Haryana RERA Upholds Cancellation Of Flat's Booking, Orders Builder To Refund After Deducting 10% Of The Basic Sales Price

Background Facts

Homebuyer (Complainant) booked a flat in the builder's (Respondent) project named Smart World Orchard situated in Sector 61, Gurugram. An agreement for sale was executed between the homebuyer and builder on 10.11.2022, with a total sale consideration of ₹1,84,64,899. According to the agreement, the builder was supposed to deliver possession on or before 31.12.2024.

Despite paying ₹55,39,513 out of the total cost of ₹1,84,64,899, the builder cancelled the allotment of the flat on 02.05.2023 due to a delay from the homebuyer in paying the demand raised by builder on 08.12.2022.

The homebuyer contended that the delay in making the payment occurred because the builder's project was not on the approved list of Indian Overseas Bank, where the homebuyer applied for a home loan. Further, the homebuyer stated that he was ready to make the delayed payment with interest, but the builder refused to accept it.

Therefore, aggrieved by the cancellation of the allotment, the homebuyer filed a complaint before the authority seeking revocation of the cancellation and possession of the flat.

Observation and Direction by Authority

The authority referred to Clause 9 of the agreement for sale, which stipulated that the builder has the right to cancel the unit and forfeit the earnest money if the allotment of the unit is cancelled due to the homebuyer's default in making timely payments as per the agreed payment plan.

The authority observed that the builder gave the homebuyer enough chances to make the required payments and then finally cancelled the allotment of the homebuyer's flat on 14.03.2023. Additionally, under section 19(6) and section 19(7) of the Real Estate (Regulation and Development) Act 2016, the homebuyer has an obligation to make necessary payments in a timely manner. Therefore, the authority held that the cancellation of the allotment by the builder is valid.

Further, the authority noted that after cancelling the allotment, the builder refunded Rs.36,93,023/- to the homebuyer after deducting Rs.18,46,490/- as earnest money. To analyse whether this deduction was reasonable, the authority referred to the National Consumer Disputes Redressal Commission's decision in the case of Jayant Singhal and Anr. vs. M3M India Limited (CC/2766/2017), where it was held that 10% of the basic sale price is a reasonable amount to be forfeited as earnest money.

Therefore, the authority directed the builder to refund the amount paid by the homebuyer after deducting 10% of the basic sale consideration with 10.95% interest.

Case – Rajat Verma Versus Suposhaa Realcon Private Limited.

Citation - Complaint no - 2647 of 2023