False information in publicity brochures of new projects will cost developers dearly as cited in a recent order issued by the Maharashtra Real Estate Regulatory Authority (MahaRERA).
The order issued by MahaRERA member Vijay Satbir Singh on April 22 for a project in the state allowed the homebuyer to withdraw from that with a refund and interest over false representation in brochures by the developer under Section 12 of the Real Estate Regulatory Act (RERA) 2016.
In this case, the booking of the project was done in April 2017. The brochure stated that the project would be completed in December 2019. The developers on registration with MahaRERA showed the project completion date as December 2021, instead of December 2019, and revised that till June 30, 2022, which was a misrepresentation, stated the order.
The order stated that the Marginal Cost Lending Rate (MCLR) of SBI plus 2% “is the interest prescribed by MahaRERA under the provision of the Act, along with the refund — which in effect would mean that the home buyer, who has paid Rs 55 lakh, would get additional Rs 15 lakh along with the refund”.
“This is a landmark judgement. It takes a serious note of the misrepresentation or fancy promises by the developers through their brochures. Under section 12 of the Act the buyer is entitled to claim refund of his money and compensation. The order is definitely in the interest of the home buyers,” MahaRERA member Vijay Satbir Singh said.
The homebuyer had lodged a complaint with the MahaRERA, seeking a refund along with interest in December last year under sections 18(1) and 12 of RERA.
The order issued by Singh noted that the complainant had put in the hard-earned money to book the flat and paid a substantial amount to the respondent. But even after accepting the amount from the complainants, the respondent failed to do their duty.
“The promoter of a MahaRERA-registered project left the complainant in the lurch after taking huge amounts from them and tormented them from 2017, the same year when RERA came into force” stated the order.
Moreover, the respondent went ahead and unilaterally terminated the booking for the non-payment of outstanding dues, despite failing to complete the project on the agreed date of handing over possession (December 2019) after accepting more than 20% of the amount. This was in violation of the provisions of MOFA, as well as Section 13 of RERA.
MahaRERA disposed of the matter by allowing the homebuyer to withdraw from the project, directing the builder to refund the entire accepted amount, along with interest at the rate prescribed by it (which is the marginal cost of funds based lending rate of the SBI plus 2% interest within a period of two months).
The current MCLR rate is 7% plus 2%, This meants that the interest levied is 9% per year for this order. “It would mean the total amount paid by the consumer, which is Rs 55 lakh plus 9% interest per year from the date of payment till the actual realisation of the said amount to the complainant. The allottee will get an additional Rs 15 lakh as interest,” a MahaRERA official said.