Mumbai builder ordered to refund flat booking amount with 9% interest

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MUMBAI: The Additional District Consumer Disputes Redressal Commission, Mumbai Suburban, held that a general non-refundable clause in a flat booking form cannot by itself justify retaining a buyer’s money when the developer fails to prove actual loss or a valid basis for forfeiture.

This ruling was recently made by a Mumbai Suburban District Consumer Disputes Redressal Commission ordering a builder to refund a buyer's booking deposit alongside interest, compensation for mental agony, and litigation costs, bringing the total financial liability to Rs 2.35 lakh. The commission, comprising President Pradeep G Kadu and Member Gauri M Kapse, directed Poddar Riviera Phase, Kalyan, to refund Rs 1.47 lakh to complainant Shyamsunder Madanlal Varma, who had booked a flat in the project but sought cancellation after banks did not sanction a housing loan.Varma had paid Rs 1.47 lakh towards booking of a flat in Poddar Riviera Phase-I at Mharal Village near Shahad Station. After the loan was not sanctioned, Varma requested cancellation and refund. Varma said repeated phone calls and emails did not result in repayment, and a legal notice dated Feb 17, 2022 also failed to secure a refund.The opposite party did not appear before the Commission despite service of notice, and the matter proceeded ex parte.

The Commission relied on the payment receipts, legal notice and email correspondence placed on record by Varma.In the order authored by the commission noted, “The booking form contains a general stipulation that the booking amount and other charges would be non-refundable. The email correspondence dated Dec 23, 2021 and Dec 27, 2021 is significant. The opposite party itself agreed to refund the amount paid by the Complainant after deducting Rs.25,000.”The Commission found that Poddar Riviera Phase had not justified the proposed deduction. The order stated, “However, the Opposite Party has failed to establish any specific contractual terms and conditions justifying the forfeiture of Rs 25,000 in the circumstances of the present case.”The Commission further recorded, “There is no evidence on record to establish that the Opposite Party suffered any actual loss or that the proposed forfeiture of Rs 25,000 was justified.

The mere existence of a general non-refundable clause does not, in the facts of the present case, sufficiently justify retention of the Complainant's money, particularly when the Opposite Party itself agreed to refund the amount after deduction.

”Holding the conduct to be deficiency in service, the Commission said, “Therefore, the Opposite Party has failed to justify the retention of the Complainant's amount.

Their failure to refund the amount despite the Complainant's request amounts to deficiency in service.”

The Commission awarded Rs 1.47 lakh as refund, Rs 20,000 as compensation for mental agony and harassment, and Rs 10,000 as litigation costs, making the total immediate award Rs 1.77 lakh. The order directed compliance within 45 days, failing which Poddar Riviera Phase must pay 9 percent annual interest on Rs 1.47 lakh l from June 1, 2022 until actual payment. If interest is calculated up to the order date, the interest is about Rs 58,351, taking the total liability to about Rs 2.35 lakh, with interest continuing until payment in case of default.