2021 (5) TMI 130 - AT - Indian Laws

Tribunal Deems Forfeiture Clause Unenforceable Under RERA, Orders Refund

The Tribunal found that the impugned order directing the Promoter to refund the booking amount to the Allottees was based on a non-existent document, ... Refund of booking amount to allottees - Allottees have claimed relief on the basis of clause 18 of 'model agreement' for sale as given under rules of RERA - HELD THAT:- In the instant case the transaction of sale and purchase of the flat is cancelled at initial stage. Allot-tees merely booked the flat and paid some amount towards booking and executed letter for request of reservation of the flat in printed form. Thereafter there is no progress in the transaction and neither allotment letter nor confirmation letter is issued by Promoter. Agreement for sale is not executed between the parties. Parties never reached to the stage of executing agreement for sale. There was no attempt to execute agreement on the part of either party. In such circumstances, Allottees cannot claim refund on the basis of binding effect at clause (18) of 'model agreement' for sale under rules of RERA - Transaction in the instant case is not governed by Section 18 of RERA. In this peculiar matter, though the claim of refund is not governed by any specific provision of RERA, it cannot be ignored that object of RERA is to protect interest of consumer. So, whatever amount is paid by home-buyer to the Promoter should be refunded to the Allottee on his withdrawal from the project. Regulatory Authority and Appellate Tribunal are having inherent powers under the Regulations framed under RERA to pass such orders which are necessary to meet the ends of justice. In exercise thereof in the instant case, it is in the interest of justice to direct the Promoter to refund the total amount paid by Allottee accordingly. In our view, the impugned order is not correct, proper and legal and therefore it deserves to be set-aside - Appeal allowed. Issues: Challenge to impugned order directing refund of booking amount by Promoter to Allottees.Analysis:1. Proper Application of Mind and Appreciation of Facts:- The impugned order was challenged on the grounds of incorrect application of mind and factual appreciation. The Allottees had paid the booking amount and a substantial sum towards the flat price but later decided to cancel the booking due to a medical emergency. The Promoter refused to refund the amount citing a clause in the 'request for reservation' form. However, the Tribunal found that the impugned order was based on a non-existent 'booking form signed by both parties,' rendering it incorrect and unenforceable.2. Applicability of RERA Provisions:- The Tribunal noted that the project fell under the purview of RERA, and the rights and liabilities of the parties were governed by its provisions. The Allottees canceled the transaction within four months, triggering a demand for a refund. The Promoter relied on a clause in the 'request for reservation' form to justify the forfeiture of the amount. However, the Tribunal emphasized that RERA aims to protect consumers' interests, and the clause imposing forfeiture was deemed unfair and unreasonable, contrary to the objectives of RERA.3. Validity of Forfeiture Clause:- The Tribunal analyzed the clause in the 'request for reservation' form that allowed forfeiture of a portion of the amount in case of cancellation. It was observed that the Allottees had not entered into an agreement for sale, and no allotment or confirmation letters were issued. The clause restricting the Allottees from withdrawing their reservation request was deemed unfair and one-sided. The Tribunal cited a Supreme Court judgment emphasizing that unfair and unreasonable clauses in contracts cannot be enforced, especially when one party has no meaningful choice but to assent to the terms.4. Interpretation of RERA Model Agreement:- The Promoter argued that the Allottees sought relief based on a clause in the RERA model agreement, contending that there was no violation of RERA provisions. However, the Tribunal clarified that since no sale agreement was executed, the clause in the model agreement did not apply. The Tribunal held that the Allottees' claim for a refund was not governed by any specific RERA provision but highlighted that the overarching objective of RERA was to safeguard consumers' interests, warranting a refund of the amount paid by the home-buyer.5. Inherent Powers of Regulatory Authorities:- The Tribunal invoked the inherent powers vested in Regulatory Authorities and Appellate Tribunals under the RERA regulations to ensure justice and prevent abuse of process. It directed the Promoter to refund the total amount paid by the Allottees, setting aside the impugned order as incorrect, improper, and illegal. The Tribunal allowed the appeal, ordered the refund, and directed the parties to bear their respective costs.---