‘Flat buyers can opt out, claim refund if builder fails to provide amenities'

The MahaRERA in a recent judgment passed allowed a flat buyer to pull back from a project and also directed the developer to refund the amount paid by the buyer with interest The real estate body in its April 22 verdict observed ldquoMisrepresentation of facts in a sales brochure or advertisements luring customers entitles flat buyers to withdraw from the projectrdquo Experts have welcomed the decision and said that the rule of caveat emptor meaning let the buyer beware is also applicable for flat buyers under RERAThe disputeMahaRERA was hearing a dispute after a reconciliation attempt to amicably resolve the dispute between Jignesh and Gulab Khemani complainant and Shree Siddhivinayak Infrastructure and Reality did not yield any result The complainant had booked a 595square feet flat in an upcoming project for a total consideration of over Rs 110 crore in Borivli and had paid around Rs 55 lakh to the developer alreadyAdvocate Godfrey Pimenta for the complainants claimed ldquoThe complainants purchased the said flat in the respondentrsquos project vide letter of allotment dated April 30 2017 for a total consideration of Rs 11085960 The respondent had promised the amenities at the time of the booking but have denied the same now Further they complainants have till date paid Rs 5558312 to the respondent and as per the presentation shared by the respondent with them the possession of the flat was to be delivered on or before December 2019 However the respondent as the promoter of the project then proposed the date of completion as December 31 2021 which was later revised to June 30 2022 When the Khemanis had a meeting with the respondent in his office on January 6 2021 instead of resolving the issue the respondent threatened them with cancellation of the said booking The developer then sent an email the next day stating that since the Khemanis did not pay the amount for the 8th slab it was terminating the booking and threatened them with forfeiting 20 per cent of the agreement value and taxes etcrdquoHe added ldquoThereafter the complainants told the developer that they wished to withdraw from the project as per sections 12 and 18 1 of the RERA Act and sought the refund of the amount paid along with the interestrdquoRespondent refutes claimsThe respondent represented by Advocate Bharati Hire refuted the claim of the complainants and filed an affidavit stating that the complainants are in flagrant violation of sections 196 and 197 of the RERA Act as they did not make timely payments It denied that the complainants were forced to cancel the booking due to misrepresentation and added that at the time of purchase of the flat the complainants were made aware that the layout design elevation plan etc shall undergo an amendment The affidavit further added that there has been no amendment to the plans as alleged by the complainantsThey further added that the complainants were asked to pay the stamp duty registration amount and to register the agreement for sale but they failed to do so and that as per clause 5 of the allotment letter upon failure to make timely payments the booking stands terminated The clause further states that the amount paid shall stand forfeited and the complainant shall be liable to reimburse the expenses incurred by the respondentFurther the said allotment has been signed under the provisions of the Maharashtra Owners of Flats Act 1963 and as such the parties are bound by the provisions of the MOFA Hence no reliefs should be granted to the complainants and the complaint be dismissed with cost said the respondentMahaRERA observation and orderDr Vijay Satbir Singh Member 1 of the MahaRERA bench observed that the complainants agitated for violation of section 12 of RERA which clearly provides that if the allottee makes any booking on the basis of any notice advertisement brochure and has sustained any loss he is entitled to seek refund of the entire investment along with interestHe stated ldquoThe complainants in this case believed the representation and information published by the respondent promoter in the brochure advertisement which declared the date of possession of this project as December 2017 Believing the said information the complainants seem to have booked the said flat Hence the respondent after giving any specific date of possession cannot be entitled to change it subsequently while registering this project with MahaRERArdquoFurther the MahaRERA has also noticed that complainants have put their hard earned money for booking of the said flat and paid substantial amounts to the respondent while the respondent has failed to perform its duties and liabilities as a promoter of a MahaRERA registered project and kept the complainants in lurch Moreover the respondent went ahead and unilaterally terminated the said booking on January 1 2021 for non payment of outstanding dues despite the fact that it has failed to complete the project on agreed date of possessionIn view of this the MahaRERA in its order allowed the complainant to withdraw from the project and directed the respondent to refund the entire amount paid by complainants with interest at the rate prescribed by MahaRERA within a period of two monthsAdvocate Pimenta said ldquoThis is an eye opener for developers who sell dreams by promising several amenities by way of issuing colourful brochures that if they fail to deliver the promised amenities including possession date specified they shall be held liable and responsible This will deter them from backing out from the said representations and assurances made to flat buyersrdquoMahaRERA Bar Association reactsAdvocate Anil Drsquosouza secretary of MahaRERA Bar Association said ldquoCaveat emptor extends to the seller as well warning it to be prudent and state only what is tangible visible and deliverable importantly in terms of possession date We have filed cases on promoters on such promised but not delivered amenities facilities interior finishing visagravevis bareshell flats etc as well It is heartening to note that there are several new orders of the MahaRERA now on Section 12 which deals with veracity of advertisementbrochures etcrdquoldquoIn the absence of a registered agreement or even an allotment letter buyers can prove the promise of the possession dates vide the advertisementsbrochures or any other formal communication by the promoters We are extremely happy with the order Consumer the key stakeholder in the realty industry should be protected because itrsquos he who brings in the revenuerdquo he concludedExpert viewAdvocate Vinod Sampat founder and president of Flat Users Residents Welfare Association said ldquoWhen a builder is making certain promises whether those promises are in the agreement or in the brochure the same are binding and have to be complied with In the event the same have not been complied with it amounts to an act of deficiency of service and unfair trade practice for which the flat purchaser can take action against the builder by approaching the consumer court or RERA courtrdquoldquoThe landmark judgments of the Supreme Court in the Jayantilal Investments Vs Madhuvihar Cooperative Housing Society Limited case held that whatever has been mentioned in the brochure have to be complied with It is an admitted fact that brochures are shown to flat purchasers and various amenities are promised therein Whenever the amenities shown in the brochure are not provided for it amounts to curtailment of the amenities Further the laws of the land stipulate that as per section 7 of the Maharashtra Ownership Flats Act no alterations can be made in the building plan without the consent of the flat purchasersrdquo said SampatldquoWhen a person is looking at the brochure he expects those amenities to be given to him If the brochure is misleading and those amenities are not provided then action can be taken against the builder Many times builders in small footnote write that this is just for indicative purpose However from the court point of view the same has got no legal relevance Once a submission is made in the brochure the same has got to be complied withrdquo he concluded22 AprilDay the MahaRERA bench gave its verdict