Developer is liable for a promise made to a home buyer by its channel partner. This is what the MahaRERA’s appellate tribunal held while hearing an appeal against Omkar Ventures.

By Varun Singh

Yes heard it right, a developer was held liable by the Maharashtra Real Estate Appellate Tribunal (MREAT) for the promise made by its channel partner to the home buyer.

The case is that of Rekha Navani a home buyer who booked a flat in Lawns and Beyond Phase 2, Omkar International District located at Andheri for a total consideration of Rs 1.36 crore.

While booking the flat at an exhibition, the channel partner of developer allegedly promised that in case she is found ineligible for housing loan, the amount paid will be refunded. 

At the time of booking she paid Rs 1 lakh towards expression of interest (EOI) and Rs 6.95 lakh towards application fees. A Letter of Allotment was executed on December 5, 2017 following which a demand notice was also issued to Navani by developer to pay further amount as agreed.

However, as Navani could not procure loan from banks, she requested the developer to cancel the flat and refund the amount she paid. The developer returned Rs 1 lakh only and forfeited Rs 6.95 lakh.

Post which the home buyer approached MahaRERA where the matter was disposed off, the buyer then appealed to the appellate tribunal.

At the appellate tribunal, the developer’s advocate pointed out clauses from application form filled by home buyer. He stated, in the event of withdrawal/cancellation of booking or non-payment of balance application fees, the amount of application fees paid shall be forfeited. 

Further the counsel stated that in case of termination of allotment due to fault of buyer, builder is entitled to recover/forfeit amount equivalent to 10% of the total consideration of flat. 

The counsel stated “Accordingly, on account of cancellation of booking by Appellant, the builder was though entitled to actually recover Rs 13.6 lakh (10% of the total price) yet as against the said amount, only Rs 6.95 lakh have been forfeited as only that much amount was paid so far by the buyer.”

Further about the promise made by the channel partner to the buyer, the counsel for the developer stated, that the email sent by the channel partner was addressed to homebuyer and not the builder and hence has no relevance.

The appellate tribunal held, “The fact that channel partner was appointed by Respondent (developer) for booking the flat has not been categorically denied by Respondent. Therefore, Respondent cannot brush aside its liability arising out of the said promise.”

The tribunal further said, “Iin view of the obligation of Respondent to honour the commitment made by its channel partner on its behalf, the forfeiture of amount paid by appellant (home buyer) is erroneous and against the object and purpose of the Act which is enacted as a beneficial legislation to abate hardships of flat purchasers’.”

Finally the developer was directed to refund the balance amount of Rs. 6.95 lakh to the buyer, on or before August 31, 2020 failing which an interest @ 2% above SBI’s highest Marginal Cost of Lending Rate shall be payable w,e.f. September 1, 2020 till realisation of the amount.

Also Read: TATA housing directed to refund money to homebuyer

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