Mr. Esha Saxena vs M/s Omaxe Heritage Private Limited & Anr.

A complaint was filed in Form ‘M’ on 21.06.2024 by Mr. Esha Saxena (hereinafter referred to as ‘Complainant’) stating that she booked a commercial space/shop no. OCDL/Ground/139H on Ground Floor having super area admeasuring 38sq. ft./1.02 sq. mt. in multi-level car parking cum Commercial Complex in the name and style of “Omaxe Chandni Chowk” with the Respondent “M/s Omaxe Heritage Pvt. Ltd.” (hereinafter referred to as “Respondents”) in their project namely “Omaxe Chandi Chowk, Multi Level Car Parking along with Commercial complex” (hereinafter referred to as “project”) in Chandni Chowk, New Delhi-110006.

The Respondents consequent upon the booking of the commercial space/shop had issued an allotment letter in favour of the Complainant on 23.03.2022. The Complainant thereafter had also entered into an agreement with the builder on 23.01.2023 for purchase of the above-mentioned commercial space/shop.

The Complainant has made a total payment of Rs. 34,50,000/- (Rupees Thirty-Four Lakhs Fifty Thousand Only) till date to the Respondents towards the purchase of the above-mentioned commercial space/shop.

The Complainant has placed on record copies of Allotment Letter dated 23.03.2022, Agreement executed between the Complainant and Respondent dated 23.01.2023 and receipts which clearly shows that the Respondents collected money for constructing a commercial space/shop in their project “ Omaxe Chandi Chowk, Multi Level Car Parking along with Commercial complex”.

The Complainant submitted that to her utter shock the Respondents had cancelled the said allotment of commercial space/shop vide letter dated 07.03.2024. It is further submitted by the Complainant that Respondents had not refunded the amount paid till date despite several reminders by the Complainant which also contravened the provisions of the RE (RD) Act, 2016. It is also submitted that the Complainant had visited the office of Respondents on various occasions and also written emails to them seeking refund of amount deposited by the Complainant with the Respondents along with interest. However, the Respondents kept on delaying the matter on one pretext or the other. Accordingly, the Complainant has approached this Authority to seek refund of amount deposited by her with the Respondents along with interest.

A preliminary hearing in the case was held on 12.08.2024. Notice of complaint was sent to the Respondents on 21.08.2024 via registered post and on 22.08.2024 via e-mail.

The matter was subsequently heard on 15.10.2024, 19.12.2024, 22.01.2025, 27.02.2025,02.04.2025,08.05.2025 and 15.05.2025. The Respondents filed their reply on 15.10.2024 and the complainant thereafter filed the rejoinder on 12.11.2024.

We have heard the arguments and perused the records. For the sake of convenience, the arguments and submissions made on behalf of the Respondents are summarized as under:

That admittedly, the Complainant failed to make the payment of the balance dues in timely manner despite the demand dated 21.02.2023 and 21.07.2023 and the offer of possession of the said Unit by the Respondents. Thus, exercising their rights under the aforementioned Clauses of the said Agreement and the said Application, the Respondents cancelled the Allotment vide Letter dated 09.05.2024. The Complainant was duly informed that the balance sum, if any, will be refunded upon completion of necessary formalities by the Complainant. After the said cancellation, the Complainant was left with no rights or title qua the said Unit and the Respondents were free to deal with the said Unit in any manner as per their choice.

That the Complainant wrongly stated that she made direct payment and there was no Real Estate Agent engaged by the Complainant in this transaction. It is submitted that, the Application of the Complainant bears the stamp and the signatures of the Dealer namely Sh. Nitin Chadha. Thus, the Complainant has stated falsely before this Authority that she is not aware of any Real Estate Agent engaged in the transaction. Furthermore, the Complainant has made a payment of Rs. Rs. 30,80,357.20/- plus applicable GST of Rs. 3,69,642/- towards the said Unit totalling to Rs. 34,49,999/- till date as against the total cost of Rs. 60,40,066.66. The Respondents had already deposited Rs. 3,69,642/- towards GST to the concerned department. Therefore, the Respondents are in receipt of only a sum of Rs. 30,80,357.20/- towards the said Unit.

That without prejudice, it is submitted that, the total cost of the said unit is Rs. 60,40,066.66. The Complainant is entitled for refund of amount deposited after deduction of Rs. 6,04,006.60 towards the booking amount (10% of the total cost of the Unit as per Clause 11 of the Application), Rs. 2,41,135/- towards interest on the delayed payment and Rs. 1,95,600/-towards dealer commission in terms of Clause 9.3 (iv) of the said Agreement dated 23.01.2023. Further, the Respondents have paid a sum of Rs. 2,45,677/- as Assured return to the Complainant and is entitled to deduct that amount also as per the Agreement between the parties and its Email dated 23.04.2024. After deduction of the above deductible amounts, the Complainant would be entitled for a sum of Rs. 17,93,938/- (Rs. 30,80,357.20 - Rs. 6,04,006.60 - Rs. 2,41,135/- - Rs. 1,95,600/- - Rs. 2,45,677/-) only upon compliance of necessary formality.

This Authority has carefully examined the facts and circumstances of the case, and the following issues emerge for determination:

The present case necessitates a comprehensive analysis of the statutory framework under the Real Estate (Regulation and Development) Act, 2016, particularly focusing on Section 13, Section 88, Section 89 and Clause 20 of the form of Agreement prescribed under Rule 3 of Real Estate (Regulation and Development) (Agreement for sale) Rules, 2016 (hereinafter referred as “Agreement to Sale Rules”).

Section 13 of the RE (RD) Act, 2016 constitutes the cornerstone of the regulatory framework governing advance payments and agreements in real estate transactions. This provision deals with three crucial and sequential aspects: the 10% rule for advance payments, execution of agreement to sell, and mandatory registration of the said agreement. Each of these requirements is designed to create a structured and transparent framework for real estate transactions while protecting the interests of allottees. The relevant extract of Section 13 reads as under:

An agreement for sale does not per se transfer the ownership or title of a property nor it is a compulsorily registrable document under section 17 of the Registration Act, 1908. Therefore, the significance and non-registration of the Agreement for Sale dated 21.03.2023, has to be understood in the light of the provisions of RE(RD) Act, 2016. Section 88 of the RE (RD) Act, 2016 establishes the cumulative nature of the statutory framework, providing that the Act shall be in addition to and not in derogation of other laws. This provision ensures that the protections and obligations under the RE (RD) Act are supplementary to existing legal frameworks, thereby strengthening the overall regulatory mechanism. The relevant provision reads:

Section 89 of the RE (RD) Act, 2016 provides the overriding effect of the Act in case of any conflict with other laws, ensuring the supremacy of the provisions of the RE(RD) Act, 2016 over inconsistent provisions in other statutes or instruments. This section establishes a clear hierarchy where provisions of the Act take precedence over conflicting legal frameworks. The provision states:

The interplay between Section 89 and Section 13(1) of the Act demonstrates the legislative intention to impose stricter compliance requirements in real estate transactions than those existing under general laws. By virtue of Section 89, the mandatory registration requirement under Section 13(1) overrides the optional registration framework under the Registration Act, 1908. This statutory override ensures that real estate agreements for sale cannot escape the regulatory oversight that registration provides, thereby creating enhanced protection for allottees and greater accountability for promoters.

The effect of non-registration of an agreement for sale under the RE (RD) Act, 2016 is significant. Under Section 49 of the Registration Act, 1908, documents required to be registered cannot affect immovable property unless registered. However, under the specific regime of the RE (RD) Act, 2016, non-registration of agreement for sale has more severe consequences. When an agreement for sale is not registered as mandated under Section 13(1) of the Act, it not only fails to create enforceable rights in the immovable property but also renders the very acceptance of advance payments of more than 10 percent of the cost of payment unlawful. This creates a legal disability for the promoter who, having violated the prerequisite condition, cannot seek enforcement of contractual terms that would prejudice the allottee's interests. The non-registration thus operates as a statutory shield protecting allottees from exploitative contractual provisions and ensures that promoters cannot benefit from their own non-compliance with mandatory statutory requirements.

Clause 20 of form of agreement provided under section 3 of the (Agreement for Sale) Rules, 2016 deals with the binding effect of agreements and specifically addresses the consequences when agreements are not registered. Clause 20 reads as follows:

In the present case, it is an undisputed fact that the Agreement for Sale dated 23.01.2023 executed between the parties was never registered under the provisions of the Registration Act, 1908 as mandated by Section 13(1) of the RE (RD) Act, 2016. This non-registration assumes critical significance in light of the specific consequences prescribed under clause 20 of the form of agreement in (Agreement for Sale) Rules, 2016. The failure to register the agreement, despite it being a mandatory statutory requirement will not create a binding contract between the allottee and the promoter.

The Respondents' contention that they are entitled to forfeit 10% of the total consideration as booking amount, along with interest on delayed payments and dealer commission, cannot be sustained in law. Clause 20 of the form of agreement in (Agreement for Sale) Rules, 2016 operates as a statutory override to any contractual provisions that may provide for forfeiture or retention of amounts when the agreement is not registered as required under Section 13(1) of the Act.

The legislative intent behind mandate to register an Agreement for sale is clear and purposeful. When a promoter fails to comply with the mandatory requirement of registration of the agreement for sale, the law strips away the promoter's right to forfeit any amount received from the allottee. This is a penal consequence imposed on the promoter for non-compliance with statutory obligations, and such consequence cannot be waived or modified by contractual arrangements. Similarly, if the allottee fails to come forward for the registration of agreement for sale, he or she also suffers penal consequences as the application of an allottee shall be treated as cancelled and the deposited amount will be refunded without any interest or compensation.

Furthermore, the Respondents' reliance on various clauses of the unregistered Agreement for justifying forfeiture is legally untenable. An unregistered agreement, does not create any contractual obligations between the parties. The supremacy clause contained in Section 89 of the Act ensures that the provisions of the RE (RD) Act override any inconsistent contractual terms.

Regarding the issue of GST payments, it is evident from the record that the Complainant has paid Rs. 3,69,642/- towards GST as part of the total payment of Rs. 34,50,000/-. The nature of GST is such that it is a tax collected by the seller on behalf of the government and is ultimately remittable to the tax authorities. In cases where the underlying transaction fails or is cancelled, the GST component requires special consideration.

The GST component collected by the promoter has to be deposited with the tax authorities/government. In case, any transaction of immovable property fails to materialise for any reason, then promoter can seek refund of the amount deposited as GST. This is based on the principle that when the said property is actually sold to some other person or entity, than GST shall be paid again, and double collection of GST for the same property would be against the provision of law. To cater to such a situation in sale transaction, specific provisions are provided with the Central Goods and Services Tax Act, 2017 for refund of GST deposited for a sale transaction, which is not materialised.

The respondents have not provided any proof of deposit of GST in the subject transaction. But, even if it is deposited, the promoter can seek its refund on proof of cancellation of agreement for sale. Thus, any deduction on account of GST cannot be allowed.

The Respondents' submission regarding Real Estate Agents commission also cannot be sustained. The (Agreement for Sale) Rules, 2016 in clause 20 of the Form of Agreement for Sale is very specific and categorically mandates that all the deposits made including booking amount shall be refunded without any interest or compensation.

The email correspondence dated 02.04.2024 and 23.04.2024 from the Complainant's husband, wherein he requested cancellation of the unit due to financial constraints, cannot be construed as a waiver of the Complainant's statutory rights under the (Agreement for Sale) Rules, 2016. The statutory protection afforded to allottees under the RE (RD) Act is in the nature of a shield against exploitation and cannot be waived by the allottee, particularly when such waiver would result in forfeiture of substantial amounts in violation of the statutory scheme.

It is pertinent to note that the RE (RD) Act, 2016 was enacted with the specific objective of protecting the interests of allottees and ensuring transparency and accountability in the real estate sector. The mandatory requirement of registration of agreements and the penal consequences for non-compliance are essential safeguards built into the statutory framework to prevent exploitation of home buyers and commercial space purchasers.

The Respondents cannot legitimately take shelter under the contractual provisions of an unregistered agreement to justify forfeiture when the law specifically and categorically prohibits such forfeiture. The statutory framework in clause 20 in the form of Agreement for sale provided in the Agreement for Sale Rules, 2016 is deliberately designed to penalize promoters as well as allottees, who fail to comply with mandatory registration requirements, and this penalty represents a conscious legislative choice that cannot be circumvented through private contractual arrangements or post-facto justifications.

Based on the aforesaid analysis and considering the statutory provisions under the RE (RD) Act, 2016 and Rules framed thereunder, this Authority arrives at the following findings:

In light of the above findings, the Respondent's claim for forfeiture of booking amount, interest on delayed payments, and dealer commission is legally unsustainable and contrary to the statutory provisions under the RE (RD) Act, 2016.

However, we note that the respondents have paid Rs. 2,45,677/- on account of Assured Returns, to the complainant. The RE(RD) Act, 2016 does not recognise any terms in agreement for sale contrary to the terms provided in the form of agreement for sale, under Rule 3 of the Agreement for Sale Rules 2016. Thus, the concept of assured returns is not recognised by the RE(RD) Act, 2016. But payment of Rs. 2,45,677/- received by the complainant, is an admitted fact. If, we allow refund of entire payment made by the complainant without discounting the receipt of Rs. 2,45,677/- by the complainant, it would amount to unjust enrichment of the complainant. Accordingly, we allow deduction of Rs. 2,45,677/- by the respondents from the total deposit made by the complainants.

In the view of the above analysis and findings, this Authority hereby orders as follows:

The case is disposed of accordingly.

No order as to costs.

File be consigned to record room.