Promoter can’t forfeit allottee’s savings arbitrarily: RERA appellate tribunal

The Haryana Real Estate Appellate Tribunal has made it clear that a promoter cannot arbitrarily forfeit the booking amount of an allottee. It ruled that authorities under the RERA Act were duty-bound to protect the buyer against such “illegal methods” employed by promoters in a dominant position.

The ruling came in a case where Appellate Tribunal Chairman Justice Rajan Gupta and Member (Technical) Rakesh Manocha ordered a promoter to refund the entire paid-up amount to the allottee along with annual nine per cent interest from the date of cancellation in September 2022 till realisation.

This judgment is significant as it reinforces the consumer-centric intent of the RERA Act, with the Appellate Tribunal ruling that a promoter cannot capriciously forfeit the booking amount, especially when an allottee may have invested life savings in the property. The ruling not only provides relief to the individual allottee, but also sets a precedent to deter promoters from resorting to such “illegal methods” of forfeiture in future.

The Tribunal asserted: “It cannot be lost sight of that an allottee may book a unit by remitting all his savings to the promoter. If entire amount is forfeited without any cogent reason, the allottee would not only be deprived of the unit, but his hard money as well. In case, a promoter, who is always in a dominant position, resorts to any illegal method for forfeiture of the booking amount, the authorities under the special enactment are expected to come to his rescue.”

Going into the background of the matter, the Appellate Tribunal observed it was not in dispute that the allottee booked a commercial unit in the promoter’s project at Gurugram after paying Rs18.50 lakh. The controversy arose over the allottee’s claim that a 50 per cent discount had been agreed upon in lieu of foregoing assured returns.

The booking application and allotment letter carried blank columns for area and price, prompting the allottee to repeatedly seek clarification by email in July 2022. The promoter, however, for the first time forwarded a cost sheet on July 17, 2022, quoting the price at Rs 7,950 per sq ft against the agreed rate of Rs 3,975 per sq ft, with the total cost calculated at Rs 3.44 crore.

The allottee immediately reiterated her claim regarding the agreed concession, but instead of addressing the issue, the promoter went ahead and issued an allotment letter on August 2, 2022, followed by a buyer’s agreement on August 6, asking her to execute the same.

Referring to the correspondence between the parties, the Tribunal added: “It is evident that there were deliberations between the appellant-allottee and respondent-promotor for grant of 50 per cent concession as the appellant-allottee had agreed to forego periodical payment of assured returns. It was, thus, not unreasonable for the appellant-allottee to expect that concession, as promised to her, would be granted”.