The Maharashtra Real Estate Appellate Tribunal ruled that the Real Estate Regulatory Act doesn't allow developers to deduct money from the amount paid by buyers if they cancel a purchase.
The Real Estate (Regulation and Development) Act is silent on the point of permissible deduction if the buyer cancels a booking for whatever reason.
The ruling dated August 10, 2022. was delivered in the cases of Pradip Mehta and Mrudula Mehta.
The buyers bought an apartment in Indiabulls Savroli-1. The buyers paid Rs 17 lakh as part of the transaction.
The judgement states that the developer promised to build a golf course and a 50,000 sq ft club house.
The developer promised to give possession of the apartment to MREAT by February. The developer made a change to the date on the website.
The developer didn't complete the project even after the revision. The promised amenities were not given.
The allottees told the developer that they had canceled the booking and asked for a refund of the amount paid with interest after the developer failed to fulfill their commitments.
The developer got an occupation certificate after completing the project.
The buyers approached MahaRERA with a case that the developer be ordered to pay compensation of Rs 5 lakh to them for not providing promised amenities, to refunds the amount paid with interest, to pay maximum penalty as per the provisions of RERA and to pay Rs 1 lakh towards the cost of
In case the buyers wanted to cancel the booking, the developer argued that clause 16 of the booking form should be used.
The developer said that the brochure the buyers relied on was issued by a third party.
The buyers approached MREAT after MahaRERA said the refunds would be based on the terms and conditions in the booking form.
The developers argued in the tribunal that the buyers wanted to leave since they were not making enough money. The developer argued that the conduct of buyers shows that they were not genuine buyers but investors who were taking advantage of the provisions of RERA to make a return on investment.
The buyers had blocked the flat for the last eight years and the developer argued that they would lose a lot of money if they left.
When there is no violation of provisions of RERA on the part of the developer, buyers will have their money taken away.
The developer's argument was not found to have any substance.
MREAT set aside MahaRERA's order and directed the developer to pay interest at State Bank of India's highest Marginal Cost of Lending Rate plus 2 percent of the amount paid by the buyers from July 1, 2014, until the whole amount is realised.
The developer has failed to give possession of the subject flat to buyers by the due date of July 1, according to MREAT. When allottees are not at fault or instrumental in causing delay, the promoter is not entitled to forfeiture of the amount.
The Act is silent on the point of permissible deduction if the booking is canceled because of something. The developer has utilized the amount since June 30th of last year and the allotees have paid earnest money to the developer on June 30th of last year.
The significance of the order is that the developer can't deduct for the buyer's fault. The MREAT judgment states that there is no provision in the Act for a certain deduction for the cancellation of a booking.
A comment from the legal representatives of the developer Sylvanus Properties Ltd is awaited.
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