Regulator's Decision on Payment Obligations
The Maharashtra Real Estate Regulatory Authority (MahaRERA) has issued a directive to Larsen & Toubro (L&T) to take only 2% of the amount previously paid by a non-resident Indian (NRI) homebuyer and return the rest. This decision follows a comparable case involving Godrej Properties.
Case Specifics
L&T Realty, a division of the conglomerate, developed a project in Mumbai's Kurla neighborhood. The NRI homebuyer had paid more than Rs 25 lakh toward the project’s total cost of Rs 2.29 crore. However, as the remaining amount was not paid, L&T canceled the reservation. L&T offered the buyer Rs 17 lakh, with a cancellation charge of more than Rs 8 lakh, or approximately 3.49 percent of the total flat price.
MahaRERA, in its order, instructed L&T to deduct no more than 2 percent of the total amount paid upon cancellation of the booking.
Precedent from Godrej Properties
Previously, on April 8, Moneycontrol reported that MahaRERA had ordered Godrej Greenview Housing Private Limited, a division of Godrej Properties, to deduct only 2 percent (instead of 5 percent) and return the remaining funds. This ruling was for a buyer who had reserved and then canceled an apartment worth Rs 92 lakh at the Godrej Emerald development in Thane, near Mumbai.
The Buyer's Circumstances
The buyer, currently in the United Arab Emirates, had reserved a unit at the Emerald Isle-T10 project in Kurla, Mumbai, and received an allotment letter in March 2018. The buyer paid approximately Rs 25 lakh, which was 10.50 percent of the total cost. Due to the termination of the bank subvention scheme, the buyer could not complete the transaction.
In a subvention scheme, the buyer, developer, and buyer’s lender enter into a three-way agreement. The buyer initially contributes up to 10% of the total cost, with the financial institution bearing the remaining amount. Equivalent monthly installments start once the buyer gains possession of the property.
Legal Argument and Decision
L&T argued before MahaRERA that the complainant (homebuyer) failed to appear to sign the sale agreement despite its efforts, a claim the buyer disputed. The developer, during the MahaRERA conciliation forum, offered to reimburse the buyer Rs 17 lakh. However, they could not agree on the sum, and the consent terms remained unsigned.
The buyer cited COVID-19 as a reason for being unable to travel to India and execute the sale agreement. Apart from the refund, the buyer asserted that the sale agreement remained unsigned, so he was not obligated to pay the developer.
Despite the developer’s request in June 2019, MahaRERA stated in its order dated March 11 that the buyer had not explained why he had not paid the stamp duty and registration fees required to complete the sale agreement.
The MahaRERA order noted, 'despite the respondent’s repeated correspondences, all of these facts point to the complainant’s flimsy justifications for avoiding timely payment and the execution of the sale agreement.'
Given that the homebuyer requested to leave the project and receive a refund, MahaRERA ordered the developer to return the amount paid without interest, after deducting 2 percent of the total consideration (value).