• Cancellation of booked flat

I have booked a flat in a pre-launch stage before 2 months and no agreement or sale deed has been made between me and builder. There is no agreed upon consensus on the amount to be deducted in case of cancellation. Now for cancellation builder is charging 5% of property value which amounts to Rs 5,00,000L and i have already paid Rs 22,00,000  in cheque format to him. As there is no agreement how can i trust the word from builder if deducted value is 5% or some xyz %. Also if no agreement is done am i and builder bound to any rules of cancellation. What are my legal options in this case?. How should i go forward with this issue?
Asked 2 years ago in Property Law from ,
1) you must have been given  a receipt by builder for Rs 22 lakhs . 

2) the receipt must be mentioning terms and conditions . 

3) send an email to builder that you want to cancel the booking and request builder to refund sum of rs 22 lakhs paid to him 

4) let builder mention in writing that 5%  of paid amount would be cancellation amount . 

5) accept deduction of Rs 5 lakhs under protest . 

6) then move consumer forum against builder for refund of balance amount with interest
Ajay Sethi
Advocate, Mumbai
23240 Answers
1219 Consultations
5.0 on 5.0
A. In my opinion, you have signed the application form at the time of flat booking and there are any hidden terms and conditions mentioned in the backside of the Booking Form. Kindly re check your application form or receipt. Usually, Terms and Conditions of the documents will stand. However, if any hidden terms and conditions, there are no possibilities of payment of stamp duty on the hidden terms and conditions.

B. Secondly, you can put a mail or send a legal notice  to the builder by claiming the Rs. 22 lakh then the builder will be replied back by mentioning the 5% deduction amount.

C. Subsequently, you can move a Consumer Court under deficiency in the Service and unfair trade practice.
B.T. Ravi
Advocate, Bangalore
736 Answers
30 Consultations
5.0 on 5.0
You did a mistake by not signing any document.
However , now the question on cancellation charge or its quantum is now open to interpretation to court and for this I would advise you to file case in consumer forum.
Devajyoti Barman
Advocate, Kolkata
5207 Answers
54 Consultations
4.9 on 5.0
1) the builder is bound to furnish you application form signed by you for booking flat . you can send notice to builder to furnish copy of signed application form submitted by you . 

2)once you have signed application form which mention the terms and conditions it would be binding upon you . 

3) once sale deed has been entered into it by the parties it would determine rights and liabilities of parties 

4) investing in pre launch projects is a risky proposition . the builder may not have all the approvals in place . you have to check whether builder has clear and marketable title to project , whether builder has obtained IOD and commencement certificate from muncipal corporation . unless builder has a proven track record never invest in such projects
Ajay Sethi
Advocate, Mumbai
23240 Answers
1219 Consultations
5.0 on 5.0
1. This is yet another case of no due diligence being carried out by the prospective buyer at the time of booking the flat. 

2. Had an agreement been executed between you and him it would have clearly delineated the rights and liabilities which would have accrued in the event that either of you could not fulfill his promise.

3. Application form cannot be equated with an agreement. 

4. Since the agreement has not been executed the builder can deduct a reasonable amount towards cancellation charges. What is a 'reasonable amount' is a matter of debate and even court may uphold his claim to deduct 5% of earnest money. This is why I always stress on flawless documentation of legal rights at the time of purchasing the property, more so form private builders.

5. Coming to the legal recourse available to you, you may send a lawyer's notice through your lawyer to the builder asking him to refund the entire amount. If he does not respond to the notice then move to consumer court and seek refund of the amount with interest.
Ashish Davessar
Advocate, Jaipur
18102 Answers
448 Consultations
5.0 on 5.0
1. You have paid Rs.22 Lakhs without having any agreement or without going through the payment terms mentioned in the brochre or application form?

2. However, since you have no document mentioning what will be deduction in the event of flat cancellation, you are suggested to pay the amount under priotest and take the balance amount,

3. After that file a consumer case before the local District Consumer Dispute Redressal Forum alleging defiiciency in service and unfair business practice claiming back the said deducted amount, damage and cost.
Krishna Kishore Ganguly
Advocate, Kolkata
12112 Answers
231 Consultations
5.0 on 5.0
1) is the payment schedule given to you in writing . in the earlier query raised by you no such schedule was mentioned . 

2)the builder can recover 5%of booking amount . that would be the earnest money . builder cannot seek to recover 5%of flat value . 

3) it is advisable to contact a local lawyer . all correspondence exchanged with builder has to be vetted by your lawyer . file complaint before consumer forum against the builder
Ajay Sethi
Advocate, Mumbai
23240 Answers
1219 Consultations
5.0 on 5.0
it is your own case that you dont have copy of application form signed by you . 

However if there is no clause regarding cancellation charges  in application form /receipt issued by builder then  builder cannot seek to recover 5%of total cost of flat from you as cancellation charges
Ajay Sethi
Advocate, Mumbai
23240 Answers
1219 Consultations
5.0 on 5.0
you have made these payments to the builder by cheque correct, also the builder must have acknowledged receipt of the amount of Rs.22 lakhs, on the receipt is there any mention of any deduction if booking is cancelled, if no receipt was issued file 420 case of cheating against the builder and file a complaint before the consumer court for the recovery of the entire amount together with interest and damages. You are bound to succeed.
Kiran N. Murthy
Advocate, Bangalore
765 Answers
50 Consultations
5.0 on 5.0
A. The builder has the right to deduct the 5% amount on the earnest money i.e, Rs. 11,00,000/-  subject to deduction clause must be exist in any agreement or receipt or application form. so he cannot exercise his right over the total consideration amount in respect of deduction.

B. In case the builder has no mention in any clause regarding deduction of the 5% towards the flat cancellation, you can lodge the complaint before the Consumer Forum under the deficiency in service and unfair trade practice. The builder has committed ample mistake without entering into any formal agreement as required by the general law. 

C. You have one more option to lodge the complaint under cheating under Section 420 of the IPC as rightly pointed out by Mr. Kiran N. Murthy.
B.T. Ravi
Advocate, Bangalore
736 Answers
30 Consultations
5.0 on 5.0
Recently I had opportunity to represent some one facing similar situation:
1.Application form is a printed form which contained conditions of application favorable to the defendant and were totally arbitrary and constituted unfair trade practices.
2. Application form had conditions  describing that the said application does not constitute any offer or definitive allotment or any agreement to sell and the applicant does not become entitled to the provisional and /or final allotment of the unit, notwithstanding the fact that the company may have issued a receipt in acknowledgement of the money tendered the said application It further read that the application shall become definitive only after the execution of the agreement by an authorised signatory of the company.  

3. No agreement was executed by the parties and thus the said application had never become definitive. In the absence of an agreement  the allotment was to be cancelled at the instance of the defendant only, which being arbitrary was illegal.
4. The terms and conditions provided that the so called earnest money shall be 15% of the total consideration This term is against the very concept of earnest money. The earnest money is a definite sum deposited at the time of entering into a transaction showing good faith of the buyer. It merges into sale price. The initial deposit made by the applicant as mentioned in the payment plan was towards IDC, Basic and EDC and none was taken as earnest money as the contract was not finalized. All the acts performed by the defendant as mentioned by  it in the application form were provisional and in the absence of any agreement between the parties no condition in the application form was executable. 
5.The interms of the application form , the possession of the premises were to be handed over within 36 months of starting construction. It gives an uncertainty to the terms of contract which was to be entered later as to when the construction would start The applicant could not be kept into dark as to stipulated date of start of construction.
The above grounds can be helpful to you in fighting your case which seems imminent .
H. S. Thukral
Advocate, New Delhi
516 Answers
125 Consultations
5.0 on 5.0
1. Earnest money in this case would be the booking amount and not the flat amount. 

2. You can pay the amount under protest and thereafter recover it by moving to consumer forum on the ground of deficiency in service.
Ashish Davessar
Advocate, Jaipur
18102 Answers
448 Consultations
5.0 on 5.0
1. It is clear now that your legal rights have not been documented.

2. As mentioned in my preceding reply, the builder can deduct the amount at earnest value only  i.e Rs.11,00,000.

3. Your legal remedy will begin by issuing a lawyer's notice to the builder to refund the remaining amount,. If he does not comply with the notice then move to consumer court for refund immediately.
Ashish Davessar
Advocate, Jaipur
18102 Answers
448 Consultations
5.0 on 5.0
1) send email to builder that you want to cancel the booking for flat and seek refund of amount paid to builder . 

2) if builder fails to refund move consumer forum against builder for deficiency in service and seek refund of money paid with interest
Ajay Sethi
Advocate, Mumbai
23240 Answers
1219 Consultations
5.0 on 5.0
1. You can file a police complaint alleging that he is illegally refusing to refund you the entire booked amount,

2. Since there is no deduction clsuse mentioned in the application, the builder can not deduct any amount from what you have paid towards booking the flat,

3. The Application envelopes the agreement for booking the flat legally,

4. If any amount is deducted from your booking amount, file a consumer case as advised in my earlier post.
Krishna Kishore Ganguly
Advocate, Kolkata
12112 Answers
231 Consultations
5.0 on 5.0
You can fight it out in a court of law the unjust practice of enrichment of the builder.

Thanking you,
Subash M R
Advocate, Bangalore
176 Answers
8 Consultations
3.6 on 5.0
A. As discussed with you earlier point that the builder cannot deduct the amount on the total consideration amount.

B. There is no documentary proof to enter into Terms and Conditions, So kindly ignore your application form.

C. Issue a legal notice to the builder to refund the entire amount and lodge the complaint before the Consumer Forum under Unfair Trade Practice and Deficiency in the service.
B.T. Ravi
Advocate, Bangalore
736 Answers
30 Consultations
5.0 on 5.0
keep that image safe. at this stage no sale deed can be executed because builder only allotted a flat in your name and there is no rule that a person can claim ownership over the flat which is allotted to him. your advance money shall not be treated as earnest money because earnest money is given with a condition that  remaining condition shall fulfilled in stipulated time by the buyer and if he failed to do so then earnest money will be forfeited.  

in your case there is no condition remains, you have paid that money only for allotment, builder is not in position to transfer that flat so he also has no right to claim remaining money  so this amount shall be treated as installment of flat. you should send notice for giving receipt of first installment. if builder refuses to give receipt of that installment than you can claim before consumer forum. 
 
if no notice, towards terms and conditions, is provided by the builder then he can't impose any terms, if he do so then it'll not applicable on you. it is rule that conditions should be bring in mine at or before signing of agreement.
Shivendra Pratap Singh
Advocate, Lucknow
2752 Answers
41 Consultations
4.9 on 5.0

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