{"id":30,"date":"2025-06-02T11:49:21","date_gmt":"2025-06-02T11:49:21","guid":{"rendered":"https:\/\/mudralegal.com\/blog\/?p=30"},"modified":"2025-06-02T11:49:43","modified_gmt":"2025-06-02T11:49:43","slug":"forfeiture-of-booking-amount-by-builder-deemed-unfair-and-unreasonable-relief-granted-under-rera","status":"publish","type":"post","link":"https:\/\/mudralegal.com\/blog\/forfeiture-of-booking-amount-by-builder-deemed-unfair-and-unreasonable-relief-granted-under-rera\/","title":{"rendered":"Forfeiture of Booking Amount by Builder Deemed Unfair and Unreasonable: Relief Granted Under RERA"},"content":{"rendered":"\n

In a significant judgment, the Maharashtra RERA Appellate Tribunal<\/em> has ruled that forfeiture of booking amount by the builder amounts to an unfair and unreasonable trade practice<\/strong>. The Tribunal emphasized that such arbitrary action violates the provisions of the Real Estate (Regulation and Development) Act, 2016 (RERA)<\/strong>, thereby directing the builder to refund the amount withheld from the homebuyer.<\/p>\n\n\n\n

Case Overview: Refund Denied on Loan Ineligibility<\/h2>\n\n\n\n

The case revolves around a homebuyer who booked a flat in the Lawns and Beyond<\/em> project in Andheri, Mumbai<\/strong>, developed by M\/s Omkar Ventures Pvt. Ltd.<\/strong> The total consideration of the flat was \u20b91.36 crores. During a property exhibition, a channel partner of the builder<\/strong> assured the buyer that if her housing loan was not approved<\/strong>, the entire booking amount would be refunded<\/strong>.<\/p>\n\n\n\n

Based on this assurance, the buyer paid \u20b91 lakh as Expression of Interest (EOI)<\/em> and \u20b96.95 lakhs as application fees<\/em>. An Allotment Letter dated December 5, 2017<\/strong> was executed. However, when the buyer was unable to secure a home loan, she requested cancellation and refund of the amount paid.<\/p>\n\n\n\n

Shockingly, the builder returned only \u20b91 lakh and forfeited \u20b96.95 lakhs<\/strong>, citing the terms of the allotment letter. Despite repeated requests, the builder refused to return the amount, prompting the buyer to file a complaint before MahaRERA<\/strong>.<\/p>\n\n\n\n

Initial MahaRERA Decision and Appeal<\/h2>\n\n\n\n

While disposing of the complaint, MahaRERA<\/strong> upheld the forfeiture, stating that it was in accordance with the terms and conditions<\/em> of the Allotment Letter, which allowed forfeiture of up to 10% of the consideration amount.<\/p>\n\n\n\n

However, unsatisfied with the decision, the buyer approached the Maharashtra RERA Appellate Tribunal<\/strong>, seeking justice.<\/p>\n\n\n\n

Appellate Tribunal Observations: Biased Clauses and Unfair Terms<\/h2>\n\n\n\n

The RERA Appellate Tribunal<\/strong> closely examined the case and made the following critical observations:<\/p>\n\n\n\n

    \n
  • The terms of the Allotment Letter were ambiguous, one-sided, and against the spirit of RERA<\/strong>.<\/li>\n\n\n\n
  • Builders cannot enforce arbitrary clauses<\/strong> in contracts that put homebuyers at a disadvantage.<\/li>\n\n\n\n
  • The RERA Act, 2016 is a welfare legislation<\/strong>, designed to protect the interests of homebuyers<\/strong>, and builders must not bypass its intent through vague agreements.<\/li>\n\n\n\n
  • Citing the Supreme Court’s ruling in Pioneer Urban Land and Infrastructure Ltd. v. Govindan Raghavan<\/em>, the Tribunal reaffirmed that contracts containing unreasonable and one-sided terms cannot be enforced<\/strong>, especially when one party holds a weaker bargaining position.<\/li>\n<\/ul>\n\n\n\n

    Moreover, the Tribunal acknowledged the email communication from the builder\u2019s channel partner<\/strong>, which assured a full refund in case of loan rejection. This assurance was held to be binding, given that the channel partner was acting on behalf of the builder.<\/p>\n\n\n\n

    Tribunal’s Verdict: Refund Ordered<\/h2>\n\n\n\n

    Based on the above findings, the Tribunal concluded that forfeiture of the booking amount was illegal and unjustified<\/strong>. It directed M\/s Omkar Ventures Pvt. Ltd.<\/strong> to refund the entire forfeited amount of \u20b96.95 lakhs<\/strong> to the buyer.<\/p>\n\n\n\n

    Impact on Homebuyers and the Real Estate Sector<\/h2>\n\n\n\n

    This ruling serves as a landmark precedent<\/strong> for similar cases involving:<\/p>\n\n\n\n

      \n
    • Forfeiture of booking amounts by builders<\/strong><\/li>\n\n\n\n
    • Unfair and one-sided clauses in allotment letters<\/strong><\/li>\n\n\n\n
    • Homebuyer protection under the RERA Act<\/strong><\/li>\n<\/ul>\n\n\n\n

      The judgment is a strong message to real estate developers<\/strong> that they cannot exploit homebuyers through misleading promises and arbitrary contractual terms. It also reinforces that booking amounts cannot be forfeited if the buyer is not at fault<\/strong>, especially in cases involving loan rejection<\/strong> or misrepresentation<\/strong> by the builder or their agents.<\/p>\n\n\n\n

      Conclusion: A Step Towards Fairness in Real Estate Deals<\/h2>\n\n\n\n

      This judgment upholds the objective of RERA<\/strong> \u2013 to ensure transparency, accountability, and protection for homebuyers<\/strong> in the real estate sector. Builders must now exercise greater caution in drafting their agreements and refrain from enforcing unjust forfeiture clauses<\/strong>.<\/p>\n\n\n\n

      Homebuyers facing similar issues should not lose hope. Legal remedies under RERA and appellate forums<\/strong> are available to ensure their hard-earned money is protected from arbitrary builder practices.<\/p>\n","protected":false},"excerpt":{"rendered":"

      In a significant judgment, the Maharashtra RERA Appellate Tribunal has ruled that forfeiture of booking amount by the builder amounts 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