Hi, you can either approach to RERA or Consumer Court. It is better you can approach Consumer Court.
I had booked a plot from a well known plotted developer in Bangalore. Its been more than 60 days since I have sent a cancellation request via mail and they have acknowledged my cancellation as well by taking my bank details as well. But they haven't given any timeline on the refund. I have sent multiple emails and My enquiries are answered without any solid details on the status without providing estimated timeline of refund credit. What all options do I have with RERA as its a registered project and as a consumer to get my refund back as soon as possible..?
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Hi, you can either approach to RERA or Consumer Court. It is better you can approach Consumer Court.
Hello Pradeep Sir, Thanks for your response. If you can provide Pros and Cons of approaching RERA or Consumer Court in terms of time and money I have to spend, it would help me to decide. Thanks in advance
File complaint against builder before RERA and seek orders for refund of money with interest
2) in alternative you can file complaint before consumer Forres for refund of money with interest
Dear customer,
Since the project is RERA-registered, you are entitled to raise your complaint under the Real Estate (Regulation and Development) Act, 2016. As a first step, you can serve a formal legal notice on the developer, demanding an immediate refund with a defined timeline. If that too does not help, then you can raise a complaint through the website of RERA authority Karnataka, attaching a copy of the relevant documents which would include the details of booking, request for cancellation, e-mails correspondence and an acknowledgment receipt. Under the RERA Act, it is binding upon developers to perform in accordance with the agreement. Delay in refunds might incur penalties.
Hope that this helps you to solve your problem.
A follow up on everyone who have responded. I don't see any particular section under RERA for making a refund claim without deficiency of service or untimely completion. Can anyone guide me here..?
You are at liberty to cancel your booking before completion of project and seek refund of money payable by you
I presume project is registered with RERA
No details are given as to date of booking, reason for cancellation, whether there is any deficiency/delay by the developer etc. Still without any such reasons a consumer is entitled to cancel the deal. An agreement to sell also implies liberty to cancel the sale even if there is no such express cancellation clause. Absence of such clause will not restrain the buyer to cancel the agreement as such agreement without such clause is “unfair contract” as described under Section 2 (46) of Consumer Protection Act, 2019. Your option is the approach District Consumer Commission under the new Act. You will get refund with 12 per cent interest from the date of payment till realization as per the law laid by SC in M/s. Parsvanath.
Thank you Ravi Shinde sir. To add further details, There was no agreement made. Only booking was done by paying booking amount of 1 Lakh INR. The Project was in prelaunch state and after the launch I have cancelled the booking without any agreement. Its been 70+ days since the cancellation was done and no proper update on refund timelines were received. Hence I am looking for legal remedies. Thanks
You don’t have any agreement for sale
no allotment letter
project must not be registered with RERA as you made payment during pre launch stage
file complaint against builder before consumer forum, only
You can turn to advantage the fact that there is no written agreement. In such case whatever you claim as agreed will be accepted by District Consumer Commission provided it is reasonable. You can claim that you were assured a particular plot but a differed plot is offered. Such an assurance amounts of “misleading advertisement,” under Section 2 (28). Issue him a properly drafted lawyer's notice alleging the plot assured was a corner plot/road facing plot/north facing plot but now the plot booked is not as assured. Drafting of lawyer's notice is the key. File a consumer complaint in District Consumer Commission in spite of the project is RERA registered such complaint can be filed as the provisions of RERA are not in derogation of other laws under Section 88. You an refer to law laid down by SC in Vidya and others vs. Parsvanath Builders Limited (2024) 9 SCC 651 where it is held that builder is liable refund the full advance with 12 per cent interest.
You can issue a legal demand notice demanding the refund upon cancellation.
Subsequently, you can approach RERA with a complaint against the developer if it is a RERA registered project for refund of your booking amount.
A complaint before RERA in this regard will be disposed expeditiously when compared to that of the complaint filed before consumer commission.
You may enquire from your advocate about the cost and other procedures to be followed in this regard.
You can file a complaint with the facts and the documentary evidences without going for any particular section to lodge your complaint.
In the event of no agreement neither the project is RERA registered you may initiate legal action as per law by first sending legal demand notice communicating your decision to cancel the booking and demand return of your booking amount.
Failing to respond or comply with the demand made, you may file a money recovery suit to recover your amount.
Dear Client,
Since your booking has been cancelled and the refund is delayed for more than 70 days, there are legal remedies available. File a complaint under Section 31 of the RERA Act, 2016, through the Karnataka RERA website by attaching all supporting documents, including the booking receipt, cancellation email, acknowledgement, and correspondence. According to RERA, developers have to comply with their obligations; therefore, delay in refunds may attract penalties. Under the Consumer Protection Act, 2019, you can file a complaint in the Consumer Court for deficiency in service, claim refund with interest and compensation for mental distress. Sometimes, sending a legal notice to the developer demanding the refund within a specified timeline speeds up the process. If the methods do not work, then one may file a civil suit for recovery. RERA generally allows quicker orders whereas Consumer Court might consider more wide-ranging consumer grievances. Engage a lawyer to draft the notice and advise on the best way to achieve cost-effectiveness yet remain time-bound.
Hope that this helps you to solve your problem.
- As per Supreme Court in the matter of Fateh Chand (supra) , that a mere breach of contract by a buyer does not entitle the seller to forfeit the amount as received, unless, loss is proved to have been caused to the prospective sellers.
- Hence, if you are cancelling the agreement entered with the builder , then he cannot forfeit the paid amount by you.
- You can send a legal notice to the said builder for getting the refund
Builders and Developers – How to Recovery Advance paid to them
-Kishan Dutt Kalaskar
INTRODUCTION:
The concept of advance payment or deposit is part of a contractual relationship between a buyer and a seller in transferring immovable property. However, it differs from security money, which generally indicates a buyer's interest in said property. It is considered part of a 'purchase money', the due amount of which is supposed to be paid on a future date, complying with the agreement signed between the parties.
LEGAL RIGHTS OF PROSPECTIVE BUYER
Referring to the buyer's right under property law, a prospective buyer, under section 55(6)(b) of the Transfer of Property Act, 1882, is entitled to a charge on the property against the seller or anyone claiming it under him, for the amount of purchase money (advance deposit) paid by him as part of the sale agreement. Therefore, when the buyer has not defaulted or breached any terms of the contract thereof, he has all the rights to use legal remedies available to protect his rights against a seller, i.e., builder/contractor, to claim their money (advance payment) back or ask for specific performance if possible.
LEGAL RIGHT OF BUYER TO CLAIM COMPENSATION
In addition, as per section 21 of the Specific Relief Act, the party who suffers from a breach of a contract by any means is entitled to receive compensation for any loss incurred by the damages caused to him by the party who is at fault or broken a contract as a pecuniary compensation due to a breach or loss. In such instances where the seller or contractor refuses to fulfil contractual obligations, a buyer can also charge him for a penalty if a penalty clause is inserted in an agreement.
MODES OF MISUSING THE ADVANCE AMOUNTS BY THE BUILDERS OR DEVELPERS
The cases of payment fraud by the side of builders or developers are prevalent by several means, such as
The purview of applicable laws is explained hereunder:
RELEVANT ACTS
The Indian Contract Act, 1872
The primary provisions of law regulating advance deposit or earnest money are sections 73 & 74 of the Contract Act. As per the general rule of the contract, if a party infringes the terms of a contract by any means, the buyer has the right to cancel the contract and obtain a refund of the advance deposit along with interest and compensation for any loss incurred. Hence, a buyer of the property under a valid contract is safeguarded under this Act.
The Specific Relief Act, 1963
Under section 20 of the Specific Relief Act, a defaulting party under the terms of a contract can be held liable to perform precisely what has been mentioned in the contract. Therefore, in the instances where a buyer is cheated by a builder/developer of a property and if a builder takes an unfair advantage by which the buyer has extreme hardship, the Court in such cases may exercise discretion in granting specific performance as a relief to a defendant/buyer.
The Consumer Protection Act, 1986 and the Indian Penal Code, 1860
Consumer courts have imposed huge penalties in various matters and assured that the possession of the flat or property is handed to a prospective buyer at the earliest or the entire amount is refunded along with interest and compensation. In cases where the builder has cheated, or the developer has made false promises, the buyer can file a criminal case under the Indian Penal Code, 1860, for cheating, breach of contract, or delivery of poor-quality construction. He can also file a consumer complaint regarding deficiency of services, delay in possession, or non-delivery of property/flat.
The Real Estate (Regulation and Development) Act, 2016, and RERA (Real Estate Regulatory Authority)
The interest of home/property buyers is protected under this Act regarding safeguarding their rights where they can file a complaint against the builder or a developer. Under the RERA Act, a minimum of 70% of the buyer's money will be kept in a separate escrow account that will ensure that the fundscollected for a particular real estate project arenot diverted to other projects undertaken by the builder/developer. However, builders cannot ask for more than 10% of the property's value as an advance payment before the sale agreement is signed. It also states that claiming a refund of the payment or an advance deposit is an exclusive right of a buyer. Thus, in instances where a builder or developer has cheated or violated the terms of a contract causing any loss or inconvenience to a buyer, a buyer is eligible to claim an advance deposit made by him with interest or a full refund with interest post the due date for up to 10% every month until handing over the property. The methods you can use as buyers as a remedy to take legal action against a seller or a builder are mentioned below.
LEGAL METHODS FOR RECOVERY OF ADVANCE PAID
Send a legal notice
Sending a legal notice to a seller or builder is theforemost step in any property dispute,whether for payment recovery or for a specific performance where alegal breach of a contractual relationship has occurred. A lawyer or an attorney dealing with a property dispute or contract lawyer can assist in drafting a proper legal notice describing the appropriate grounds and reasons for it. If the builder refuses or doesn't respond within the stipulated time of sending such notice, he can take the next legal step in the procedure.
File a complaint under RERA
First, a buyer must check if the builder is registered under RERA. If yes, he can easily file a complaint online on the registered portal of RERA to raise a complaint against the seller to obtain relief and to claim a refund or advance payment.
Moving to a Consumer Forum
A buyer can also approach a consumer court to file a complaint against the seller for a criminal breach of trust or fraud. In addition, Consumer courts have ordered exemplary compensation like 65 lakhs and 18% interest compensation. In the matter of Unitech, Jaypee group was penalized with a 12% annual penalty for its NOIDA project.
Court Precedent
Videocon Properties Ltd. v. Dr Bhalchandra Laboratories and Others [(2004) 3 SCC 711]
In this case, the Supreme Court examined the nature of the advance deposit. The Court took the view that the words used in the agreement alone would not be determinative of the character of the "earnest money", but the intention of the parties and the surrounding circumstances must be considered to know whether an initial payment is an essential advance deposit.
Conclusion
When the contract contains a clause as to what is to be done with the advance deposit in the event of a breach of contract, the Court must be guided by the terms of the contract. Hence, the advance deposit will be refunded in case of non-compliance with the contract by the seller or builder. Additionally, when a buyer invests in a project approved by RERA, their rights as a buyer are secured. RERA ensures legal compliance and possession timings. Also, a buyer can claim an advance payment made to a builder as a booking amount if his loan application is dishonoured for any reason. One must know that the government lays out no rules or conditions regarding the cancellation of the house or refund the booking amount. It is subjective to your understanding of your builder or developer. So, the advance payment can be recovered in such cases, but a buyer might have to pay a cancellation fee, as mentioned by a builder in the agreement. If a buyer has not maintained the documents or documented the property purchase, he may not be able to get the refund. In this case, one can consider taking legal advice.
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