REFUND OF TOKEN MONEY BY BUILDER

Dear Client,
Section 11 of the RERA Act, 2016, allows cancellation of allotment only as per the agreement for sale. If an allottee defaults on payments or commits three defaults in installment payments, the builder may terminate or cancel the agreement after giving a 15-day written notice to the allottee. Upon termination, the builder must refund any paid installments within 30 days to the allottee/buyer, subject to adjustments. However, the forfeiture of earnest money must be reasonable and not exceed 10% of the consideration amount. According to Section 13(1) of the Act(RERA), a promoter shall not accept a sum more than ten per cent. of the cost of the apartment, plot, or building, as the case may be, as an advance payment or an application fee, from a person/buyer without first entering into a written agreement for sale with such person and register the said agreement for sale, under any law for the time being in force. The National Consumer Dispute Redressal Commission, New Delhi, in consumer case no. 2766/2017 titled as Jayant Singhal and Anr. Vs. M/s M3M India Ltd and the Supreme Court in the case of Sirdar K.B Ram Chandra Raj Urs Vs. Sarah C. Urs, (2015) 4 SCC 136 held that forfeiture of the amount in case of breach of contract must be reasonable, and if forfeiture is in the nature of a penalty, then provisions of Section 74 of Contract Act, 1872 are attracted, and the party so forfeiting must prove actual damages. After the cancellation of the allotment, the flat remains with the builder. As such, there is hardly any actual damage. So, it was held that 10% of the basic sale price is a reasonable amount to be forfeited in the name of earnest money. In the given scenario, if the housing complex is a registered project of MahaRERA, then serving a legal notice to the Builder, file a complaint against him under Section 31 of the Real Estate (Regulatory and Development) Act, 2016 before the Adjudicating Officer claiming a refund of booking money or deposited earnest money along with compensation for the deficiency in service. Or else you can file a complaint against the Builder for deficiency in service and unfair trade practice before the District. Consumer Commission under Section 35 of the Consumer Compensation Act, 2019, claiming a refund of the booking money or earnest money paid against the consideration money of the flat and compensation for harassment and the cost of litigation. You can also file a civil suit against the Builder seeking specific performance before a Civil Court, claiming damages and compensation and other relief. The complaint before the Consumer Court should be filed within two years from the date of the cause of action, It may be noted that you cannot raise your complaint/claim simultaneously before the Consumer Court and RERA for the same cause of action at a time. If required, consult or hire an Advocate for tailored advice to navigate the issue in the right way.