• Delay in refund for plot booking cancellation

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..?
Asked 12 days ago in Consumer Law

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18 Answers

Hi, you can either approach to RERA or Consumer Court. It is better you can approach Consumer Court. 

Pradeep Bharathipura
Advocate, Bangalore
5617 Answers
338 Consultations

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 

Ajay Sethi
Advocate, Mumbai
97223 Answers
7850 Consultations

 

Complaints before RERA disposal  would be faster 

 

 

consumer forum may take more time for disposal 

Ajay Sethi
Advocate, Mumbai
97223 Answers
7850 Consultations

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 stepyou can serve a formal legal notice on the developer, demanding an immediate refund with a defined timeline. If that too does not helpthen 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 cancellatione-mails correspondence and an acknowledgment receiptUnder 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.

 

Anik Miu
Advocate, Bangalore
10285 Answers
121 Consultations

You can file complaint to consumer court and seek refund 

Prashant Nayak
Advocate, Mumbai
32660 Answers
206 Consultations

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 

Ajay Sethi
Advocate, Mumbai
97223 Answers
7850 Consultations

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.  

Ravi Shinde
Advocate, Hyderabad
4263 Answers
42 Consultations

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

 

 

Ajay Sethi
Advocate, Mumbai
97223 Answers
7850 Consultations

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.  

Ravi Shinde
Advocate, Hyderabad
4263 Answers
42 Consultations

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.

 

T Kalaiselvan
Advocate, Vellore
87425 Answers
2348 Consultations

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. 

T Kalaiselvan
Advocate, Vellore
87425 Answers
2348 Consultations

You can file a complaint with the facts and the documentary evidences without going for any particular section to lodge your complaint.

T Kalaiselvan
Advocate, Vellore
87425 Answers
2348 Consultations

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.

T Kalaiselvan
Advocate, Vellore
87425 Answers
2348 Consultations

Dear Client,

Since your booking 
has been cancelled and the refund is delayed for more than 70 days, there are legal remedies availableFile 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; thereforedelay in refunds may attract penalties. Under the Consumer Protection Act2019, 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.

 

Anik Miu
Advocate, Bangalore
10285 Answers
121 Consultations

- 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 

Mohammed Shahzad
Advocate, Delhi
14641 Answers
224 Consultations

You can approach the court even in above circumstances 

Prashant Nayak
Advocate, Mumbai
32660 Answers
206 Consultations

1. Key Legal Remedies Available

Approach Under RERA


  • Eligibility: Since this is a RERA-registered project, RERA has jurisdiction to address grievances related to non-compliance with refunds.

  • Filing Complaint:

    • File a formal complaint under RERA citing the developer’s failure to refund the amount despite cancellation.

    • Relevant Provisions: Although there is no specific section for refunds post-cancellation in your case, argue based on the general obligations of the promoter under Section 18 of RERA, which mandates refund in cases of default.


  • Relief: RERA can order the developer to refund the booking amount with interest for the delay.

Approach Consumer Court


  • Grounds: Unfair trade practices and deficiency in service for failure to process a refund within a reasonable timeframe.

  • Relief Sought:

    • Refund of booking amount.
    • Interest on delayed refund.
    • Compensation for harassment and mental agony.


  • Cost: Filing fees in Consumer Court are nominal, based on the claim amount.

Legal Notice

  • Before approaching RERA or Consumer Court, send a legal notice demanding the refund within 15 days.
  • If they fail to comply, you can escalate to the appropriate forum.

2. Pros and Cons of RERA vs. Consumer Court

Aspect

RERA

Consumer Court

Cost

Nominal filing fee.

Nominal filing fee.

Timeframe

Generally faster (1-6 months).

May take longer (6 months to 2 years).

Scope

Limited to real estate disputes.

Broader scope; allows claims for harassment.

Relief

Focused on refunds and penalties.

Includes compensation for mental agony.

3. Steps to Take


  1. Draft and Send a Legal Notice:

    • Demand the refund with interest.
    • Highlight RERA registration and obligations under the law.


  2. File Complaint with RERA:

    • Provide evidence of booking, cancellation acknowledgment, and communication history.
    • Seek an expedited order for a refund with interest.


  3. Alternative: File a Consumer Court Complaint if you seek additional compensation for mental harassment.

4. Practical Advice


  • Follow-Up Aggressively: Sometimes a well-worded legal notice itself prompts the developer to act.

  • No Agreement Concern: The absence of a formal agreement works in your favor, as the cancellation was timely and the refund is overdue.

  • Act Promptly: Developers often delay refunds to discourage claims. Taking legal action will put pressure on them.

If you need assistance with drafting the legal notice or filing a complaint, consider consulting a legal professional. Hope this helps. If you could spare two minutes to write a review, it would be greatly appreciated and bring immense happiness to read it. Thank you!

Shubham Goyal
Advocate, Delhi
322 Answers

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

  • Delaying the possession of the property beyond a reasonable time.
  • Using advance payment or deposit money for new projects or personal use.
  • By misrepresentation, where the property does not meet promised specifications,etc.

 

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.

*****

 

Kishan Dutt Kalaskar
Advocate, Bangalore
6193 Answers
491 Consultations

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