Tribunal blocks bid by homebuyers for apartment allotment after exiting project, accepting refund

Representational image.

The Maharashtra Real Estate Tribunal (MREAT) has shot down a plea by a pair of homebuyers in the Mulund area of Mumbai for allotment of an apartment in a project after withdrawing from it and accepting the refund cheques, saying the developer was not required to do so.

The tribunal said though the homebuyers had written to the developer many times and had discussed staying on in the project, the developer had not issued them a fresh allotment letter. The tribunal noted that even after expressing their desire to remain in the project, the buyers did not return the refund cheques to the developer and retained them for one year.

The developer said it denied allotment to the homebuyers because it had relaunched the project with a different name with a new partner and contended that the prior booking was not maintainable now.

The two parties had jointly booked an apartment in the residential project in March 2006 for a total consideration of Rs 1.18 crore and paid Rs 1 lakh as earnest money.

In August 2006, the developer (Sheth Developers Pvt Ltd) issued an allotment letter to the homebuyers. However, in May 2008, the developer informed them that the project was not progressing due to various notifications and ordinances and asked the homebuyers to approach their office for cancellation of the allotment.

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Forest land issue

However, the homebuyers requested the developer not to cancel their allotment, according to a copy of the MREAT’s order. The developer then informed the homebuyers in June 2008 that material and labour costs had risen and asked them to pay an additional amount towards purchase of the apartment.

The developer claimed the project did not start because the forest department held back its approval. Saying that it would take time to sort out the matter, the developer asked the homebuyers to write in letters of cancellation and promised them refunds in a week. Based on the assurance, the homebuyers asked the developer to cancel their allotment in March 2009.

Following this, a newspaper article suggested that the forest land issue was set to be resolved very soon. The homebuyers then wrote to the developer in April 2009, requesting it to ignore their cancellation request and continue with their booking and allotment. However, these letters were returned to the homebuyers.

The developer issued five cheques amounting to Rs 11.83 lakh towards cancellation of allotment in June 2009. However, the homebuyers did not deposit the cheques.

“After homebuyers again went to meet the developer, the developer informed the homebuyers that if they want to continue with their booking, then they (developer) would provide the apartment as per terms and conditions of the allotment letter when the project revives or commences. Based on this assurance, the homebuyers expressed their willingness to continue with their booking,” the tribunal said in the order.

The homebuyers returned all the cheques in June 2010 on the understanding that the booking of the flat hadn’t been cancelled.

In March 2017, when the homebuyers visited the office of the developer, they were informed that the project had been relaunched and another developer was now associated with the construction.

The homebuyers wrote to the developer asking for allotment of an apartment in the relaunched project, as was promised. However, their efforts were in vain.

The homebuyers then filed a complaint with the Maharashtra Real Estate Regulatory Authority, asking it to direct the builder to allot an apartment to them or refund the amount of Rs 21.55 lakh with 10.5 percent interest and Rs 5 lakh compensation.

Complaint dismissed

The developer informed the regulator that the homebuyers had been allotted a flat in the Mulund project named Vasant Oscar in 2006, but it had to be abandoned in 2008 because the forest department withheld permissions. The developer said the flat was booked in the old project and not in the new project known as Montana, which was being built with another partner. The developer also said the homebuyers had exited the Vasant Oscar project and that their money had been refunded with interest.

The MahaRERA dismissed the complaint of the homebuyers and directed the developer to clear any pending dues within 30 days. The aggrieved homebuyers then challenged the order of the MahaRERA in the tribunal.

The MREAT said that it had established during the hearings that they wanted to exit the project. The tribunal cited how the homebuyers failed to return the refund amount cheques for one year even after expressing their desire to stay on in the project as the forest land clearance issue was being resolved.

The MREAT also said in its final judgment that there was no record to show the developer had accepted their proposal in any form, including a fresh allotment letter.

“It is not in dispute that the homebuyers have written letters to the developer from time to time and expressed their desire to remain in the project. It is significant to note that there is no material on record to show that the developer accepted the said proposal of the homebuyers and issued a fresh allotment letter to homebuyers. Moreover, we are of the view that the developer is not bound to accept the offer of the homebuyers,” the tribunal said in its judgment.

The tribunal stated that the claim of the homebuyers to direct the developer to allot them an apartment in the Montana project was not maintainable.

It said the MahaRERA had rightly held that the complainants were not allottees with respect to the project against which they had filed the complaint and therefore, the complaint was not maintainable.

“We are of the considered view that the impugned order is sustainable in law and therefore, no interference in the impugned order is called for in this appeal,” MREAT said.

According to Minesh Gala, the lawyer representing the developer, the RERA Act is clear about the definition of an allottee and once they exit a project, they cease to be homebuyers and cannot claim relief under the RERA Act.

“Also, in this case, the project was taken over from the old developer by a new developer, and there was no written promise by the old developer on issuing fresh allotment. It is a settled law that once you exit something, you cannot again claim it unless there is some written agreement,” Gala said.