Provisional Flat Allotment Given As Loan Security Does Not Create Allottee Rights: Maharashtra RERA

The Maharashtra Real Estate Regulatory Authority (RERA) has recently held in a case that a provisional flat allotment issued merely as security for a loan did not conclusively establish a promoter-allottee relationship while dismissing a complaint by a man seeking a refund or possession of a flat in Shree Tirupati Greenfield's “Siddheshwar Gardens” project.

Member Ravindra Deshpande said the Provisional Reservation Letter relied upon by complainant Naresh Moturam Bhojwani had to be read in its entirety.

“Once a party signs and accepts a document, such party is presumed to have read, understood and accepted all the terms and conditions contained therein. The Complainant cannot selectively rely only upon those recitals which support allotment of the flat while ignoring the specific recital contained in Clause 6(3) regarding the transaction being security against loan.”, the authority observed.

As per Bhojwani's case, Shree Tirupati Greenfield had provisionally allotted Flat No. 1703 in “Marigold Wing B” of the Siddheshwar Gardens project on February 9, 2014, for a total consideration of ₹80 lakh. Bhojwani claimed to have paid ₹50 lakh towards the flat.

Bhojwani alleged that despite legal notices, the developer neither executed a registered Agreement for Sale nor handed over possession. He approached MahaRERA seeking a refund with interest or, alternatively, execution of the agreement and possession of the flat. He also sought project de-registration proceedings.

Shree Tirupati Greenfield, however, contended that the transaction was merely a loan arrangement secured through the Provisional Reservation Letter. Relying on Clause 6(3), it argued that the allotment was issued only as security against a loan and conferred no rights in the flat upon repayment of the amount.

The Authority noted that although the letter identified a specific flat and recorded receipt of ₹50 lakh, Bhojwani had also signed and accepted the clause treating the allotment as loan security.

It further found it significant that despite the transaction dating back to 2014, no registered Agreement for Sale was ever executed. Bhojwani also remained silent for nearly ten years before approaching MahaRERA.

“The conduct of the Complainant in remaining silent for almost ten years also assumes significance while appreciating the nature of the transaction and the reliefs presently sought,” the Authority observed.

The Authority also noted that Bhojwani had already initiated proceedings under Section 138 of the Negotiable Instruments Act before the Ulhasnagar criminal court based on dishonoured cheques allegedly issued towards repayment of the amount.

Holding that the complainant had substantially treated the dispute as a monetary recovery claim, the Authority said seeking possession and execution of an Agreement for Sale before MahaRERA was inconsistent with the stand already adopted.

“Two separate forums cannot simultaneously adjudicate upon substantially the same claim arising out of the same transaction. The Complainant is therefore at liberty to pursue appropriate remedies before the forum already seized of the dispute,” it held.

Consequently, the Authority said it was unable to conclusively hold that Bhojwani fell within the definition of an allottee. It dismissed the complaint, declined to grant costs, and left the parties free to pursue appropriate remedies before the competent court.

For complainant (Naresh Moturam Bhojwani): Advocate Prakash Kukreja.

For respondent (Shree Tirupati Greenfield): Advocate Animesh Gupta.