22 April 2024 Hire Purchase >> Property & Real Estate   |   Property/Real Estate Law >> Property & Real Estate  

In a recent case, Bombay High Court has revived a homebuyer's defense in a real estate dispute. The buyer, who had been living in the flat since 2017, was initially shut out of the case for failing to meet a hefty deposit requirement set by the Trial Court.

The disagreement arose between the buyer and the builder over the payment for a flat. The agreed price was Rs. 34,50,000, but the buyer claimed to have already paid Rs. 32,50,000 – Rs. 7,50,000 with documented proof and Rs. 25,00,000 in cash, for which he lacked documentation.

The builder sued the buyer for the remaining balance of Rs. 30,000,000. The Trial Court, in a controversial move, ordered the buyer to deposit Rs. 10,000,000 as a condition for defending the lawsuit. The buyer, unable to produce this significant sum, lost the case by default.

Appeals followed, with the buyer challenging both the initial judgment and the Trial Court's deposit requirement. While the first appeal was dismissed due to the missing deposit, the Second Appeal Court offered a lifeline.

The higher court acknowledged that the buyer had indeed deposited Rs. 20,000,000 while appealing the Trial Court's decision. This deposit, the court argued, should have been considered sufficient to fulfill the initial deposit condition.

Significantly, the Second Appeal Court also recognized the buyer's right to contest the deposit requirement itself, even while appealing the main judgment. This opens the door for challenging such high upfront costs that can prevent genuine disputes from being heard.

The case has now been sent back to the Trial Court. The buyer will be allowed to defend himself if he deposits an additional Rs. 5,000,000, bringing the total deposit to Rs. 25,000,000. This offers the buyer a chance to present his case and potentially recover the disputed amount.

This judgment highlights the importance of due process in real estate disputes. It ensures that buyers have a fair opportunity to defend themselves, even when facing significant financial demands from builders.