From Impasse to Implementation: Bombay High Court and MahaRERA Unlock Remedy for “Dead Stock” Units

A significant procedural hurdle faced by real estate developers dealing with defaulting allottees has been decisively cleared by a recent judgment of the Hon’ble Bombay High Court (“High Court”) in Macrotech Developers Ltd. v. Joint Sub-Registrar and Ors. (Writ Petition (L) No. 18256 of 2025). This ruling, coupled with the swift issuance of Circular No. 50/2025 by the Maharashtra Real Estate Regulatory Authority (“MahaRERA”), has established a clear and enforceable mechanism for the cancellation of agreements for sale, offering a much-needed resolution to the persistent problem of “dead stock” units.

The Macrotech case involved a developer who, after terminating an agreement for sale due to persistent payment defaults by the allottees, obtained an order from MahaRERA on 14th August 2024 directing the allottees to execute a deed of cancellation. When the allottees failed to comply, the developer filed an execution application. In its subsequent order dated 28th November 2024, MahaRERA, instead of appointing an officer to execute the deed on behalf of the defaulting allottees, took a step further and directed the Sub-Registrar of Assurances to unilaterally cancel the registered agreement. The Sub-Registrar refused to comply, citing a lack of authority under law for MahaRERA to issue such a direction. Faced with this impasse, the developer approached the High Court. The High Court found that MahaRERA had overstepped its jurisdiction, observing that the Authority had “erroneously proceeded” to direct the Sub-Registrar to unilaterally cancel the instrument, a relief that was neither sought by the developer nor warranted in law.

The High Court’s decision clarified the applicable legal principles for such situations. While Section 31 of the Specific Relief Act, 1963, provides for the cancellation of instruments, this power is limited to instances where an instrument is void or voidable, which was not the contention in the present case. The Court instead endorsed the procedure implicitly laid out by the Real Estate (Regulation and Development) Act, 2016 (“Act”) and its corresponding rules. Under Section 40(2) of the Act and Rule 4 of the MahaRERA Rules, 2017, an order of the Authority is to be enforced in the same manner as a decree of a civil court. The appropriate procedure is therefore found in Order XXI, Rule 34 of the Code of Civil Procedure, 1908, which provides that where a party fails to execute a document as directed by a decree, the court may appoint a fit person to execute the document on their behalf. The correct course of action for MahaRERA was not to direct the Sub-Registrar, but to appoint a fit and proper person to execute the deed of cancellation.

In direct response to the High Court’s judgment, MahaRERA issued Circular No. 50/2025 on 18th November 2025, establishing a Standard Operating Procedure. The circular mandates that in cases where a promoter or allottee fails to execute a document like an Agreement for Sale or a Deed of Cancellation as ordered, MahaRERA shall appoint a “fit and proper person” of the Authority to execute and register the said document. Crucially, the order will also contain a specific direction to the concerned Registrar of Assurances to register the document so executed. This procedure is to be applied with immediate effect, including to all pending non-compliance applications, thereby institutionalizing the remedy clarified by the High Court.

The interplay between the High Court’s judgment and MahaRERA’s circular provides the procedural clarity that the real estate sector has long sought. The previous ambiguity, which often left developers with favourable orders from MahaRERA that were practically unenforceable at the registration office, has now been resolved. The ruling delineates the boundaries of MahaRERA’s powers while simultaneously affirming a robust and legally sound enforcement mechanism. By adopting this procedure, MahaRERA has created a clear, predictable, and effective pathway for developers to follow when faced with non-cooperative, defaulting allottees.

This development marks a watershed moment for developers, offering a definitive solution to the vexing issue of “dead stock”. Units tied up in registered agreements with defaulting buyers can now be legally and procedurally freed, allowing developers to regularize the title and re-introduce these units into the market. This not only improves project cash flows and viability but also ensures that the regulatory framework under the Act remains balanced, protecting the interests of diligent promoters just as it protects allottees. The establishment of this clear procedure is a commendable step towards a more efficient and equitable real estate market.