The Maharashtra Real Estate Regulatory Authority (MahaRERA) has directed Godrej Properties’ arm, Mann-Hinje Township Developers LLP, to refund the consideration amount to two Pune homebuyers who cancelled their purchase of two units within 10 days after discovering the adjacent flats they booked could not be combined into a single ‘jodi’ apartment.
The case
The two homebuyers had booked two adjoining units in the Godrej Woodsville project in Hinjewadi, Pune. They initially paid an expression of interest amount, followed by a total booking sum of over ₹14 lakh.
However, within just 10 days of submitting the application form dated September 30, 2022, the homebuyers realised that the project’s structural layout did not permit merging the two units into a single residence as intended. Following this, the homebuyers sought cancellation of the booking through emails dated October 9 and 10, 2022, as per their submissions before MahaRERA.
According to the homebuyers, the developer accepted the cancellation request on October 17, 2022. Despite repeated follow-ups and the issuance of a legal notice in December 2022, the developer failed to refund the amount within the stipulated time. The homebuyers further submitted that the cancellation request was made before execution of any agreement for sale, and the developer was required to process a refund without unlawful deductions,” homebuyers submitted to MahaRERA.
The homebuyers alleged that the developer’s reliance on clauses in the application form that permit forfeiture of 20% of the booking amount is contrary to the MahaRERA order, which limits permissible deductions and mandates a refund within the prescribed period.
The homebuyers filed a complaint with MahaRERA on February 28, 2023.
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Developer’s defence
According to the developer, as per the terms and conditions of the application form, particularly clauses relating to cancellation and earnest money, the developer was entitled to forfeit the booking amount upon such a cancellation. However, the developer claimed that he refunded the full amount to homebuyers on March 16, 2023 and May 2, 2023.
“As per the application form, earnest money was defined as 20% of the total sale consideration, and in case of cancellation or default by the purchaser, the respondent was entitled to cancel the booking and forfeit the earnest amount. It is further submitted that the respondent had also informed the complainants that in case of cancellation prior to issuance of allotment letter, the entire amount paid by them was liable to be forfeited in accordance with the said terms,” the developer stated in its submission to the MahaRERA.
According to the developer, even otherwise, as per of 2022, the developer was entitled to deduct a portion of the consideration amount upon cancellation at the behest of the allottee (homebuyers). However, the developer said the company accepted the cancellation request and refunded the entire booking amount to the complainants, with no deductions.
“It is submitted that since the entire amount has already been refunded to the complainants, there is no surviving cause of action, and the complainants are not entitled to claim any interest or further relief,” the developer stated in submissions made to the MahaRERA.
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MahaRERA’s verdict
The stated that the developer had relied upon the clauses of the application form to contend that it was entitled to forfeit the earnest money upon cancellation by the complainants. On the other hand, the developer has submitted that it, being a customer-centric organisation, refunded the entire booking amount to the complainants without any deduction.
“However, no documentary evidence has been placed on record by the respondent to substantiate that such refund has in fact been made. In the absence of any cogent proof evidencing the alleged refund, the said contention of the respondent cannot be accepted,” the MahaRERA said in its order.
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“The respondent (developer) is directed to refund the amount paid to them by the complainants (homebuyers) towards the consideration of the said flat purchased in the project (excluding amounts paid towards taxes and other charges such as stamp duty, registration fees and such other amounts paid to statutory authorities) within sixty days from the date of this order,” the MahaRERA order said.
According to the order, failing to refund, the respondent (developer) is required to directed to pay interest at the rate of State Bank of India’s Highest Marginal Cost of Lending Rate (MCLR) plus 2% as per the provisions of Rule 18 of the Maharashtra Real Estate (Regulation and Development)(Registration of Real Estate Projects, Registration of Real Estate Agents, Rates of Interest and Disclosures on Website) Rules, 2017 till the realisation of the refund amount.
An email query has been sent to Godrej Properties. The story will be updated if a response is received.