State Consumer Disputes Redressal Commission
Achin Garg vs M/S. Land Mark Apartments Pvt. Ltd. on 17 March, 2026
IN THE NATIONAL CONSUMER DISPUTES REDRESSAL COMMISSION
NEW DELHI
RESERVED ON : 27.11.2025
PRONOUNCED ON : 17.03.2026
CONSUMER COMPLAINT NO. 1089 OF 2017
Shri Achin Garg
S/o Shri Ajay Garg
R/o R-12/15,
Raj Nagar, Ghaziabad (UP) Complainant
Versus
M/s Land Mark Apartments Private Limited
(Through its Chairman)
Plot No. 85-P, Institutional Area,
Sector 44, Gurgaon (Haryana)
Also at
M/s Land Mark Apartments Private Limited
(Through its Chairman)
Plot No. 04 Vipul Square Sushant Lok 1
Gurgaon (Haryana) Opposite Party
BEFORE:
HON'BLE DR. INDER JIT SINGH, PRESIDING MEMBER
HON'BLE DR. JUSTICE SUDHIR KUMAR JAIN, MEMBER
For the Complainant Mr. Devender Goel, Advocate
For the Opposite Party Ms'. Anjalika Sharma, Advocate
ORDER
DR.INDERJIT SINGH, PRESIDING MEMBER
1. This Consumer Complaint has been filed by the Complainant against Opposite Party as detailed above, inter alia praying for directions to the OP(s) to:-
(i) hand over the possession.
(ii) award costs and litigation expenses of Rs. 1,50,000/-.
(iii) pay interest @18% p.a. on delay of possession as the OP have intention to charge interest on minor delay.
(iv) pay rent @40000/- per month, which complainant is paying outside as possession not given with Rs.5/- per sq.ft, penalty as per agreement.CC 1089 of 2017 Page 1 of 15
»if
(v) provide the Completion Certificate from the authority and don't force the complainant to have possession without completion certificate;
Or in alternative If possession is not possible, OP be directed to return all the amounts deposited with compounding interest @18% quarterly, from the date of deposit till the realization of said amount along with litigation expenses to the tune of Rs. 1,50,000/-.
vi) award damages to the tune of Rs.l crore as explained in the body of the complaint.
vii) grant permission to the Complainant to plead and pray for alternative prayer(s) if so required, at a later stage.
2. Notice was issued to the Opposite Party vide order dated 09.05.2017 with the direction to file written version within a maximum of 45 days from the date of receipt of notice in the Complaint. The OP did not file the written version within the stipulated period. Vide order dated 12.09.2017, another opportunity was granted to the OP to file the written version subject to payment of cost of Rs. 10,000/- for the said delay in filing the written version. Despite, the opportunity granted to the OP to file written version, the OP did not file the same and its right for filing the written version was closed vide order dated 31.01.2018. The OP filed application IA/7442/2018 for condonation of delay in filing the written version. Vide order dated 18.04.2018, application for condonation of delay was allowed subject to payment of cost of Rs.20,000/- to the Complainant. Parties filed Written Statement/Reply, Rejoinder, Evidence by way of an Affidavit and Written Arguments/Synopsis etc.
3. Brief facts of the case, as emerged from the Complaint are that: -
On 13.10.2011, the Complainant booked independent villa/floor/unit on GF-17 having super built up area 1600 sq.ft, on the ground floor on Plot No. 17 Size 230 sq.yds. at Sushant Lok-1, Gurgaon Haryana for a total consideration of Rs. 1,42,50,000/-. Possession was to be given within 24 months, from the date of booking. Agreement was executed on 28.01.2012. The complainant paid approx. 65% of the consideration amount i.e. Rs.95,43,807/- (including service tax) till 19.10.2012. On enquiring from time to time between the period from 28.01.2014 till April, 2016, the OP did not reply regarding the status of possession of the said Villa/floor/unit. On 04.05.2016, the OP sent mail for cancellation of the unit and refunded amount of Rs.58,93,727/- after deducting Rs.36,50,080/- deposited as booking amount, which was in actual Rs. 14,25,000/- (10% of the total amount) from the total amount paid by the complainant in 2011. Thereafter, the complainant sent emails and contacted the company official for restoring of independent villa and for giving the date of possession in writing so that payment can be made, but received no reply.
On 13.09.2016, the complainant sent mail - (a) for restoring the booking as CC 1089 of 2017 Page 2 of 15 he was ready to pay the balance amount on date of possession. The possession date, was still not confirmed by the company, (b) for refund of balance payments as net amount to receive RS.36,50,080/- + interest due from 2011. On 08.10.2016, the complainant sent a legal notice, but no reply was received. Hence, the Complainant is before the Commission, with the above prayers.
4. The OP in their written statement/reply stated that:
(i) the complaint is liable to be dismissed on the ground of misstatement and concealment of facts on the part of the complainant. It has been wrongly stated by the complainant that he had been making timely payment of all the dues to the OP and there was no default on his part in any manner. The complainant agreed to purchase the unit in question by paying booking amount i.e. 10% of the total consideration. The complainant opted construction linked plan and was required to pay as per the mutually agreed payment plans. Builder Buyer Agreement was signed by the parties on 28.01.2012 and the timely payment was the essence of the contract (Clause
6). The complainant was always in default in making payment of the due amount as per the agreed plan. Vide letter dated 22.01.2012, OP intimated to the complainant that the unit allotted to him was cancelled.
ii) On 26.01.2012, Complainant requested for revocation of cancellation of the booked unit with a promise to make the due payments in time. Soon after having the allotment of his unit restored, the complainant went in default once again. Repeated reminders were sent to make the payment, but to no avail. Vide letter dated 04.09.2012, his allotment was again cancelled. Once again, on the request of the complainant, the allotment was restored.
iii) Vide letter dated 17.05.2013, complainant was served with demand letter of the then pending amount of Rs.28,47,000/-. Since the complainant failed to pay the said amount, a reminder was sent on 03.12.2013.
iv) Because of repeated defaults in payment by the Complainant, the allotment of the unit in favour of the complainant was cancelled by the OP on 06.02.2014.
v) The OP had completed the construction in the last quarter of 2013 and thereafter applied for grant of Occupation Certificate/Completion Certificate. The Competent Authority/District Town Planner issued the Completion Certificate vide Memo dated 13.02.2014.
vi) Vide letter dated 09.08.2014, Complainant was offered physical possession of the unit and was also requested to make the balance of payments. Simultaneously, vide letter dated 09.08.2014, a reminder for payment of balance amount of Rs.51,51,637/- was also sent to the Complainant. Despite the fact that the unit was complete, OC had been CC 1089 of 2017 Page 3 of 15 issued, possession had been offered, the complainant deliberately chooses not to make the balance payment and take possession of the unit. Consequently, the OP cancelled the allotment of the said unit, which was communicated to the Complainant vide letter dated 02.09.2015. Despite the said communication, complainant chose not to turn up, hence, the OP had no option but to refund the amount due to the Complainant, after deducting the earnest money and interest levied on delayed payment as per the terms and conditions of the builder agreement dated 28.01.2012. Rs.58,93,727/- was refunded to the Complainant vide cheque dated 03.05.2016, which was got encashed by the complainant and the amount stood transferred from OP's account on 07.05.2016. There was neither any protest raised nor any effort made by the Complainant to revert to the OP and endeavoured to have his unit restored by making the balance payment.
vii) Since the unit was free and available for allotment with the OP, the same was subsequently sold to another party on 13.11.2016.
viii) The aforesaid facts reveal that there was no deficiency in service on the part of the OP.
5. The case was heard at length from both sides on 27.11.2025. The said order, which captures the brief facts of the case and rival contentions of the parties, is reproduced below:
"1. Heard counsel for both sides. Counsel for the complainant submitted that although in the complaint the prayer was for possession, as OP already sold the unit in question they do not wish to prolong the litigation and pray for refund. He submits that now they are pressing for refund of the balance amount, submitting further that they deposited an amount of Rs.95,43,807/- (although counsel for OP subsequently submitted that as per their record an amount of Rs.92,50,000/- only was paid) out of which OP has already refunded Rs.58,93,727/-, and balance Rs.36,50,080/- is still payable, and he is seeking direction to OP to refund this amount with reasonable rate of interest as decided by this Commission.
2. The complainant paid a booking amount of Rs.14,25,000/- as evidenced through receipt dated 13.10.2011 at page 15. Subsequently builder buyer agreement dated 28.01.2012 was signed. As per this agreement the total sale consideration is Rs.1,42,50,000/- and the complainant herein was allotted a unit on the ground floor GF-17 out of the three floors to be constructed i.e., ground floor, first floor and second floor in the building. The payment plan is at page 35, which is reproduced beiow:-CC 1089 of 2017 Page 4 of 15
1. On Booking 10% of Basic Sale Price
2. Within 30 Days of Booking 15% of Basic Sale Price
3. On Start of Construction 10% of Basic Sale Price
4. On Completion of Excavation 10% of Basic Sale Price
5. On Casting of Ground Floor Slab 10% of Basic Sale Price
6. On Casting of 1st Floor Slab 10% of Basic Sale Price
7. On Completion of Brick work &. Internal Plaster 10% of Basic Sale Price
8. On Completion of Internal Flooring 10% of Basic Sale Price
9. On Completion of External Plaster 10% of Basic Sale Price
10. On Intimation of Possession 5% + Registration + Stamp Duty
3. The complainant paid 75% of the total consideration amount i.e., installments up to serial no. 7 of the above stated payment plan. Demand letter for installment at serial no. 8 above was issued vide letter dated 17.05.2013 (page 44) however this amount was not paid. This led to cancellation of the unit. In fact, there were multiple cancellation letters, but based on the request of the complainant on many occasions, the cancellations were withdrawn. The first cancellation letter was issued on 22.01.2012 (page 53 of the reply of OP). Complainant made a request on 26.01.2012 to revoke the cancellation (page 54). Then second cancellation was issued on 04.09.2012 (page 55) and third cancellation on 06.02.2014 (page 58) and fourth and final was issued on 02.09.2015 (page 62). The OP has forfeited an amount of Rs.36,50,080/- and the present complaint has been filed seeking refund of this amount with interest. Counsel for OP has drawn our attention to various clauses of the builder buyer agreement referred to above, in particular those pertaining to the cancellation and builder's right to forfeit the earnest money (clause 6 of the agreement) and clause 4 which defines the earnest money to be equal to 15% of the sale consideration. The OP builder has forfeited not only the 15%> of the sale consideration being the earnest money but also interest on delayed payment, in all a total of Rs.36.50 Lakhs has been forfeited. It is the case of the OP builder that they have actually suffered loss due to the complainant not making payment and taking possession, as they have sold the unit in question to a third party at a loss. They have drawn our attention to the allotment letter and builder buyer agreement in favour of the third party (page 65 and 66 of their reply), as per which the total sale consideration was Rs. 1.27 Crore as against the original sale consideration of Rs. 1.42 Crore at which the unit was sold to the complainant, thereby suffering a loss of Rs. 15 Lakhs. Counsel for OP also submitted that they have also paid huge interest on the money invested during the period the CC 1089 of 2017 Page 5 of 15 complainant did not make payment and the unit remained unsold from the date of the offer of possession to the complainant till it was resold to another person. Hence, they have justified their forfeiture of the total amount of Rs.36.50 Lakhs.
4. Counsel for complainant on the other hand contended that the reason for non-payment of the Sth installment was because of unauthorized construction of the basement by the OP, which was not as per the original plan. They have drawn our attention to the report of the Local Commissioner, who was appointed as per this Commission's order dated 11.04.2019. However, he has not been able to show us any evidence/document or communication to the OP which would indicate that the reason for non-payment of the demand raised by letter dated 17.05.2013 was on account of unauthorized construction of the basement.
Counsel for OP in this regard drew our attention to the builder buyer agreement which mentions the basement and also to the OC at page 59 of their reply under which basement for domestic storage purpose only has also been approved as part of the OC.
5. Although initially counsel for OP raised a preliminary objection of maintainability stating that the complaint is time-barred, but subsequently realizing that the cause of action arose when they finally cancelled the unit on 02.09.2015 and the present complaint having been filed in April 2017 was well within two years, did not press further with the maintainability issue.
6. In view of the foregoing, the only issues for consideration in the present case are:
a) Whether OP builder is entitled to/justified in forfeiting any amount from out of the amount paid by the complainant.
b) Ifyes, the quantum of amount which OP is entitled to forfeit.
c) Whether the complainant was justified in not making the payment of the demand raised vide letter dated 17.05.2013, that is the Sth installment onwards.
d) Whether OP builder can, white forfeiting the amount of earnest money, also forfeit an amount towards interest on delayed payment by the complainant.
7. After hearing both sides, judgment reserved.
8. Both sides have the liberty to fie copies of the case laws they wish to rely on within one week from today."
CC 1089 of 2017 Page 6 of 156. We have carefully gone through the relevant clauses of the Builder Floor Buyer Agreement (BFBA) dated 28.01.2012 entered into between the Complainant and OP. As per Clause 1 of this agreement, the total sale consideration is Rs. 1,42,50,000/-. As per clause 4 of the said Agreement, 15% of total sale consideration payable as per Clause 1 has been classified as earnest money, which is liable to be forfeited in case buyer withdraws the allotment. Clause 6 deals with forfeiture in case of default. This Clause is reproduced below:
"6. That the timely payment of each installment as mentioned in Annexure-I annexed hereto is the essence of this Agreement. In case any installment, as specified herein, is delayed, the BUYER / APPLICANT shall be liable to pay the due installment along with the interest @ 18% per annum compounded at the time of every succeeding installment. However, if the BUYER / APPLICANT fail to pay the installment within three months of its due date, with interest, as per payment plan annexed hereto, towards the consideration of the said Independent Floor, the BUILDER/DEVELOPER, at its sole discretion, shall be entitled to terminate this Agreement and to forfeit the earnest money and thereupon the allotment of the said Independent Floor shall stand cancelled and the BUYER / APPLICANT shall be left with no right or Hen whatsoever, on the said Independent Floor. However, the amount, if any, paid over and above the earnest money shall be refunded without interest by the BUILDER / DEVELOPER after adjustments of interest on delayed payments, cheque return charges, and deduction of other amounts non- refundable in nature, if any due from the BUYER / APPLICANT."
7. The first cancellation letter dated 22.01.2012 states that booking amount has been forfeited. The said letter is reproduced below:
"Subject: Cancellation ofyour unit GF -17 in "Landmark A venue "
Dear Str/Madam, We want to inform you that the unit you have booked in our project "Landmark Avenue" at Sushant Lok-I, Sec-43, Gurgaon, Haryana has been cancelled. As per the payment schedule installment was due. Despite repeated reminders and follow-ups there were no response from your side. Therefore, now we are forced to cancel your booking and forfeit the booking amount leaving no right of yours on that particular unit.
So, this letter should be considered as cancellation ofyour unit."
8. Two more cancellation letters dated 04.09.2012 and 06.02.2014 were also issued on similar lines. The said letters are reproduced below:
CC 1089 of 2017 Page 7 of 15 1Letter dated 04.09.2012 "Subject: Cancellation ofyour unit GF -17 in "Landmark A venue"
Dear Sir/Madam, We want to inform you that the unit you have booked in our project "Landmark Avenue" at Sushant Lok-I, Sec-43, Gurgaon, Haryana has been cancelled. As per the payment schedule installment was due. Despite repeated reminders and follow-ups there were no response from your side.
Therefore, now we are forced to cancel your booking and forfeit the booking amount leaving no right of yours on that particular unit.
So, this letter should be considered as cancellation ofyour unit."
Letter dated 06.02.2014 "Subject: Cancellation of unit no.17 on Ground Floor in our project "Landmark A venue "
Dear Sir/Madam, After careful consideration, we regret to inform you that the residential unit applied by you in our project "Landmark Avenue" has been cancelled due to non-payment as per the payment schedule, despite repeated reminders.
The registration amount paid by you against the unit has been forfeited as per the terms and conditions in the application form duly signed.
This communication should be considered as the final confirmation of the cancellation of the aforesaid unit.
Further, as per our company policy this unit has been allotted to another customer."
9. It is to be noted that even after issuing the final confirmation of cancellation letter dated 06.02.2014 reproduced above, which also states that the unit has been allotted to another customer, the OP vide its letter dated 09.08.2014 again issued a final remainder for offer of possession for the unit in question to the Complainant and on the same date i.e. 09.08.2014 a reminder for the due instalment was also issued. These letters are also reproduced:
Letter dated 09.08.2014 "Sub: Final Reminder for Offer of Possession for unit no.GF-17 in Landmark Avenue CC 1089 of 2017 Page 8 of 15 Dear Sir/Madam, This bears reference to the letter sent on 1.4 April 2014 regarding offer of possession for independent floor bearing unit no. GF-17 booked by you in our project "Landmark Avenue" at Sector-43, Gurgaon.
This is to bring to your notice that we will take 60 days to hand over physical possession, post your payment. The delayed payment is also attracting interest & or penalties. To expedite the physical handing over you are requested to make your payment immediately.
Please fee! free to call Mr. Ravi Dabas at 99-100-65616 for any further clarification."
Reminder dated 09.08.2014 "Subject: Reminder-Due Installment Dear Sir/Madam, This is with reference to your booking of 3BHK Ground Floor apartment bearing Unit No-GF 17 in our project Landmark Avenue. The following amount is due against your unit: as per the payment schedule. Installment Name Balance Dues (Rs.) Service Tax(Rs.) On Offer of Possession ________ 712500 __________ 26420 Previous Balance _________ 4272000 __________140717 Total_____________ _________ 4984500 167137 Total Amount Payable 5151637/-
You are. requested to please pay the current demand of Rs.51,51,637/- (Rupees Fifty One Lac Fifty One Thousand Si Hundred And Thirty Seven Only) immediately. Now Payment would attract penalties/ interest and also would delay the handing over process. Please ignore this demand tetter if you have already made the payment."
10. Subsequently, another cancellation letter dated 02.09.2015 was sent, which is reproduced below:
Letter dated 02.09.2015 "Re.: Cancellation ofyour unit in our project Landmark Avenue This has reference to the independent floor bearing unit no. GF-17 booked by you in our residential project "Landmark Avenue" situated at Sushant Lok-I, Gurgaon, Haryana.
We have not received the installment/s due post December 2012, despite CC 1089 of 2017 Page 9 of 15 repeated reminders. The unit was cancelled due to non payment via letter dated 6th February 2014. The same: trend was seen in January 2012, due to nonpayment your unit was cancelled and later revoked.
After detailed conversation and mutual understanding we revoked the cancellation of your booking and again asked you to make the payment due on offer ofpossession (100% Due) along with service tax. amount via reminder letter dated 09.08.2014.
We have also sent a final reminder letter dated 09.08.2014 wherein we stated that you shall be handed over your unit for possession post payment.
Till date you have not paid any Installments as stated above, after careful consideration we are left with NO OPTION rather than to cancel your unit. This unit stands cancelled in our records and set free to be allotted to other customer/s, leaving no right of yours on that particular unit. The registration amount paid by you against the unit will be forfeited as per the terms and conditions of the aforesaid unit.
For any clarification on the way forward, fee! free to contact the undersigned."
11. Subsequently, vide their letter dated 03.05.2016, a cheque for Rs. 58,93,727/- was sent to the Complainant after deducing the earnest money and interest on delayed payments. The said letter is reproduced below:
"Re.; Refund against your unit in our project Landmark Avenue This has reference to the independent floor bearing unit no. GF-17 booked by you in our residential project "Landmark Avenue" situated at Sushant Lok-j Gurgaon, Haryana.
The unit was cancelled due to non payment via letter dated 22nd January 2012. After detailed conversation and mutual understanding we revoked the cancellation of your booking after receiving your request letter dated 26th January 2012.
The same trend was seen after revoking your cancellation. We have not received the installments despite repeated reminders and forced to send the cancellation of your unit via letter dated 4th September 2012 & 6th February 2014, We have also sent a final reminder letter dated 9th August 2014 wherein we stated that you shall be handed over your unit for possession post payment. But again due to nonpayment despite this final reminder letter, we have sent a cancellation letter of your unit dated 2nd September 2015.CC 1089 of 2017 Page 10 of 15
Till date you have not reverted or paid any due installments as stated above, after careful consideration we are left with NO OPTION rather than to cancel your unit. This unit stands cancelled in our records and has been allotted to other customer /s, leaving no right of yours on that particular unit. Herein please find enclosed a cheque [bearing cheque no. 471600 of amount Rs.58,93,727/- (Rupees Fifty Eight Lacs Ninety Three Thousand Seven Hundred Twenty Seven only) dated 03.05.2016 drawn on IDBI Bank], towards refund against your unit post deducting the earnest money and interest on delayed payments as per the terms and conditions of the Builder Buyer Agreement Dated 28 January 2012. Please consider this as Full and Final payment against your unit in our project Landmark A venue,"
12. From the foregoing, it is clear that the Complainant did default in making the payments of due installments. Hence, the OPs were justified in cancelling the unit and forfeiting certain amounts. However, as regards the amount which the OPs can forfeit, we have considered the issue in the light of various judgments of Hon'ble Supreme Court and this Commission, some of which are referred to below. What constitute an earnest money and what would be a reasonable amount which the builder can forfeit in the event of a default by the allottee, was discussed at length by this Commission in DLF Ltd. Vs. Bhagwanti Narula 2015 SCC Online NCDRC 1613.
13. In Pioneer Urban Land & Infrastructure Ltd. Vs. Govindan Raghvan (2019) 5 SCC 725, Hon'ble Supreme Court observed that "a term of a contract will not be final and binding if it is shown that the fiat purchasers had no option but to sign on the dotted line, on a contract framed by the builder the incorporation of one sided clause in an agreement constitute an unfair trade practice as per Section 2 (r) of the Consumer Protection Act, 1986 since it adopts unfair methods or practices for the purpose of selling fiats by the builder , the appellant-builder cannot seek to bind the respondent with such one sided contractual terms." In Ireo Grace Realtech Pvt.Ltd. Vs. Abhishek Khanna & Anr. (2021) 3 SCC 241, Hon'ble Supreme Court held "Developer cannot compel apartment buyers to be bound by one-sided contractual terms contained in apartment buyers agreement"
14. In DLF Ltd. Vs. Bhagwanti Narula, 2015 SCC Online NCDR 1613, this Commission held that -
7 However, the question which primarily arises for consideration in this case is as what would constitute the "earnest money" and to what extent the Petitioner Company is entitled to forfeit the same. The contention of the petitioner is that as agreed by the parties in terms of Clause 8 of the Agreement, 20% of the sale price, irrespective of the stage at which the payment was made constitutes earnest money whereas the case of the complainant as submitted during the course of arguments was that only the amount of Rs. 63,469/- which was paid at the time of booking the apartment can be said to be the earnest money and only that amount could be forfeited.
CC 1089 of 2017 Page 11 of 158. In Maula Bux v. Union of India/1969) 2 SCC554, the Hon'bie Supreme Court quoted the following observations made by the Judicial Committee in Kunwar Chiranjit Singh v. Har Swarup-AIR 1926 PC 1- "Earnest money is part of the purchase price when the transaction goes forward; it is forfeited when the transaction falls through, by reason of the fault or failure of the vendee".
9. In Shree Hanuman Cotton Mills v. Tata Air Craft Ltd.-(1969) 3 SCC 522, the Hon'bie Supreme Court quoted the following characteristics of the earnest money-
"15. Borrows, inWcKte & Phrases, Vol. II, gives the characteristics of "earnest". According to the author, "An earnest must be a tangible thing. That thing must be given at the moment at which the contract is concluded, because it is something given to bind the contract, and, therefore, it must come into existence at the making or conclusion of the contract. The thing given in that way must be given by the contracting party who gives it, as an earnest or token of good faith, and as a guarantee that he will fulfil his contract, and subject to the terms that if, owing to his default, the contract goes off, it will be forfeited. If, on the other hand, the contract is fulfilled, an earnest may still serve a further purpose and operate by way ofpart payment."
After considering several decisions on the subject, the following principles were laid down by the Hon 'b/e Supreme Court regarding 'earnest':
(1) It must be given at the moment at which the contract is concluded.
(2) It represents a guarantee that the contract will be fulfilled or, in other words, 'earnest'is given to bind the contract.
(3) It is part of the purchase price when the transaction is carried out. (4) It is forfeited when the transaction falls through by reason of the default or failure of the purchaser.
(5) Unless there is anything to the contrary in the terms of the contract, on default committed by the buyer, the seller is entitled to forfeit the earnest".
The above referred principles were reiterated in Satish Batra v. Sudhir Rawai- (2013) 1 SCC 345. It would, thus, be seen that only that amount would constitute earnest money which is paid at the time of contract is concluded between the parties. Any payment made after the contract is concluded, cannot be said to be part of the earnest money. In the case before us, admittedly, only a sum of Rs. 63,469/- was paid to the Petitioner Company at the time the deal was concluded between the parties. Therefore, in view of the above said CC 1089 of 2017 Page 12 of 15 referred authoritative pronouncements of the Hon'ble Supreme Court, only the aforesaid forfeited amount can constitute earnest money.
10. In Maula Bux case (Supra), the Hon'ble Supreme Court took the following view with respect to forfeiture of the earnest money-
"5. Forfeiture of earnest money under a contract for sale of property movable or immovabie-if the amount is reasonable, does not fall within s. 74. That has been decided in several cases: Kunwar Chiranjit Singh v. Hat Swarup (t); Roshan Lal v. The Delhi Cloth and General Mills Company Ltd., Delhi (2); Muhammad Habibullah v. Muhammad Shafi (3); Bishan Chand v. Radha Kishan Das (4); These cases are easily explained, for forfeiture of a reasonable amount paid as earnest money does not amount to imposing a penalty. But if forfeiture is of the nature ofpenalty, s. 74 applies".
It would thus be seen that only a 'reasonable amount' can be forfeited as earnest money in the event of default on the part of the purchaser and it is not permissible in law to forfeit any amount beyond a reasonable amount, unless it is shown that the person forfeiting the said amount had actually suffered loss to the extent of the amount forfeited by him. In our opinion, 20%o of the sale price cannot be said to be a reasonable amount which the Petitioner Company could have forfeited on account of default on the part of the complainant unless it can show it had only suffered loss to the extent the amount was forfeited by it. In our opinion, in absence of evidence of actual loss, forfeiture of any amount exceeding 10%o of the sale price cannot be said to be a reasonable amount.
11. It was contended by the learned Counsel for the Petitioner Company that since the complainant had specifically agreed to deliver 20% of the sale price as earnest money, the forfeiture to the extent of 20% of the sale price cannot be said to be unreasonable, the same being inconsonance with the terms agreed between the parties. This was also his contention that so long as the Petitioner Company was acting as per the terms and conditions agreed between the parties, it cannot be said to be deficient in rendering services to the complainant. We, however, find ourselves unable to accept the aforesaid contention, since, in our view, forfeiture of the amount which cannot be shown to be a reasonable amount would be contrary to the very concept of forfeiture of the earnest money. If we accept the aforesaid contention, an unreasonable person, in a given case may insert a clause in Buyers Agreement whereby say 50%> or even 75%> of the sale price is to be treated as earnest money and in the event of default on the part of the Buyer; he may seek to forfeit 50%) of the sale price as earnest money. An Agreement for forfeiting more than 10%> of the sale price, in our view, would be invalid since it would be contrary to the established legal principle that only a reasonable amount can be forfeited in the event of default on the part of the Buyer. In Bharathi Knitting Company v. DHL Worldwide Express Courier Division of Airfreight Ltd.- (1996) 4 SCC 704, the Hon'ble Supreme Court accepted the contention that in an appropriate case, the Consumer Forum without trenching upon acute disputed question of facts may CC 1089 of 2017 Page 13 of 15 decide the validity of the terms of the contract based upon the fact situation and may grant relief, though, each case depends upon its own facts.
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13. For the reasons stated herein above, we hold that (i) an amount exceeding 10% of the total price cannot be forfeited by the seller, since forfeiture beyond 10% of the sale price would be unreasonable and (ii) only the amount, which is paid at the time of concluding the contract can be said to be the earnest money. "
15. One of the plea taken by the OPs for forfeiting the above stated amount is that they have suffered actual loss due to such cancellation which is evident that they have sold the said unit to another person at Rs. 1,27,00,000/- as against the sale consideration of Rs. 1,42,50,000/-. They have drawn our attention to allotment letter dated 30.11.2016 in favour of one Mr. Dhirendra Singh Datta and Mrs. Neeiam. The relevant extract of that letter is reproduced below.
"ALLOTMENT LETTER 30th November, 2016 To MR. DHIRENDRA SINGHDATTA AND MRS. NEELAM H. NO. 3211, DLF PHASE-4 GURGAON-122001, HARYANA MOB. NO. -9810229914 Dear Mr. Dhirendra Singh Datta and Mrs. Neeiam Sub: Allotment of Unit No. GF-17 at Landmark Avenue in favour of Mr. Dhirendra Singh Datta This is to inform you that we have received your application for purchasing of unit on Ground Floor in Landmark Avenue. We are pleased to inform you that Unit No. GF-17 has been allotted to you in our project Landmark A venue.
On behalf of the company I congratulate you and we will continue with good relationship in future."
16. This allotment letter was followed by a Builder Floor Buyer Agreement on the same date in which the consideration shown is Rs. 1.27 crores. It is to be noted that it was already stated by OPs in their letter dated 06.02.2014 that the unit has been allotted to another customer but details of such allotment to other customer prior to CC 1089 of 2017 Page 14 of 15 06.02.2014 have not been placed on record. Moreover, the final cancellation letter is dated 02.09.2015 (although the letter dated 06.02.2014 itself claims to be the final confirmation of the cancellation). Hence, the loss in selling the unit to the another allottee has to be considered, if such unit was sold immediately after final cancellation letter dated 06.02.2014 (or at the most 02.09.2015). The Builder Floor Buyer Agreement placed on record is dated 30.11.2016 i.e. more than 2 years apart from the said final cancellation dated 06.02.2014 (and more than 1 year apart from letter dated 02.09.2015). Hence, the variation in the sale price after such a gap and consequent loss, if any, cannot be attributed to the Complainant. Hence, we are of the considered view that the maximum which the OPs can forfeit in the present case is 10% of the sale consideration i.e. Rs. 14.25 lakhs. Hence, the OP is liable to refund the balance i.e. Rs.81,18,807/- (Rs.95,43,807/- minus Rs. 14,25,000/-).
17. After careful consideration of the entire facts and circumstances of the entire case, we partly allow the Complaint with the following reliefs to the Complainant/directions to the OPs:
a) OPs shall be entitled to forfeit a maximum of 10% of the sale price of Rs. 1,42,50,000/- i.e. Rs. 14,25,000/-. Such forfeiture shall be from out of first/initial payment(s) made by the Complainant.
b) OPs shall refund the balance from out of the total amount paid by the Complainant i.e. Rs.81,18,807/- (Rs.95,43,807/- minus Rs. 14,25,000/-) along with interest @6% p.a. from the date of each deposit till the date of actual payment. While making the balance payment, the amount already refunded i.e. Rs.58,93,727/- shall be duly accounted for, and interest liability on this amount shall cease on the date(s) this amount was paid.
c) Entire amount payable as per above orders shall be refunded within a maximum of one month from the date of this order, failing which total amount payable at the end of one month shall carry interest @9% p.a. from the expiry of one month of date of this order of actual payment.
d) Parties to bear their respective costs.
18. The pending IAs in the Consumer Complaint, if any, also stand disposed off.
Sd/-
( DR. INDER JIT SINGH ) PRESIDING MEMBER Sd/-
( DR. SUDHIR KUMAR JAIN, J.)
Jr/Court-3/AB/ MEMBER
CC 1089 of 2017
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