Maharashtra Real Estate Tribunal says booking amount forfeiture unfair due to inequitable, one-sided pacts

Maharashtra Real Estate Tribunal rules in homebuyers’ favour to get booking amount refund.

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MUMBAI: In a significant judgment, an appellate tribunal has directed a real estate developer to refund the booking amount it had forfeited from a homebuyer, saying that some key clauses in the allotment letter did not conform to applicable laws.

Maharashtra Real Estate Appellate Tribunal set aside a Maharashtra Real Estate Authority (MahaRERA), saying the forfeiture of booking amount is unfair due to one-sided clauses customers are forced to sign by the builders.

The matter relates to the booking of an apartment in realty developer Omkar Ventures’ project in Andheri, Mumbai.


The tribunal in its ruling on Monday (June 29) stated that the terms specified in application form and allotment letter issued to the homebuyer do not conform to the provisions of the Real Estate (Regulation and Development) Act, 2016 and they are also “ambiguous, one-sided and inequitable”.

“It is rather difficult for an allottee of common intellect and not familiar with the terminology used in real estate sector to comprehend implications of such terms used in contractual transactions executed in the form of booking application form/allotment letter,” it said.

At the time of booking, homebuyer Rekha Navani paid Rs 1 lakh towards expression of interest (EOI) and Rs 6.95 lakh towards application fees for an Rs 1.36 crore apartment.

Both the parties executed a letter of allotment in December 2017 following which a demand notice was also issued to the homebuyer by the developer to pay the next installment.

However, the homebuyer could not procure a loan from banks she requested the developer to cancel the booking and refund the amount already paid.

The developer returned Rs 1 lakh paid against the expression of interest, while forfeiting the booking amount of Rs 6.95 lakh.

The homebuyer claimed that the channel partner had assured her that the booking amount would be refunded if she does not qualify for a housing loan.
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The developer argued that the homebuyer had failed to a certain clause of the allotment letter that states an amount equivalent to 10% of consideration can be forfeited on cancellation. And based on this clause, the developer had forfeited only 5% amount paid by the homebuyer.

MahaRERA had earlier disposed of the homebuyer's complaint in favour of the developer.
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The appellate tribunal’s ruling could have an impact on many such disputes between builders and homebuyers.

This verdict will prompt RERA authorities across the country to follow the provisions of the RERA Act and reconsider their decision of not allowing refunds. This is a big relief for homebuyers and deter builders from taking advantage,” said Abhay Upadhyay, President of the Forum for People’s Collective Efforts (FPCE).

Homebuyers across the country have been voicing their concerns over disadvantages they face due to agreements skewed in developers’ favour.

Apart from forfeiture of booking amount, complaints over penal charges levied by developers, including interest for delayed payment or default, have also been raised by them.
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