Pranav B Prem

The Maharashtra Real Estate Regulatory Authority (“Authority”), through Member (I) Mahesh Pathak, has held that a builder cannot forfeit 10% of the total sale consideration when a homebuyer cancels the booking. The Authority clarified that only 2% of the total sale consideration can be forfeited in such cases, finding Godrej Properties Limited’s claim to forfeit 10% to be unjustified and contrary to the Real Estate (Regulation and Development) Act, 2016 (“RERA”).

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Background

The complainant, Rahul Naresh Bari, had booked Flat No. 3003 on the 30th floor of Tower 4 in the project “Godrej Ascend Phase 1”, a registered project of Godrej Properties Limited, on August 16, 2022. The total sale consideration for the flat was ₹68,00,000, of which the complainant paid a booking amount of ₹6,80,000 (10% of the total price). Due to personal reasons and inability to secure a housing loan, the complainant decided not to proceed with the booking. He requested the builder to cancel the booking and refund the amount. However, the builder refused, stating that the entire booking amount would be forfeited under Clause 8 of the application form, which permitted forfeiture of 10% of the total consideration in case of cancellation. Aggrieved, the complainant filed a complaint before MahaRERA on September 16, 2024, seeking a direction to refund the booking amount with interest and compensation.

Builder’s Submissions

The builder, represented by Advocate Abir Patel, argued that the complainant withdrew from the project for personal reasons beyond the permissible period of 45 days and therefore, the forfeiture clause in the booking form would apply. It was contended that the builder had incurred expenses on construction, administration, marketing, and had suffered opportunity loss due to the cancellation. The respondent further maintained that the complainant had signed the booking form with full knowledge of its terms and could not now dispute its applicability.

Observations of MahaRERA

After examining the submissions and documents, MahaRERA noted that the complainant had not demonstrated any violation of Section 18 or Section 12 of RERA. There was no evidence of any misrepresentation or false information by the builder. Therefore, the complainant was not entitled to a refund with interest or compensation under those provisions. However, the Authority held that the forfeiture of 10% of the total sale consideration was neither legal nor justified under the RERA framework. It emphasized that any forfeiture must be in line with the statutory provisions and cannot be arbitrary or disproportionate.

The Authority referred to its Order No. 35/2022 dated August 12, 2022, which prescribes a 2% forfeiture limit in case of cancellation by the allottee before execution of the agreement for sale. The order also sets out the prescribed format for the allotment letter, which applies to registered projects. MahaRERA found that since Godrej Properties had not filed any deviation report to this circular, the order was fully applicable to the present case. Quoting the order, MahaRERA observed that “forfeiture of 10% of the total consideration, as claimed by the respondent, is neither legal nor justified under the provisions of RERA.” It reiterated that forfeiture must be reasonable and in compliance with the law.

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Verdict

MahaRERA partly allowed the complaint. While it rejected the homebuyer’s claim for interest and compensation, it directed Godrej Properties Limited to refund the booking amount after deducting 2% of the total sale consideration (excluding statutory dues or brokerage, if any) within 45 days from the date of the order. With this ruling, the Authority reaffirmed that developers cannot impose arbitrary or excessive forfeiture clauses and must act within the boundaries set by RERA and MahaRERA circulars. The complaint was disposed of, with MahaRERA holding that Godrej Properties’ 10% forfeiture claim was not sustainable in law.

Appearance

Complainant appeared in person

For the respondent: Ld. Adv. Abir Patel

Cause Title: Rahul Naresh Bari V. Godrej Properties Limited 

Case No: Complaint No. CC12400126

Coram: Shri. Mahesh Pathak, Hon’ble Member – I/MahaRERA