MahaRERA holds developer at fault for issuing allotment before full booking amount; directs refund of ₹1.50 lakh
In a significant order strengthening homebuyer protections, the Maharashtra Real Estate Regulatory Authority (MahaRERA) has ruled that a booking application form by itself does not amount to a concluded or binding sale contract, especially when the booking process is incomplete.
The Authority directed Mahindra Happinest Developers Ltd to refund ₹1.50 lakh to a homebuyer who had cancelled her booking before paying the second instalment of the booking amount.
The ruling came in Complaint No. CC006000000194936, filed by Moushumi Rohan Gala, concerning a flat booked in the developer’s Mahindra Happinest Kalyan Project.
What Was the Dispute About?
The complainant had booked a 1 BHK apartment in August 2020 and paid:
- ₹25,000 as token amount
- ₹1,25,000 as Booking Amount–1
The second instalment (Booking Amount–2) was due on October 9, 2020. However, due to COVID-related travel restrictions, the complainant—who was residing in Qatar—requested time for registration.
Despite this, the developer:
- Issued an allotment letter before receiving the full booking amount
- Sent repeated reminders for registration
- Eventually forfeited the entire ₹1.50 lakh when the complainant cancelled the booking one day before the second instalment due date
Aggrieved, the homebuyer approached MahaRERA seeking a refund.
Developer’s Argument: Booking Form Is a Binding Contract
The developer argued that:
- The booking application form constituted a concluded contract
- The complainant had voluntarily cancelled the booking due to “personal circumstances”
- As per the booking terms, the developer was entitled to forfeit 10% of the total flat cost
- Issuing the allotment letter created enforceable contractual obligations
The developer also cited Supreme Court judgments supporting forfeiture of earnest money.
MahaRERA’s Key Finding: No Completed Booking, No Binding Contract
Rejecting the developer’s stand, MahaRERA held that:
“Signing of the booking form does not in itself create a binding contract.”
The Authority noted that as per the booking terms:
- The booking would be completed only after payment of both Booking Amount–1 and Booking Amount–2
- The developer was required to issue the allotment letter after receiving the full booking amount
By issuing the allotment letter before receiving Booking Amount–2, the developer violated its own booking conditions.
Why Issuing Allotment Letter Early Hurt the Developer’s Case
MahaRERA observed that:
- The developer acted prematurely and contrary to the agreed process
- The complainant cancelled the booking before the due date of the second instalment
- The booking transaction was never completed
- Mere issuance of an allotment letter cannot justify forfeiture when conditions precedent were not fulfilled
Flat Was Resold, No Loss to Developer
A crucial factor influencing the decision was that:
- The same flat was later sold to a third party
- A registered agreement for sale was executed in March 2021
- The developer suffered no actual financial loss
Hence, MahaRERA ruled that forfeiture of the entire booking amount was unjustified and against the spirit of RERA, which is consumer-protective legislation.
Final Order by MahaRERA
MahaRERA directed the developer to:
- Refund ₹1,50,000 (token + Booking Amount–1)
- Pay the refund within 30 days
- Failing which, pay interest at 2% above SBI’s MCLR
- No order as to costs
Why This Order Is Important for Homebuyers
This ruling is significant because it clarifies that:
- ❌ Booking forms are not equal to sale agreements
- ❌ Developers cannot forfeit money if booking is incomplete
- ❌ Allotment letters issued prematurely do not create binding rights
- ✅ Refunds are justified when developers breach their own booking terms
- ✅ RERA will look at substance over paperwork
Key Takeaway
Homebuyers should note that payment milestones matter, and developers must strictly follow their own booking procedures. MahaRERA has once again reinforced that consumer interest comes first, even when standard forfeiture clauses exist.
Also Read: MahaRERA Appellate Tribunal Rejects Developer’s Appeal Over Delay in Filing
