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No Developer Can Book A Flat Without Project Registration, Rules Maharashtra REAT



No Developer Can Book A Flat Without Project Registration, Rules Maharashtra REAT

Mumbai: The Maharashtra Real Estate Appellate Tribunal ruled out the contention of a developer, that the provisions of the Real Estate (Regulation and Development) Act do not require developers to return the booking amounts to home buyers, maintaining a MahaRERA order to refund a buyer an amount of Rs. 1 lakh.

Sanjiv Gill, a homebuyer had booked a studio apartment at the UK Iridium project at Kandivali East, promoted by Damodar Suruchi Developers, by paying Rs. 1 Lakh on May 28, 2017. Gill demanded back the booking amount in September, not knowing it is non-refundable. The developer denied returning the amount.   

MahaRERA member Vijay Satbir Singh heard the case. The developer’s advocate argued that the complaint was not credible as no provision under RERA cites for refunding the booking amount. He contended that Gill was not an allottee as per RERA’s definition, as neither an allotment letter had been issued nor was any agreement for sale signed. He further drew attention to a clause included in the application form signed by Gill, which described that if the booking is cancelled then the amount would be forfeited.

Mr. Singh stated that UK Iridium was registered with MahaRERA on August 17, 2017, and accepted the booking amount from Gill on May 28, when the project was not registered. Thus, the booking amount was accepted at a time when the project was not registered and hence the violation of Section 3 of RERA.

Additionally, he said that Clause 18 of the model form of agreement, recommended by MahaRERA, specifies that if parties failed to sign the agreement, the entire money paid by the allottee, including the booking amount, has to be returned without any interest.

A fine of Rs. 50,000 was imposed on the developer for violating Section 3 for booking the flat prior to registering it with MahaRERA.

Section 3(1) of RERA states, “no promoter shall advertise, market, book, sell or offer for sale any plot, apartment or building in any real estate project without registering the project with the real estate regulatory authority established under this Act.”

However, when the developer appealed against this order, Justice (retd.) KU Chandiwal dismissed the argument that Gill is not an allottee or that it will not attract provisions of Section 18 (1) of RERA. “These submissions are against the statute itself. When the project was registered by the promoter, it was but an obligation under the statute to quote specific date of handing over possession, and the other legal requirements including the development, any litigation, financial liability etc.”

He said that the order by MahaRERA, of refund without interest, did not demand an interference. Nonetheless, he approved of the developer’s appeal partially, particularly with regard to the fine amount. He ruled that although RERA came into effect from May 1, 2017 onwards, the Maharashtra government had extended the time frame for registration of ongoing projects till July 30. Consequently, the developer had registered his project in the given time, but MahaRERA recorded it on 17th August. As a result, there was no breach of Section 3, which invites penalty.

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