The Bombay High Court ordered a Rs 70.12 lakh stamp duty refund to Pune-based Sai Innovation after its development agreement was cancelled. The court also directed payment of 6% annual simple interest from April 7, 2014, holding that the agreement had failed to achieve its intended purpose.

The Bombay High Court has directed Maharashtra stamp authorities to refund the developer’s stamp duty with 6% annual interest | AI Generated Representational Image

Mumbai, August 29, 2026: The Bombay High Court has directed the Maharashtra stamp authorities to refund Rs 70.12 lakh in stamp duty to a Pune-based partnership firm after holding that a development agreement, which was subsequently cancelled, had failed to achieve its intended purpose.

Justice Amit Borkar, in a judgment pronounced on August 20, allowed a writ petition filed by Sai Innovation, a partnership firm through its partner Shankar Pandurang Jagtap, and quashed orders passed by the Joint District Registrar and Collector of Stamps, Pune City, and the Deputy Controller of Stamps, Pune, which had rejected the firm's refund claim.

The court also directed that the refund amount carry simple interest at 6% per annum from April 7, 2014, until the date of actual payment. The amount along with accrued interest has been ordered to be paid within six weeks from the uploading of the judgment.

Real Estate Body Welcomes Judgment

`;

Hitesh Thakkar, Vice President, Naredco Maharashtra, a real estate apex body, welcomed the judgment and said that the order has set a precedent as development agreements are often cancelled for various reasons and seeking a refund would have been difficult, but now, after this judgment, it gives clarity.

Development Agreement Cancelled

The dispute arose from a development agreement executed by Sai Innovation on April 15, 2013, with the owners of around 8,000 sq m of land at Balewadi, Pune. The registered agreement was executed for development of the property, and the firm paid stamp duty of Rs 70,12,500.

However, the proposed development did not proceed after the building plans could not be sanctioned within a reasonable period and disputes arose between the parties. The parties subsequently executed a cancellation deed on February 18, 2014, which was registered on February 24, 2014. The property owners also returned the consideration received from the developer, according to the petition.

The firm thereafter applied for a refund of the stamp duty on April 7, 2014. The application was not recommended by the Deputy Controller of Stamps and was subsequently rejected by the Joint District Registrar in December 2014.

Court Examines Refund Provisions

The authorities had primarily taken the view that the development agreement did not fall within the proviso to Section 48(1) of the Maharashtra Stamp Act, 1958.

The High Court held that the authorities had approached the issue incorrectly by treating Section 48 as the substantive provision governing entitlement to refund.

Referring to Section 47(c)(5) of the Maharashtra Stamp Act, the court noted that the provision covers cases where an instrument “fails of the intended purpose” due to circumstances specified under the Act.

Justice Borkar observed that Section 47 provides the substantive right to seek a refund, while Section 48 prescribes the period within which such a claim has to be made. The proviso to Section 48(1), the court said, does not create an independent right to refund but can provide an extended limitation period when its conditions are met.

In that judgment, the court had held that a development agreement could be treated at par with an instrument of conveyance for the limited purpose of applying the proviso to Section 48(1), where the stamp duty payable on the development agreement was calculated with reference to Article 25 of Schedule I.

The court in the present case held that the authorities could not reject the refund claim merely because the document was described as a “Development Agreement” rather than a conveyance.

“The mere name or description of the document cannot decide the matter,” the court observed, adding that what has to be considered is the nature of the transaction, the stamp duty payable and whether the other statutory requirements have been fulfilled.

Possession Clause Considered

The State had also argued that the developer had been handed over possession of the property under Clause 13 of the development agreement and, therefore, the firm could not seek a refund.

The High Court, however, said the clause could not be read in isolation.

The court noted that Clause 11 described the developer's right as being given “as a licensee for development”. It held that Clauses 11 and 13 had to be read together while determining the legal nature of the possession granted.

According to the judgment, the developer had been permitted to enter the property, carry out levelling work and undertake other activities required for the proposed development. Such rights, the court held, were consistent with a limited contractual permission for development and did not conclusively establish that complete and exclusive legal possession had been transferred.

The court also took note of the fact that the development had never commenced, no construction was undertaken and no third-party rights were created before the agreement was cancelled.

Also Watch:

“Mere cancellation of an agreement does not automatically mean that refund has to be granted. At the same time, only because an agreement is cancelled, it also cannot be said that Section 47 can never apply,” the court observed, holding that the facts of each case have to be examined to determine whether the intended transaction had failed.

To get details on exclusive and budget-friendly property deals in Mumbai & surrounding regions, do visit: https://budgetproperties.in/

Add As a

Trusted Source