Haryana RERA Directs Pareena Infrastructures To Refund Homebuyer's Money, After Deducting 10% As Earnest Money

The complaint was filed by the homebuyer after the builder forfeited the paid-up amount due to the cancellation of the flat booking, following the homebuyer's failure to make timely payments.

Background Facts

The homebuyer (Complainant) was allotted a flat in the builder's (Builder) project named "MICASA," located at Sector-68, Gurugram, through an apartment buyer's agreement dated 23.07.2015. According to clause 13 of this agreement, the builder was obligated to deliver possession of the flat within four years from the agreement date.

The homebuyer paid a total of Rs. 17,16,952 in installments out of the total consideration of Rs. 83,32,455 to the builder. Despite receiving this substantial amount, the builder failed to deliver possession by the promised date.

In February 2020, the homebuyer secured a loan from SBI, which was disbursed in March 2020. However, due to the COVID-19 lockdown, the loan was canceled, not due to any fault of the homebuyer. Despite multiple requests and reminders from 21.09.2022 to 30.07.2023, the builder did not refund the amount or complete the project.

Additionally, the homebuyer discovered that the builder had canceled the booking and sold the flat to another customer in 2021 without informing them. Consequently, the homebuyer filed a complaint with the authority seeking a refund of the total amount paid, along with interest.

Contentions of Builder

The builder argued that the homebuyer regularly failed to make payments. The homebuyer did not pay their dues even after receiving demand letters on 24.06.2020 and 04.03.2022. Because of this, the builder sent a warning letter on 26.03.2022 before officially canceling the allotment with a cancellation letter on 30.04.2022.

Observation and Direction

The Authority referred to Clause 13 of the apartment buyer's agreement, which stated that under normal conditions and subject to unforeseen events (force majeure), the builder must complete the construction of the Building where the flat is located within 4 years from the start of construction or the signing of the agreement, whichever is later.

Therefore, based on Clause 13 the Authority calculated the due date for possession as 26.10.2020, considering the 4-year period from the start of construction on 26.04.2014, plus a 6-month extension due to the COVID-19 pandemic.

Further on the issue of the cancellation of the flat booking authority held that section 19(6) of RERA, 2016 imposes a duty on homebuyer to make the payment of the installments on timely manner, therefore builder's cancellation of the flat booking after homebuyer failure to make timely payment is valid.

The Authority observed that upon canceling the unit, the builder was obligated to return the paid-up amount after deducting the earnest money. However, the deductions made by the builder were not lawful according to the Supreme Court rulings in Maula Bux vs. Union of India (1970) and Sirdar K.B. Ram Chandra Raj Urs vs. Sarah C. Urs (2015), where it was held that forfeiture of the amount in case of breach of contract must be reasonable, and if the forfeiture is in the nature of a penalty, the provisions of Section 74 of the Contract Act, 1872 apply, requiring the party to prove actual damages.

The Authority held that since the flat remained with the builder after cancellation, there was hardly any actual damage. Therefore, the builder is liable to refund the paid-up amount of Rs. 17,16,952 after deducting 10% of the sale consideration of Rs. 83,32,455 as earnest money, with an interest at 11.10% p.a.

Case – Rajesh Ahuja Versus M/s Pareena Infrastructures Pvt Ltd

Citation - Complaint No. 4732 of 2023