In a significant ruling, the Maharashtra Real Estate Appellate Tribunal (MahaREAT) held that the right to reserve a flat includes the right to cancel the reservation, hence, a builder cannot ask an allottee to forfeit the booking amount for withdrawing his reservation. In an order passer earlier this month, the MahaREAT directed Piramal Estate Pvt Ltd to return Rs5.62 lakh to a Kalwa-based couple Dinesh and Ranjana Humane. The couple had cancelled their reservation for an apartment in Vaikunth Cluster-2 at Thane due to medical emergency in the family.
This order might come as a manna from heaven to thousands of such flat allottees who are stuck in similar one-sided clauses.
The MahaREAT panel, comprising Sumant Kolhe (judicial) and member SS Sandhu, noted that a clause in the reservation form barring a prospective flat purchaser to withdraw from the arrangement and asking him to forfeit 10% of the flat's value or the amount paid is ex-facie unreasonable, unfair and inequitable. It says a promoter could not take undue advantage of a one-sided clause.
The couple was represented by Sunil Kewalramani who contended that the Humanes cancelled the transaction at the initial stage and informed the promoter within four months after booking the flat, while the agreement for sale had not been signed.
The order says “The existence of such a condition in the printed form of ‘request for reservation’ by allottee is against the object and purpose of RERA... and not binding on the parties”.
The MahaREAT panel noted that the parties had not entered into a sale agreement, nor was a confirmation or allotment letter issued. The condition of forfeiture was also unilateral, that is it was only for the home-buyer and not for the promoter. In fact, the ‘request for reservation’ form was signed only by the allotees and not by the promoter.
Thus, the order says, "In the instant case, while applying for the flat, allottees had no choice but to sign the printed form of request prepared one-sided by the petitioner.”
Abir Patel, the counsel for the promoter submitted that the allottees have claimed relief on the basis of clause 18 of ‘model agreement’ for sale as given under rules of RERA. He also stated that there is no violation of the provisions of RERA or rules and regulations thereunder.
According to the counsel, complaint under Section 31 of RERA is not maintainable unless there is violation. He further contended that clause of forfeiture is given in model agreement under RERA rules and it is not against the spirit of RERA. He also argued that allottees cannot cancel the booking on personal ground for claiming the refund.
The MahaREAT specified that the Humanes case would not fall under clause 18 of a model agreement, as they cancelled the transaction at the initial stage. The panel of says the parties did not execute the sale agreement, and asserted that RERA’s objective was to protect consumers.
Exposing the unfair, unilateral conditions imposed on the allotees by the promoter, the order states “The only document signed by allottees is the printed form which is styled as ‘request for reservation’. So, at the time of making the ‘request for reservation’ of the flat on the part of allottees, promoter obtained the signatures of allottees on such form of request which consists of 33 different terms and conditions to be observed and complied by allottees only."
The order further added “As per clause 17, allottees have no right to withdraw their request for reservation. This is absolutely unfair and unreasonable and one-sided condition imposed on the allottees. Allottees cannot be restrained from exercising their right of withdrawing the request. Right to make request for reservation of flat includes the right to withdraw such request for reservation of flat. Clause 17 providing forfeiture of 10% amount of the total price of flat or the amount paid till date whichever is lesser in case of withdrawal by allottees is ex facie unreasonable, unfair and inequitable. Existence of such a condition in the printed form of ‘request for reservation’ to be filed in by allottees is against the object and purpose of RERA. In fact clause 17 being against statute of RERA, it is not binding on the parties.”
The Tribunal relied on the April 2019 judgement by the Supreme Court (Pioneer Urban Land and Infrastructure Vs Govindan Raghavan in Civil Appeal No 72238 of 2Ol8) signifying that the court will not enforce an unreasonable, unfair contract or an unreasonable and unfair clause in a contract where contracting parties are not equal in bargaining power and where a man has no choice or rather a meaningful choice but to give his assent to a contract or to sign on the dotted line in a prescribed or standard form... as a part of the contract, however unfair, unreasonable and unconscionable a clause in that contract or form or rule may be.
The order concluded “In this peculiar matter, though the claim of refund is not governed by any specific provision of RERA, it cannot be ignored that object of RERA is to protect the interest of consumer. So, whatever amount is paid by home-buyer to the promoter should be refunded to the allottee on his withdrawal from the project.”
The couple had submitted form of request for reservation of flat on 29 January 2019 and paid an amount of Rs1,12,393 as booking amount. They further paid Rs4,49,5741 on 1 March 2019 towards price of the flat to the promoter.
Due to medical emergency in the family, of the couple decided to cancel the flat booking. Accordingly, they e-mailed to promoter and requested to cancel the flat booking and to refund the total amount of Rs5,61,967.
In May last year, the promoter responded on e-mail that the amount paid by the allotees is forfeited on account of cancellation of booking by the allotees.
The couple then filed a complaint with MahaRERA. MahaRERA conducted inquiry and passed impugned order directing the promoter to refund the booking amount to allottees in accordance with booking form signed by both the parties. The couple then approached the MahaREAT, being dissatisfied with the MahaRERA inquiry and order.
The MahaREAT order pointed out that as per the impugned MahaRERA order, the amount is to be refunded in accordance with the booking form signed by both the parties while the request for reservation was signed only by the allotees and not by the promoter. There is no booking form in the said case and the impugned order is based on such document which does not exist on record. Hence, the appellate tribunal held that the impugned order is incorrectly and wrongly passed by giving reference of signatures of both the parties and it is not executable by the parties.