Mrs Preeti Santosh Dwivedi and Ors Vs Raymond Ltd

This article attempts to discuss the issues regarding the deduction of amount as a cancellation charge from the sales consideration paid by the allotee.

Issues:

Whether the promoter can deduct the amount of sales consideration paid by the allotee as a cancellation charges?

Provisions:

Section 18 Return of amount and compensation

18. (1) If the promoter fails to complete or is unable to give possession of an apartment, plot or building,

(a) in accordance with the terms of the agreement for sale or, as the case may be, duly completed by the date specified therein; or

(b) due to discontinuance of his business as a developer on account of suspension or revocation of the registration under this Act or for any other reason,

he shall be liable on demand to the allottees, in case the allottee wishes to withdraw from the project, without prejudice to any other remedy available, to return the amount received by him in respect of that apartment, plot, building, as the case may be, with interest at such rate as may be prescribed in this behalf including compensation in the manner as provided under this Act:

Provided that where an allottee does not intend to withdraw from the project, he shall be paid, by the promoter, interest for every month of delay, till the handing over of the possession, at such rate as may be prescribed.

Section 12 -Obligations of the Promoter regarding veracity of the Advertisement or prospectus:

Where any person makes an advance or a deposit on the basis of the information contained in the notice advertisement or prospectus, or on the basis of any model apartment, plot or building, as the case may be, and sustains any loss or damage by reason of any incorrect, false statement included therein, he shall be compensated by the promoter in the manner as provided under this Act:

Provided that if the person affected by such incorrect, false statement contained in the notice, advertisement or prospectus, or the model apartment, plot or building, as the case may be, intends to withdraw from the proposed project, he shall be returned his entire investment along with interest at such rate as may be prescribed and the compensation in the manner provided under this Act

Fact of the Case:

In the present case the complainant booked the flat in the project called “…….” Being developed by the Respondent company Raymond Ltd. The complainants who were working outside India and wanted to relocate therefore the booked the said flat on 27th May, 2019 for total consideration of Rs 1,16,88,232/-.

After booking of the flat the complainant paid the total amount of Rs 6,07,788/- including the booking amount of Rs 1,01,000/-. However due to some personal reason the complainant could not relocate to India and decided to cancel the booking of the flat. The complainant informed the decision of cancellation vide email dated 17.08.2019 and requested to refund the amount. However, the promoter vide email dated 03.09.2019 informed the Complainant that the booking is cancelled and the entire amount of Rs 6.07 Lacs is forfeited.

Aggrieved with the said decision of the promoter for forfeiture of amount, the complainant filed the complaint with the RERA Authority on the ground that the sales manager of the promoter company has misguided and further stated that the promoter in its advertisement has also stated that there is refund Guarantee and Zero Cancellation fees on the booking amount, if any buyer cancels the booking of his flat. In spite of the above advertisement, the respondent is not refunding the said amount which shows the mala fide intention to illegally forfeit the said amount.

The Complainant has placed the reliance upon the judgement of the MahaRERA Appellate Tribunal in the matter of Mrs. Rekha Navani vs. M/s Omkar Ventures Pvt. Ltd (Appeal No – AT006000000021466/2019 wherein it was held that “respondent cannot be allowed to act contrary to spirit of the act by devising format which are ambiguous, unreasonable and inequitable.” Further, they relied upon the judgement of Hon’ble Supreme Court, in the case of Central Inland Water vs Broio Nath Ganguly and Anr, wherein it is held that while deciding the case in favour of an allottee, in view in Pioneer Urban Land and Infrastructure vs. Govindan Raghavan in Civil Appeal No. 12238/ 2018 on 02-04-2029 signifying that that “the court will not enforce an unreasonable, unfair contract or an unreasonable and unfair clause in a contract.” Further, they relied upon the judgement in case of Dinesh R Humne and Anr vs. Piramal Estate Private Ltd (Appeal No. AT006000000041967) in which it is held that “the object of RERA is to protect interest of consumer. So whatever amount is paid by home-buyer to the promoter should be refunded to the allotee on his withdrawal from the project.”

In response to the said complaint the promoter stated that the present complaint filed by the complainant is not maintainable as there is no violation of the provision of the RERA Act and Rules. Further, it was stated that as per the provision, refund of amount to the allottees is only when there is delay from the end of the promoters or due to discontinuance of his business as developer which is not the present case. Further, the complainant has duly signed the application form therefore all the terms and conditions of the application form are binding to the complainant and as per clause 8.2 (b) of application form, post issuance of allotment letter in case of cancellation, respondent is entitled to forfeit 10% of agreement value. Therefore, promoter validly exercised its right under clause 8.2(b) of the said application form to forfeit the amounts paid towards the booking and allotment of the said flat.

The promoter placed the reliance upon the judgement of the Hon’ble Haryana Real Estate Regulatory Authority Gurugram in the matter of Sh. Ankur Dhanuka vs. Godrej Projects Developments Ltd wherein it was held that “allotee / complainants themselves executed the booking application with wide open eyes thus the allottee / complainants cannot raise this issue now. ii) Developer can forfeit the earnest money up to only 10% along with GST of the Total consideration.”

Further, the Promoter placed the reliance upon the judgement of the Hon’ble MahaRERA Authority in the matter of Mr. Pranav Kelkar vs M/s Sai Pushp Enterprises wherein it was held that “if complainants cancel their booking vide their personal reasons then there is not violation provisions of the RERA by respondent and in the absence of agreement for sale, parties are governed by the booking application only.”

MahaRERA Authority Order:

While deciding the present matter the MahaRERA Authority observed that in the present case, the booking was done after commencement of RERA and that too, after this project was registered with the MahaRERA in the month of June, 2019. Hence, all the provisions of the RERA and the relevant rules and circulars issued by the MahaRERA are applicable to this case. Further, the Agreement to sale is not executed not the allotment letter is issued which shows that the promoter promised to give the possession on any particular date which is lapsed. Hence, the claim of the complainants for refund along with compensation under section 18 of the RERA is devoid of any merits.

Further, it is observed that the complainants have not pleaded any violation of section 12 of the RERA by the respondent that it has given any false information/notice to them due to which they suffered from any losses. Therefore, there is no question that any false information has been given by the respondent. Hence, the MahaRERA is not inclined to grant any reliefs to these complainants under section 12 of the RERA.

Further, it is observed by the MahaRERA that in the present case the complainant failed to prove any violation of sections 12 and 18 of the RERA by the respondent. Hence, their claim of refund of the amount paid along with compensation and cost cannot be considered by the MahaRERA.

However, as per order no. 35 /2022 dated 12-08-2022, issued by MahaRERA, with respect to the prescribed format of allotment letter, permits the promoter to forfeit 2% amount in case of any cancellation done by the allottee and the settled principle for cancellation of the booking (before the execution of agreement for sale is executed) has been prescribed by the MahaRERA by way of such order and action on the part of the respondent for forfeiture of such 10% amount paid by the complainants is not in consonance with the said circular dated 12-08-2022 issued by MahaRERA. Since this project is registered with MahaRERA, the said MahaRERA Order can be made applicable while deciding such cases on merits.

Therefore, the promoter is directed to refund the money paid by the complainants towards the consideration of their flat without any interest, after deducting 2% of the total consideration (value) of the said flat (excluding the statutory dues paid to the government/ brokerage if any) within a period of 45 days from the date of this order.

Conclusion:

In absence of the violation of provision of Section 12 and 18 of RERA, the refund of amount with the compensation can not be considered and the promoter can deduct the 2% of Sales consideration, as per the order no. 35 /2022 dated 12-08-2022, issued by MahaRERA, in case the cancellation is done by the allottee.