In a recent ruling, the Maharashtra Real Estate Appellate Tribunal directed M/s. Godrej Properties Limited (the builder) to refund ₹73,57,978 to a homebuyer, stating that the builder is not entitled to forfeit the money paid as part of the purchase price.
Background
The homebuyer had purchased two flats, Flat No. 503 and Flat No. 504, in the builder’s project ‘The Trees,’ with each flat priced at ₹1,41,67,000. An agreement for sale was signed on October 7, 2016, and the homebuyer paid a total of ₹97,49,343 towards the flats.
However, on March 23, 2018, the builder terminated the agreement, alleging non-payment by the homebuyer, and forfeited ₹56,66,800 of the amount already paid.
In response, the homebuyer lodged a complaint with the Authority, demanding a full refund and an additional ₹15,00,000 in compensation for alleged misrepresentation and fraudulent conduct by the builder.
On August 13, 2020, the Authority ruled that the forfeiture clause in the sale agreement was an unfair practice under Section 7 of RERA, 2016. The Authority ordered the builder to refund ₹19,81,136 for Flat 503 and ₹19,24,186 for Flat 504.
Both the homebuyer and the builder appealed this decision. The homebuyer sought a refund with interest, while the builder aimed to overturn the Authority’s ruling.
Tribunal’s Findings
The Tribunal, consisting of Shriram R. Jagtap (Judicial Member) and Shrikant M. Deshpande (Technical Member), examined Clause 13(b) of the sale agreement, which allowed for the forfeiture of 20% of the total consideration in case of payment defaults.
Citing the Supreme Court case Satish Batra vs. Sudhir Raval [Civil Appeal No. 7588 of 2012], the Tribunal noted that if payments were made as part of the purchase price rather than earnest money, the forfeiture clause could not be applied.
The Tribunal found that the builder’s attempt to apply the forfeiture clause to the part payments was inappropriate. It also noted that the builder had resold the flats at a significantly higher price, contradicting claims of financial loss.
As a result, the Tribunal upheld the homebuyer’s appeal, rejected the builder’s appeal, and ordered the builder to refund ₹73,57,978 plus interest from the termination date until the actual refund date.
Posted and reproduced in Public Interest by
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