The Maharashtra Real Estate Regulatory Authority (MahaRERA) recently ruled that its August 2022 order limiting builders to retaining only 2% of the flat value from booking amounts in case of cancellations could be applied retrospectively. In a 2019 case, MahaRERA directed Godrej Greenview Housing to refund the buyer's INR 5 lakh deposit for a flat booked in 2019, deducting only 2% of the flat value as permitted in the 2022 order. The buyer had alleged violations under Sections 12 and 18 of the RERA Act for false promises by the builder and sought refund with interest. While dismissing allegations of violations, MahaRERA said the builder's forfeiture of the full deposit was impermissible under RERA, and applied the 2022 cancellation guidelines in its ruling.
The Maharashtra Real Estate Regulatory Authority (MahaRERA) recently ruled that its August 2022 order, which established a standard format for allotment letters and sale agreements allowing builders to retain only 2% of the flat value from booking amounts in case of cancellations, can be applied retrospectively.
In a case from 2019, last month the authority directed Godrej Greenview Housing Pvt Ltd to refund, without interest, to the buyer his INR 5 lakh earnest money deposit after deducting 2% of the flat value.
A person named Ajit Dabhade booked a 22nd floor flat for INR 92 lakh in 'Godrej Emerald Thane' in June 2019. He cancelled the booking in August 2019 and demanded a refund.
In November 2021, through his advocate Avinash Pawar, Dabhade approached MahaRERA, the regulatory body established under the Real Estate (Regulation & Development) Act, 2016 in Maharashtra. He alleged violation of sections 12 and 18 of the RERA Act by the builder and sought a refund of the amount paid along with interest.
Section 12 of the RERA Act provides for compensation by the promoter to a person who "sustains any loss or damage'' due to "incorrect statements included in an advertisement or project prospectus". It also provides for a refund of the entire investment with interest if a buyer wishes to withdraw from the project on being "affected'' by such an advertisement. Section 18 of the Act provides for compensation to buyers as being 'retroactively applicable'.
Seeking dismissal of Dabhade's complaint, the builder's counsel Abhijit Mangade refuted the reasons cited for the cancellation. Both parties levied various allegations before MahaRERA member Mahesh Pathak.
The buyer said the builder "traps" potential buyers through special offers and its brand name. The builder said the buyer failed to pay by raising frivolous excuses and showed "derelict conduct" to buy time and breached conditions of the contract, hence rendering the termination of the contract with a forfeiture clause as mentioned in the allotment letter.
In a 13-page order, MahaRERA noted that while Dabhade alleged "false promises" about home loans, he failed to substantiate his claims. Thus, MahaRERA dismissed all the allegations of any violation by Godrej Greenview Housing under RERA.
However, Mangade argued the 2022 circular could not be applied retroactively but the Authority ruled it could.
MahaRERA said the Builder's forfeiture of the entire earnest money is "not legal and proper" under RERA provisions as the August 2022 circular prescribed a new format for allotment letters, that permits forfeiture of a maximum of 2% of flat cost if a buyer cancels.
Since the project was registered with MahaRERA, Pathak said the 2022 order's guidelines could be applied. Thus, the refund plea was dismissed on merits but the builder was directed to refund the deposit without interest, deducting the 2% flat value, within 45 days.
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