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Judgment
A complaint was filed in FORM 'M' on 03.09.2024 by Mr. Pramod Gupta and Mr. Shivansh Gupta (hereinafter referred to as "Complainants") under section 31 r/w section 18 of RE (RD) Act, 2016 stating that they had booked a Shop/Commercial Space bearing unit No. 219A, sub-unit no. 219A-56 in the project of the Respondent namely "The Delhi Mall" Commercial Complex adjoining Navin Minar, New Delhi, promoted by M/s Raheja Developers Ltd. (hereinafter referred to as "Respondents").
The Complainants submitted that they paid a total of Rs. 4,63,624/- (Rupees Four Lakhs Sixty-Three Thousand Six Hundred and Twenty-Four Only) to the Respondents towards the said unit and are seeking refund of the same amount along with interest.
The Complainants submitted that they were misled by the Respondents regarding various aspects of the project including:
a. Possession Date: Initially promised possession by August 2025, but the Builder-Buyer Agreement (BBA) mentioned possession date of three years plus or minus one year from the execution of the agreement.
b. Area Measurement: Initially informed that the unit area would be 6,000 sq. feet, but the BBA stated the unit's area as 8,961.58 sq. feet, creating confusion and discrepancy.
c. Construction Company: Were led to believe that construction was managed by Arbtech, a Dubai-based company known for projects such as Burj Khalifa and Dubai Mall, but research revealed this company had been dissolved due to bankruptcy.
d. Booking Process: Complainants alleged harassment by executive Ashish Kapoor and were made to sign blank forms, requiring police intervention to obtain completed forms.
Preliminary hearings in the case were held on 07.10.2024. Thereafter, various hearings were held on 11.12.2024, 18.02.2025, 19.03.2025, 13.05.2025, and 30.07.2025.
The Respondents filed their reply on 12.03.2025. For the sake of convenience, the arguments and submissions made on behalf of the Respondents are summarized as under:
a. The Respondent company contends that the complaint is misconceived and the Complainants have not approached the Authority with clean hands, as the allotment letter dated 29.02.2024 categorically mentioned the specifications of the undivided area to be allotted to the complainants, and all necessary information pertaining to the unit and project was duly provided from the beginning, making the complainants’ submission about unilateral changes in area erroneous since he was privy to all information relating to the area of the unit.
b. The Respondent contends that as per the contractual terms, particularly clauses 2.2, 7.5 and 9.2(ii) of the Agreement, in case the allottee cancels the allotment without any fault of the builder, the promoter is entitled to forfeit the booking amount, and therefore only a portion of the deposited amount totaling Rs. 2,20,174/- is refundable after deducting Rs. 2,43,450/-as earnest money from the total received amount of Rs. 4,63,624/-.
c. The Respondent argues that the complainants acknowledged and agreed to all terms and conditions which specifically states that approved building plans are subject to revision and that proposed location, shop number and areas are tentative and approximate only, and clause 15.9 whereby the complainants confirmed understanding of each clause and its legal implications, thus precluding any claim of lack of knowledge or consent regarding project specifications.
d. The Respondent relies on legal precedents including SV Ramesh vs Ms. Emerald Haven Realty Developers and Godrej Products Development Ltd vs Vimla Vishwanath, arguing that forfeiture of up to 10% of the sale consideration as cancellation charges is legally valid and sustainable when the allottee unilaterally cancels booking without any fault attributable to the promoter, and such forfeiture is in consonance with the 2018 Regulations and provisions of the RE(RD) Act, 2016.
e. The Respondent submits that the complainants have willfully suppressed material facts including emails dated 31.05.2024, 06.06.2024 and 07.06.2024 wherein the Respondent had categorically stated that refund would be initiated after contractually stipulated deductions, and the present complaint is vexatious and filed with ulterior motive to extort money and harass the Respondent, therefore liable to be dismissed with exemplary costs.
We have heard the arguments of the parties and perused the records.
Analysis and Consideration:
The fulcrum of the matter lies in the fact that the complainants have developed reservations about the project and the promoter, leading them to seek a full refund of their payments. On the other hand, the promoter argues that any refund must comply with the terms of the agreement to sell, which stipulates forfeiture of the booking amount. According to the promoter, only the balance remaining after deducting the forfeited booking amount would be refunded to the complainants.
Having carefully examined the facts and circumstances, it is evident that the primary issue that emerges for determination before this Authority is whether the Respondents are entitled to forfeit the booking amount in the absence of a registered Agreement for Sale.
The statement of objects and reasons of the Real Estate (Regulation and Development) Act, 2016 (hereinafter referred to as “the RE(RD) Act, 2016 or Act”) clearly states that it attempts to balance the interests of allottees and promoters by imposing certain responsibilities on both. It also seeks to establish symmetry of information between the promoters and allottees, enhance transparency of contractual conditions, set minimum standards of accountability, and a fast-track dispute resolution mechanism.
A perusal of the documents available on record shows that the Complainants made payment of Rs. 4,63,624/- towards the allotment of Shop/Commercial Space bearing unit No. 219A, sub-unit no. 219A-56 with a total cost of Rs. 27,26,640/-. The unit area as per Respondent's calculation is 50.00 sq. feet at the rate of Rs. 48,690/- per sq. feet.
It is pertinent to mention here that the Agreement for Sale has not been registered between the parties. Since no Agreement for Sale has been registered between the parties, the matter has to be seen in the light of the terms of Rule 20 of the Real Estate (Regulation and Development) (Agreement for Sale) Rules, 2016 (hereinafter referred to as “Rules, 2016”) which provides:
"20.Binding Effect. - Forwarding this Agreement to the Allottee by the Promoter does not create a binding obligation on the part of the Promoter or the Allottee until, firstly, the Allottee signs and delivers this Agreement with all the schedules along with the payments due as stipulated in the Payment Plan within 30 (thirty) days from the date of receipt by the Allottee and secondly, appears for registration of the same before the concerned Sub-Registrar as and when intimated by the Promoter. If the Allottee(s) fails to execute and deliver to the Promoter this Agreement within 30 (thirty) days from the date of its receipt by the Allottee and/or appear before the Sub-Registrar for its registration as and when intimated by the Promoter, then the Promoter shall serve a notice to the Allottee for rectifying the default, which if not rectified within 30 (thirty) days from the date of its receipt by the Allottee, application of the Allottee shall be treated as cancelled and all sums deposited by the Allottee in connection therewith including the booking amount shall be returned to the Allottee without any interest or compensation whatsoever."
Rule 20 of the Rules, 2016 therefore provides that until the Agreement for Sale has been signed and registered, the promoters cannot forfeit earnest money or booking amount. The Respondents, to avoid such a situation, should have acted in time after booking was made by the Complainants to get Agreement for Sale registered.
It may be pointed out here that the introduction and statement of Objects and Reasons of the Real Estate (Regulation and Development) Act, 2016 further clarifies that the Act 2016 was introduced because the Real Estate sector was unregulated and lacked professionalism, standardization and adequate consumer protection. The Act 2016, therefore, aims at regulation and promotion of the Real Estate sector, uniformity and standardization of business practices and transactions in the Real Estate sector, transparency in sale and contractual conditions and protection of consumer interests.
The Act 2016 lays down the parameters of contractual conditions and standardizes the business practices in the real estate sector. Therefore, the contractual conditions and financial transactions in the Real Estate sector would be governed by provisions of the Act, 2016. The terms and conditions set out in any offer, Application form, Allotment letter, Agreement for Sale or any other related document binding the allottee and the promoter in a real estate relationship must conform to the provisions of the Real Estate (Regulation and Development) Act, 2016.
The NCT of Delhi RE(RD) (Agreement for sale) Rules 2016 mandates that a binding contract between promoter and allottee shall be subsequent to the signing and registration of the Agreement to Sale. The transaction between the promoter and allottee is governed by provision of the RE (RD) Act, 2016 which protects the interest of both. The provision for forfeiture of booking amount is provided in the National Capital Territory (NCT) of Delhi Real Estate (Regulation and Development) (Agreement for Sale) Rules 2016 framed under the RE (RD) Act, 2016, but only after proper execution that is signing and registration of the Agreement to Sale.
Moreover, clause (2) of Rule 3 of the (Agreement for sale) Rules, 2016 provides that the rights of the allottees shall not be limited by any document signed prior to the execution of Agreement for Sale, stating:
"(2)Any application letter, allotment letter, agreement, or any other document signed by the allottee, in respect of the apartment, plot or building, as the case may be, prior to the execution and registration of the Agreement for Sale for such apartment, plot or building, as the case may be, shall not be construed to limit the rights and interests of the allottee under the Agreement for Sale or under the Act or the rules or the regulations made thereunder."
The Complainants had asked for cancellation of the booking allotment due to genuine reasons. Where such cancellation is not due to the promoter's default, the booking amount may be forfeited, but this right is conditional upon the execution and registration of an Agreement for Sale between the parties. In the absence of such executed and registered agreement, the provisions under Rule 20 of the Rules, 2016 mandate refund of the entire booking amount.
The National Capital Territory (NCT) of Delhi Real Estate (Regulation and Development) (Agreement for Sale) Rules 2016, provides that even the ‘Agreement for Sale’ will not have any binding effect unless it is signed and registered. In case of failure of the allottee to sign the ‘Agreement for Sale’ and appear for registration of the same before the Sub-Registrar, the promoter has to give notice to the allottee and if within 30 days of the receipt of this notice, the allottee doesn’t rectify the default then the booking amount shall be returned to the allottee but it will be without any interest or compensation whatsoever.
It may be noted here that a collective reading of Clause (2) of Rule 3 and Clause 20 of the National Capital Territory (NCT) of Delhi Real Estate (Regulation and Development) (Agreement for Sale) Rules 2016 would show that an allottee has right to cancel or withdraw from the allotment prior to the Agreement for Sale. The rights of allottees shall not be taken away by any application letter, allotment letter, agreement, or any other document which was signed or executed before the execution and registration of the Agreement for Sale for the allotted flat or unit. The rights and interests of the allottees will be protected by the Act or the Rules or the Regulations made thereunder.
It may therefore be seen that the scheme of the RE(RD) Act, 2016, read along with The National Capital Territory of Delhi Real Estate (Regulation and Development) (General) Rules 2016, and National Capital Territory (NCT) of Delhi Real Estate (Regulation and Development) (Agreement for Sale) Rules 2016, envisages that in cases where the Agreement for Sale has not been signed and registered, the allottee is entitled to withdraw from the project and entitled for refund of the amount paid by him. In cases where the allottee has executed the Agreement for Sale, but decides to withdraw from the project subsequently, without any fault of the promoter, then the promoter shall be entitled to forfeit the booking amount paid by the allottee.
In light of the above analysis, since no Agreement for Sale has been registered, the same cannot have binding effect to enforce the termination/forfeiture clauses. The Respondents are not entitled to forfeit the booking amount in the absence of a registered Agreement for Sale as per Rule 20 of the Real Estate (Regulation and Development) (Agreement for Sale) Rules, 2016.
Therefore, this Authority directs the Respondents to refund the entire amount of Rs. 4,63,624/- (Rupees Four Lakh Sixty-Three Thousand Six Hundred and Twenty-Four Only) without any interest to the Complainants, Mr. Pramod Gupta and Mr. Shivansh Gupta within 45 days of issuance of this order.
However, if the Respondents fail to comply with the refund directive within the stipulated timeframe, interest at the rate of 10.80% per annum (MCLR+2%) shall accrue on the outstanding amount in favor of the Complainants and shall be payable by the Respondents from the expiry of the 45-day period until the date of actual payment.
The case is disposed of accordingly.
No order as to costs.