Refund of
flat booking amount: Homebuyer fights Godrej Properties and wins the case; Know
your rights under RERA
Buying a home is an aspirational event for most people, however,
buying one costs lakhs of rupees if not crores. So, when Ajit Dabhade decided
to purchase a home worth Rs 92 lakh (92,17,797) near Mumbai, he made the
booking on June 22, 2019, and paid Rs 5 lakh as earnest money. However, when he
got the allotment letter from Godrej Properties on August 6, 2019, Dabhade
decided to cancel the flat booking on August 8, 2019. Godrej Properties
accepted his request for cancellation of the flat booking and told him
that the entire earnest money of Rs 5 lakh was to be forfeited by the builder.
Despite
Dabhade requesting the builder to refund the booking amount, the builder
refused. Hence Dabhade lodged his case against Godrej Properties in the
Maharashtra RERA tribunal. Dabhade complained that he was trapped by the
builder and the company violated multiple RERA (Real Estate Regulatory
Authority) laws.
According
to the court order, Dabhade alleged that the builder just portrayed special
offers that were used to trap the buyers by taking advantage of blind faith of
potential buyers in the brand name Godrej, but forfeiture obligation is thrust
on to the buyer.
Did Godrej violate RERA laws
by forfeiting the flat booking amount?
Dabhade
made several allegations against Godrej Properties. He said that employees of
Godrej Properties made him a promise that the company's finance partners would
give him a loan of Rs 6,75,000 to finance stamp duty and registration charges.
"However, the said promise was never fulfilled and only Rs 3,60,000 was
given by the said finance partners," said Dabdhade during a hearing at the
Maharashtra RERA tribunal. He also alleged that this incident violated sections
7 and 12 of the Maharashtra RERA Act.
It is also
alleged that Godrej Properties illegally obtained the consent of Dabhade by
fraudulent means. He said, "It was illegal on part of the respondent
(Godrej Properties) to obtain consent by fraudulent means on the pretext of and
by the implied notice of 'application form' of any agreement containing adverse
and forfeiting terms towards the buyer and with no obligations towards the
respondent."
Hence as
per Dabhade, the entire booking form is fraudulent so it's not valid. "As
there was no valid consent for terms of the fraudulent booking form, there was
no valid agreement between the parties. Hence, the said forfeiture was also in
violation of section 11(5) of the RERA," he said.
Builder's counter: Buyer
signed the contract knowing everything
As per
Godrej Properties, the complainant (Dabhade) approached the MahaRERA with
malafide intention and unclean hands. "The concocted story of taking
signatures on blank form under the complaint has been raised by the complainant
for the first time in many years of communication and correspondence. The
complainant had entered into the said contract in his sound mind and out of his
free will and thus the said contract and its terms will be binding upon the
complainant," said Godrej Properties in one of the hearings of the case.
In its
defence Godrej Properties said, as per clause d read with clause h and clause
iii read with clause v of the said 'allotment letter', the company was legally
well within its right to forfeit the earnest money of Rs 5 lakh if the
homebuyer cancels the booking.
MahaRERA deems Godrej's
action as not legal and orders to refund the booking amount
Maharashtra
RERA tribunal said that Dabhade had paid Rs 5 lakh for purchasing the flat
which is worth a little over Rs 92 lakh (92,17,797). This means that Dabhade
paid more than 5% of the total consideration of the flat as earnest money.
"Such forfeiture by the respondent- Godrej Properties (which is more than
5% of the total consideration of the said flat) is not legal and proper as per
the provisions f the RERA. The respondent is directed to refund the money paid
without any interest, after deducting 2% of the total consideration of the said
flat," said MahaRERA in its order dated March 11, 2024.
Justifying
the order, MahaRERA said that as per its circular dated August 12, 2022, a
promoter can forfeit a maximum of 2% in case of any cancellation done by the
allottee of the housing unit. However, Godrej forfeited the entire booking
amount of Rs 5 lakh in 2019. "Since this project is registered with the
MahaRERA, the said MahaRERA Order can be made applicable while deciding such
cases on merits," said MahaRERA in its order.
According
to Shweta Bharti, Managing Partner, Hammurabi & Solomon Partners, "The
Hon'ble Supreme Court had categorically held that a beneficial circular has to
be applied retrospectively while an oppressive circular has to be applied
prospectively. As the above-mentioned circular (August 2022) by MahaRERA was to
protect the miseries and for the benefit of the homebuyers, the circular was
applied retrospectively.".
The table
below shows the timeline to be followed for refund of the booking amount in
MahaRERA registered projects:
Serial
Number
|
If
the letter requesting to cancel the booking is received
|
Amount
to be deducted
|
1.
|
Within 15
days from issuance of allotment letter
|
Nil
|
2.
|
Within 16
to 30 days from issuance of allotment letter
|
1% of the
cost of the unit
|
3.
|
Within 31
to 60 days from issuance of allotment letter
|
1.5% of
the cost of the unit
|
4.
|
After 61
days from issuance of allotment letter
|
2% of the
cost of the unit
|
According
to an official spokesperson from Godrej Properties, "The authority in its
detailed order has disregarded the allegations made by the complainant and has
ruled in our favour by holding that there is no wrongdoing on part of the
Developer, yet authority directed us to refund the amounts to complainant after
forfeiture of amount equivalent to 2% of the sale consideration. We have sought
advice from our counsels on legality of the said direction issued by the
authority and have accordingly filed an appeal before the Hon'ble Maharashtra
Real Estate Appellate Tribunal against this aspect of the order and are
confident on merits of the matter."
Can
property developers legally forfeit your entire booking amount if the deal is
cancelled?
The
question of legality on the part of a property developer to forfeit the booking
amount when a homebuyer cancels the deal depends upon the respective state's
RERA Act and RERA circular where this incident has happened.
In the case
cited above the only reason why the complainant got a refund of the booking
amount is because of the 2022 MahaRERA circular which was applied
retrospectively. "It is pertinent to note here that under the Model
Agreement for Sale as prescribed by MahaRERA, there is no clause categorically
providing for the consequence when a buyer wishes to cancel the booking,"
says Chheda.
"There
could have been instances of disputes regarding booking amount refunds before
the August 2022 circular. By making the circular retrospective, MahaRERA might
be aimed to provide a solution for those cases as well," says Bharti.
Legal
experts, however, say that the RERA Act has provided protection to the buyer if
the promoter fails to fulfil its obligations.
"Section
18 provides that in the event the promoter fails to complete or is unable to
give possession of an apartment, plot or building and the allottee wishes to
withdraw from the project, then without prejudice to any other remedy available
to the allottee, the promoter shall refund to the allottee amount received by
the promoter with interest at such rate as may be prescribed," says
Chheda.
www.economictimes.indiatimes.com
dt. 22.04.2024