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MREAT stays MahaRERA order asking Godrej Properties to refund home buyer – Spectraa Real Estate Advisory

MREAT stays MahaRERA order asking Godrej Properties to refund home buyer

Maharashtra Real Estate Appellate Tribunal (MREAT) has stayed a MahaRERA order of August 2020 asking Godrej Properties Ltd to refund Rs 39 lakh forfeited by the developer from a home buyer from The Trees project in Vikhroli after terminating the agreements for two flats for alleged failure to stick to payment schedule.

Allowing the appeal, the tribunal bench comprising chairperson Justice (retd) Indira Jain and administrative member SS Sandhu said the appeal had challenged the jurisdiction of MahaRERA to strike down forfeiture clause in the agreements for sale and the material placed of record shows that the appellant had an arguable case on merits. The bench stayed the order pending final disposal of the appeal.

In its order dated August 13, 2020, MahaRERA had awarded refund of Rs 19.81 lakh and Rs 19.24 lakh for flats D 503 and 504 booked by home buyer Amit Agarwal. The buyer had approached MahaRERA with a complaint after the developer terminated his agreements and forfeited 20 per cent of the total consideration for his alleged failure to adhere to the payment timelines.

The MahaRERA order observed that the forfeiture clause did not give the complainant equal bargaining power. “When the model agreement under Maharashtra Ownership of Flats Act (MOFA) provides the refund of the consideration amount, I strike down the forfeiture clause in agreements as it amounts to unfair practice within Section 7 of RERA,” the order said.

During the appeal hearings, advocate Virendra Saraf, appearing for the developer, contended that by striking down the forfeiture clause in agreements, MahaRERA exercised the powers of Civil Court though it is not within the purview of RERA. He argued that the order effectively sought to rewrite contract between the parties, which is beyond RERA provisions. He also submitted that the order has wide ramifications as the findings regarding the forfeiture clause will ensure complete benefit to flat purchasers, and there will no penal consequences if flat buyers fail to meet their payment commitments. He sought immediate stay on the MahaRERA order.

Advocate Tanuj Lodha, appearing for the home buyer, strongly argued against the stay. He contended that the developer was not entitled to forfeit money as they have resold both the flats at higher prices and need not incur any loss. He submitted that the condition in the agreement regarding forfeiture is one sided as there is no such clause referring to developer’s obligation in case of default.

He contended that false allegations regarding delay in payment have been made just to forfeit the amount, to terminate agreements and find out new customers so as to get higher profits.

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