Godrej Skyline Developers Must Refund Full Booking Amount with Interest, Says MahaRERA

The Maharashtra Real Estate Regulatory Authority (MahaRERA) has ordered Godrej Skyline Developers Pvt Ltd to refund the full booking amount paid by a homebuyer, along with interest. This decision came after MahaRERA determined that the terms of the contract between the homebuyer and the developer were coercive and invalid.

The case began when the homebuyer booked a flat in the "Forest Grove" project at Godrej Park Green, paying an initial booking amount of ₹2,02,070 for a flat valued at ₹42,66,775. Due to unforeseen financial difficulties and income insecurity, the homebuyer decided to cancel the booking and requested a refund. After discussing the situation with the builder's representative, the homebuyer was verbally assured that the booking amount would be refunded. Following this, the homebuyer formally communicated their cancellation request via email.

The developer acknowledged the cancellation request but sent a cancellation form with a clause stating that the entire booking amount would be forfeited. The homebuyer, unwilling to accept these terms, chose not to sign the form and instead sent a legal notice demanding a refund of the booking amount. The builder’s advocate, in response to the legal notice, argued that the terms of the booking application justified the forfeiture of 20% of the total flat cost as "earnest money" in case of cancellation. The homebuyer, dissatisfied with this justification, approached MahaRERA, seeking a refund of the booking amount along with 24% interest and compensation for mental and physical stress.

In its examination of the case, MahaRERA focused on the clause in the allotment letter, which required the buyer to return a signed copy within seven days. The authority observed that failure to comply with this condition would result in the automatic acceptance of the terms. MahaRERA found this clause to be coercive, as it limited the homebuyer’s ability to negotiate or reject the terms set by the developer. Referring to the Supreme Court’s ruling in the case of Pioneer Urban Land and Infrastructure Ltd. v. Govind Raghavan (2018), MahaRERA reiterated that contracts with unreasonable or unfair terms cannot be enforced, particularly when one party holds significant bargaining power over the other, leaving the other party with no real choice but to agree.

Additionally, MahaRERA reviewed the builder's claim that the booking amount represented "earnest money" that could be forfeited in the event of cancellation. The authority noted that the booking amount of ₹2,02,070 was significantly less than the 20% of the total sale price of the flat, as specified in the application form. Because the booking amount did not meet the criteria for earnest money, MahaRERA ruled that the builder could not forfeit the amount as "earnest money."

Final Order

MahaRERA directed Godrej Skyline Developers to:

• Refund the full booking amount of ₹2,02,070 to the homebuyer.
• Pay interest on the refunded amount from the date of payment until the date of refund.

This ruling highlights the importance of fairness and transparency in agreements between developers and buyers, particularly when standard-form contracts are involved. Developers are reminded that they cannot impose unfair or coercive terms on homebuyers. Moreover, the ruling emphasizes that homebuyers facing such unfair terms have the right to seek legal recourse.

Image source- maharera