Voluntary Flat Booking Cancellation Does Not End Homebuyer's Allottee Status Until Full Refund: Telangana REAT

The Telangana Real Estate Appellate Tribunal has held that a homebuyer who voluntarily cancels a flat booking does not lose the status of an allottee merely because a cancellation deed has been executed.

It held that the allottee continues to retain that status until the developer refunds the entire agreed-upon amount.

A bench of Chairperson Justice A. Santhosh Reddy, Judicial Member P. Pradeep Kumar Reddy and Administrative Member Vemula Sreekar upheld the Telangana Real Estate Regulatory Authority's direction requiring Aliens Developers Private Limited to refund the remaining ₹2 lakh to homebuyer Bakki Sneha.

The tribunal later disposed of the appeal after noting that the refund had been made and rejecting the developer's objections.

"The cancellation of allotment becomes final only when the entire refund amount is remitted back to the complainant as agreed. Since the cancellation has not attained its finality, the 2nd respondent/complainant continues to be recognized as an allottee, rendering the appellant's contention that the 2nd respondent/complainant has ceased to be an allottee untenable.", the tribunal ruled.

Sneha booked a flat in the developer's project on May 31, 2020, and paid an advance of ₹2.50 lakh. She later decided to cancel the booking, and the parties executed a cancellation deed under which the developer agreed to refund the amount.

The developer refunded ₹50,000 in October 2022. The remaining ₹2 lakh was not paid despite repeated follow-ups, prompting Sneha to approach the Telangana RERA seeking the balance amount along with interest and costs.

The regulatory authority directed the developer to refund the outstanding ₹2 lakh within 30 days, failing which it would be liable for penalties under the act.

Before the tribunal, the developer argued that Sneha had voluntarily cancelled the booking without alleging any fault on its part. It contended that she was no longer an allottee and that the dispute arising from the cancellation deed was contractual in nature and could not be decided under RERA.

The tribunal rejected those objections. It observed that the cancellation could not be treated as final because the agreed refund had not been paid in full when the complaint was filed. It also noted that the cancellation deed relied on by the developer did not bear the date of execution or the developer's signature.

While considering the relief, the tribunal observed that Sneha had not produced substantial evidence explaining why she cancelled the booking. It also found that the developer had failed to adhere to the payment schedule recorded in the cancellation deed. It therefore upheld the direction to refund the balance of ₹2 lakh, while agreeing that she was not entitled to interest.

The tribunal recorded that the remaining ₹2 lakh had since been refunded and acknowledged before it. Holding that nothing further survived for adjudication, it disposed of the appeal without any order as to costs.

For Appellant (Aliens Developers Private Limited): Advocate M. Ashwin Reddy.