folder of all WhatsApp messages, emails, and letters—anything that shows the builder’s delays or silence.
Documents You Must Keep Ready
- Sale agreement or builder‑buyer agreement (stamped and registered)
- Allotment letter and payment plan
- Receipts and bank records for all payments made (especially the full consideration)
- Copies of any demand letters for fit‑out deposit (if any existed before the complaint)
- RERA complaint copy filed by you and the builder’s termination complaint
- Photographs of the site or correspondence emails to the CRM team
- Identity proofs of allottees (Aadhaar, PAN)
- RERA registration certificate of the project
What Evidence Is Required?
- Copy of the registered agreement – Primary evidence to show the terms, payment schedule, and possession date.
- Bank statements – To prove full payment with dates and amounts.
- Email and WhatsApp exchanges – Even informal messages can establish the builder’s indifference.
- Builder’s demand letter for fit‑out deposit – If it exists, it often reveals the demand was made only after the allottee’s complaint.
- RERA complaint copies and orders – To show the sequence of litigation.
- Witness statements – If any co‑allottee or family member had direct conversations, note them.
- Site visit photographs – Evidence that the project was incomplete even after the deadline.
Timeline of Legal Process
- Filing of complaint and reply – 2 to 3 weeks from drafting to listing.
- Arguments on interim relief – Usually within 1 to 2 months; the Authority may pass a stay quickly.
- Framing of issues and evidence – 3 to 6 months, depending on docket load.
- Final arguments – 2 to 4 months after evidence closure.
- Judgment and order – The Authority aims to dispose of complaints within 60 days, but practically it takes 6 to 18 months.
- Execution of order – If the builder doesn’t comply, a fresh execution application; possession or compensation realisation can take another couple of months.
Understanding the Costs
The total cost of a matter like this varies significantly from one case to the next — it depends on the complexity of the dispute, the forum involved, the number of hearings, and the specific facts of your situation. There is no single fixed figure that applies to everyone.
A professional advocate can give you an accurate estimate only after reviewing all your facts and documents in a consultation.
Can the Matter Be Settled Out of Court?
Yes, and many RERA cases do get settled. Mediation or conciliation through the Authority itself is possible under Section 32(g) of RERA. The parties can enter into a compromise deed where the builder drops the termination complaint and gives possession, and the allottee withdraws the interest claim or settles at a negotiated rate. Lok Adalats also handle such matters if both sides consent. Settlement saves time and litigation fatigue, but it must be carefully drafted—never sign a compromise that vaguely waives all future claims against the builder. Have your advocate review every line.
Common Mistakes People Make
- Delay in filing a reply. Many allottees treat the builder’s termination as a bluff and miss the deadline; that can lead to an ex‑parte order terminating the agreement.
- Paying the disputed amount under pressure without legal advice. That can be shown as admitting the debt and weaken your defence.
- Arguing the case personally. Without understanding how RERA questions disproportionate termination, people end up making damaging concessions.
- Destroying old communications. Even a three‑word WhatsApp “where are my keys” can establish the builder’s unresponsiveness.
- Not filing a cross‑complaint. If you only defend the termination complaint but don’t press your own claim for interest and possession, the builder retains procedural advantage.
- Hiring a lawyer without RERA litigation experience. RERA has its own procedural nuances and a specialized advocate knows exactly which interim application to move on day one, often securing a stay that keeps the flat safe for months while the matter runs.
FAQs People Normally Have
Can the builder sell the flat to someone else while the case is on?
He shouldn’t. If you secure an interim injunction from the Authority, any third‑party sale would be voidable. Always ask for a restraint order on alienation early in the proceedings.
Is the fit‑out deposit legal even if possession is delayed?
It might be a legitimate charge, but its non‑payment after full sale consideration doesn’t normally allow the builder to cancel the agreement. The remedy is to demand the deposit, not terminate the deal.
What if I don’t have a copy of the agreement?
Ask the builder for a certified copy; they’re obliged under RERA to provide one. If they refuse, you can still file a complaint with other evidence of payment and allotment.
Does this affect my CIBIL score if I took a home loan?
No. The builder’s complaint about fit‑out deposit has nothing to do with your loan repayment. Allottee‑builder disputes aren’t reported to credit bureaus.
Can I claim compensation for mental harassment in such a case?
The RERA Authority can award compensation for mental agony and harassment under Section 18 read with Section 31. You need to plead it specifically and support it with facts—like the builder’s sudden termination after your own complaint.
This article is general legal information, not legal advice. Consult a qualified advocate about your specific situation.
Advocate Sudhir Rao, Supreme Court of India