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Mumbai: In a crucial ruling protecting homebuyers, the Maharashtra Real Estate Regulatory Authority (MahaRERA) has directed Godrej Properties Limited to refund the booking amount to an allottee, limiting the cancellation forfeiture to a maximum of 2% of the total flat consideration. The developer had sought to forfeit the entire booking amount of ₹6,80,000/-, representing approximately 10% of the flat’s value.
📍 The Complaint and Developer’s Stance
The complainant, Rahul Naresh Bari, had booked a flat in the “Godrej Ascend Phase 1” project with a total sale consideration of ₹68,00,000/-. He paid a booking amount of ₹6,80,000/-.
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- Cancellation Reason: The complainant sought cancellation and refund after failing to secure a housing loan due to his ineligibility. The cancellation request was made in March 2023, which was beyond the stipulated 60-day period from the date of booking.
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- Developer’s Claim: Godrej Properties argued it was entitled to forfeit 10% of the total consideration amount, as per Clause 8 of the application form and a specific case law, stating it incurred costs and opportunity loss.
⚖️ MahaRERA’s Ruling on Forfeiture
MahaRERA Member Shri. Mahesh Pathak examined the rival submissions and made the following key observations:
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- Forfeiture is Disproportionate: The Authority held that the developer’s claim to forfeit nearly 10% of the total consideration was “neither legal nor justified under the provisions of the RERA”.
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- Statutory Compliance Required: MahaRERA emphasized that any forfeiture must be in compliance with the statutory framework of RERA and cannot be arbitrary or disproportionate.
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- Applicability of MahaRERA Order 35/2022: The Authority relied on its Order No. 35/2022 dated August 12, 2022, which set the prescribed format for the allotment letter. This order permits the promoter to forfeit only 2% of the total consideration amount in case of a cancellation by the allottee before the execution of the agreement for sale.
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- Deviation Not Justified: Since the project is registered with MahaRERA and the developer failed to upload any deviation report to Order No. 35/2022, the 10% forfeiture claim was dismissed as having “no legal substance”.
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- Rejection of Interest and Compensation: The MahaRERA rejected the complainant’s claim for interest and compensation, as he failed to demonstrate any violation of RERA Sections 18 or 12 by the developer.
✅ Final Order
The complaint was partly allowed.
The respondent, Godrej Properties Limited, was directed to refund the money paid by the complainant, without any interest, after deducting 2% of the total consideration (value) of the said flat. The refund must be executed within a period of 45 days from the date of the order.
This ruling serves as a vital precedent, standardizing the maximum permissible forfeiture amount to 2% of the total consideration for cancellations initiated by the allottee before the execution of the Agreement for Sale.
Clich Here to Read and Download the Order
Published in public interest by:
Adv. Sulaiman Bhimani
Citizens Justice Forum
The Law Suits
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