Agreement of sale is important, but in absence of the agreement, the builder should refund the entire booking amount. This is what legal eagles opine
By Adv Sunil Kewalramani and Adv Prakkash Rohira.
There is no express provision in the RERA Act and Maharashtra rules made there under, related to forfeiture of the booking amount or refund of booking amount, in case the parties do not sign the agreement.
However a plain reading of Clause No. 18 of the Model Form of Agreement, prescribed in the Maharashtra Real Estate (Regulation and Development) (Registration of Real Estate Projects, Registration of Real Estate Agents, Rotes of interest and Disclosures on Website) Rules, 2017, makes it clear that “if the parties fail to sign the agreement, the entire money paid by the allottees including the booking amount has to be returned to them without any interest.”
On June 29, Maharashtra Real Estate Appellate Tribunal (MREAT) passed an order, where the developer was asked to refund entire booking amount.
Read about the order here: Developer liable for promise made by Channel Partner
LEGAL IMPLICATION OF THIS LANDMARK JUDGEMENT
Before passing of this landmark judgement, the Maharashtra Real Estate Regulatory Authority (MahaRERA) and Maharashtra Real Estate Appellate Tribunal (MREAT), through its past judgements were of the Legal view that, “if the allottee cancels the booking of the flat due to his personal reasons then the refund will be as per the terms and conditions of the allotment letter”. They were also of the legal view that “If the allottee cancels the booking of the flat due the default or misrepresentation by the Developer, in that case they are eligible for refund of the whole amount.”
In this Landmark judgement MREAT has observed the following,
- “The RERA Act is a welfare legislation enacted primarily to safeguard the interests of allottees and thus Developer cannot be allowed to act contrary to the spirit of RERA Act by devising formats (Booking form, Allotment Letter, etc) which are ambiguous, unreasonable and inequitable.”
- “Such arbitrary and one-sided interpretations making the contractual transactions unfair and inequitable put the Allottee in a disadvantageous position and thus cannot be accepted.”
- “Developer cannot be allowed to act disadvantageously to the interests of the Allottee who was not made aware of interpretations and implications of ex-facie ambiguous, one-sided and inequitable terms used by the Developer in Application form/Allotment letter which Allottee has no choice but to sign on dotted line in a prescribed or standard form.”
- “Forfeiture of amount by the Developer is erroneous and against the object and purpose of the RERA Act which is enacted as beneficial legislation to abate hardship of flat purchasers.”
- “In view of the observations as above, we are of the view that forfeiture of amount paid by the Developer is improper and also contrary to the provisions of Act and for these reasons allottee is entitled to refund of forfeited amount without interest.”
This landmark judgement will be helpful for the homebuyers who want to cancel their flat booking due to personal reasons but are unable to do so due arbitrary and illegal forfeiture clauses in the Application form/Allotment letter.
This landmark judgement will also be helpful for the homebuyers who due COVID-19 Pandemic are unable to continue with their flat booking and want to cancel it.
Note: Views and opinion expressed in the above article solely belong to the authors.
