Earnest money forfeiture follows acceptance of enhanced allotment terms, but recovery is limited to the actual deposit made.

Where an allottee accepted the enhanced premium communicated by the authority, that communication was treated as part of the continuing allotment offer, and failure to comply with the payment condition within the time fixed by the court attracted forfeiture of earnest money. The forfeiture was limited to the amount actually deposited as earnest money under the earlier offer. Because the deposit was a fixed sum of Rs. 5 lakhs and not 10% of the enhanced premium, only Rs. 5 lakhs could be forfeited.

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Issues: Whether the respondents, having accepted the allotment on the enhanced premium communicated by the authority, were liable to forfeiture of the earnest money on failure to comply with the payment condition, and if so, the extent of the forfeitable amount.

Analysis: The later communication enhancing the premium was found to be in continuation of the earlier offer and allotment process, and the respondents were treated as having accepted that offer. On their failure to pay in accordance with the court-fixed time, the liability to forfeiture of earnest money arose. The forfeiture could, however, not exceed the amount actually deposited as earnest money under the earlier offer. Since the deposit was a fixed sum of Rs. 5 lakhs and not 10% of the enhanced premium, only that sum could be forfeited.

Conclusion: The respondents were liable to forfeiture of the earnest money, but the forfeiture was confined to Rs. 5 lakhs and not to 10% of the enhanced premium.

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