Provisional Flat Allotment Given as Loan Security Does Not Establish Allottee Rights: MahaRERA
Case Title: Naresh Moturam Bhojwani v. Shree Tirupati Greenfield
Case No.: Complaint No. CC006000000591428
The Maharashtra Real Estate Regulatory Authority (MahaRERA) has held that a provisional reservation or allotment letter issued merely as security for a loan does not, by itself, establish a promoter-allottee relationship under the Real Estate (Regulation and Development) Act, 2016.
The Authority accordingly dismissed a complaint filed by Naresh Moturam Bhojwani, who had sought possession or refund in relation to a flat in Shree Tirupati Greenfield's “Siddheshwar Gardens” project.
Dispute Over Provisional Flat Reservation
The complaint arose from a Provisional Reservation Letter relied upon by Bhojwani as evidence of his allotment in the project.
MahaRERA Member Ravindra Deshpande examined the document and held that it had to be read as a whole rather than by relying selectively on portions that appeared to support the complainant's claim.
A material term of the document, particularly Clause 6(3), indicated that the transaction was intended to operate as security against a loan.
Document Must Be Read as a Whole
The Authority observed that a party who signs and accepts a document is presumed to have read and understood its terms and conditions.
It therefore rejected the attempt to rely on the portions of the reservation letter referring to the flat while disregarding the specific clause describing the transaction as security for a loan.
MahaRERA observed:
“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 Authority further held that the complainant could not selectively rely upon the recitals concerning allotment while ignoring the specific contractual provision dealing with the nature of the transaction.
Promoter-Allottee Relationship Not Established
On an examination of the relevant documents and circumstances, MahaRERA concluded that the provisional allotment did not conclusively establish the existence of a promoter-allottee relationship of the nature contemplated under the RERA Act.
Consequently, the complainant could not claim the statutory remedies of possession or refund merely on the basis of the provisional reservation document.
The complaint was therefore dismissed.
Key Takeaway
The decision highlights the importance of examining the substance and complete terms of an allotment or reservation document before invoking remedies under RERA.
A document describing a flat reservation or allotment will not necessarily confer statutory allottee rights where its terms expressly establish that the transaction was undertaken as security for a loan rather than as a conventional sale or allotment of a residential unit.
