AI Drafter 
TaxTMI 
TaxTMI 
2025 (2) TMI 311
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....oked an Apartment with the Appellant in the project by the name "Godrej Summit" situated at Sector 104, Gurgaon, Haryana by an Application Form and submitted Rs. 10,00,000/- as application money. 2.2 On 20th June, 2014 by an allotment letter, the Appellant allotted an Apartment being Apartment No. C-1501 on the 14th floor in Tower 'C' to the Complainants in the above-mentioned project, pursuant to which an Apartment Buyer Agreement (hereafter referred to as "the Agreement") was entered into between the Parties. 2.3 On 20th June, 2017 the Appellant upon completion of construction applied to and subsequently received the Occupation Certificate from the Director, Town & Country Planning Department, Haryana. 2.4 On 28th June, 2017 the Appellant offered possession to the Complainants. The Complainants, however, sought cancellation of the allotment and further sought full refund of the amount paid. 2.5 On 29th September, 2017, the Complainants served a legal notice to the Appellant for refund of the amount paid totaling Rs. 51,12,310/-. 2.6 Thereafter, on 14th November, 2017, the Complainants filed a Consumer Complaint (No. 262 of 2018) before the NCDRC inter-alia praying ....
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....SP. 6. He further submits that, from the perusal of the email addressed by the Respondents to the Appellant, it was clear that though the Appellant had called upon the Respondents to take possession of the Apartment, they had opted out of the deal only because there was a recession in the market. He submits that since the Respondents themselves have cancelled the deal on account of recession in the market, the Appellant was fully justified in forfeiting the earnest money deposit. 7. He relies on the judgments of this Court in the cases of Satish Batra v. Sudhir Rawal (2013) 1 SCC 345 and Desh Raj and others v. Rohtash Singh (2023) 3 SCC 714 in support of his submissions. 8. Per contra, Shri Ashwarya Sinha, learned counsel for the Respondents, relying on the judgments of the NCDRC in the cases of Komal Aggarwal v. Godrej Projects Development Ltd. Consumer Case No.2139 of 2018 dated 9.11.2022, DLF Ltd. v. Bhagwanti Narula 2015 SCC OnLine NCDRC 1613 and Ramesh Malhotra and Another v. Emaar Mgf Land Limited and Another 2020 SCC OnLine NCDRC 789, submits that the NCDRC has consistently held that the condition of forfeiture of 20% of the BSP was not reasonable and reduced it to ....
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....tioned in Schedule VI hereto have been computed on the basis of Super Built Up Area of the Apartment. The Buyer agrees that the calculation of Super Built Up Area in respect of the Apartment is tentative at this stage and subject to variations till the Completion of Construction. In case such variations are beyond +/- 5%, then the Developer shall take prior consent of the Buyer. *** *** *** 8.4 On and from the date of such termination on account of Buyer's Event of Default as mentioned above ("Termination Date"), the Parties mutually agree that- (i) The Developer shall, out of the entire amounts paid by the Buyer to the Developer till the Termination Date, forfeit the entire Earnest Money and any other dues payable by the Buyer including interest on delayed payments as specified in this Agreement. (ii) After the said forfeiture, the Developer shall refund the balance amount to the Buyer or to his banker/financial institution, as the case may be, without any interest; (iii) On and from the Termination Date, the Buyer shall be left with no right, title, interest, claim, lien, authority whatsoever either in respect of the Apartment or under....
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....r terms and conditions of the application form and/or the BBA cannot be faulted with. However, the condition of forfeiture of 20% of BSP, being the earnest money liable for forfeiture in case of cancellation appears unreasonable. It will be in the interest of justice and fair play to both sides, if OPs are allowed to deduct only 10% of the BSP as earnest money i.e. Rs.17,08,140/- and refund the balance amount to the complainants." 18. This Court in the case of Satish Batra v. Sudhir Rawal (supra), after considering the earlier judgments of this Court, has observed thus : "15. The law is, therefore, clear that to justify the forfeiture of advance money being part of "earnest money" the terms of the contract should be clear and explicit. Earnest money is paid or given at the time when the contract is entered into and, as a pledge for its due performance by the depositor to be forfeited in case of nonperformance by the depositor. There can be converse situation also that if the seller fails to perform the contract the purchaser can also get double the amount, if it is so stipulated. It is also the law that part-payment of purchase price cannot be forfeited unless it is a g....
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....hall be ready for occupation within 42 months from the date of issuance of Allotment Letter. ("Tentative Completion Date"), however the Developer is entitled for a grace period of 6 months over and above this 42 month's period. Upon the Apartment being ready for possession and occupation the Developer shall issue the Possession Notice to the Buyer of the Apartment. Notwithstanding the above, the Developer shall be entitled to an extension of time from the Tentative Completion Date for issue of the Possession Notice, if the Completion of Construction of the said Apartment or the part/portion of the Project where the said Apartment is situated is delayed on account of any of the following reasons - (i) Non-availability of steel, cement, other building materials, water or electric supply or labour, or (ii) Any change in the Applicable Law or existence of any injunction, stay order, prohibitory order or directions passed by any Court, Tribunal, Body or Competent Authority; or (iii) Delay in securing any permission, Approvals, NOC, sanction building plan, building completion and/or occupation certificate, water, electricity, drainage or sewerage c....
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....e Developer in the event it does not comply with the timelines, a very meagre compensation is provided to the Apartment purchaser. Not only that clause 4.2 of the Agreement, which provides that the Apartment shall be ready for occupation within 42 months from the date of issuance of Allotment Letter, also provides that the Developer would be entitled for a grace period of 6 months over and above this 42 months' period. The said clause 4.2 further provides for various eventualities in case of which the Developer would be entitled to further extension of period for handing over the possession. 24. In any case, clause 4.3 of the Agreement provides that, subject to the provisions of clause 4.2 of the Agreement, if the Developer fails or neglects to issue the Possession Notice on or before the Tentative Completion Date and/or on such date as may be extended by mutual consent of the Parties, the Developer shall be liable to pay to the Buyer a meagre compensation for such a delay at the rate of Rs.5/- per month per square feet of the Super Built Up Area of the Apartment. 25. It can thus be seen that the Agreement is one-sided and totally tilted in favour of the Developer. 26. In ....
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....er, will not apply where the bargaining power of the contracting parties is equal or almost equal. This principle may not apply where both parties are businessmen and the contract is a commercial transaction." 27. This Court in the case of Pioneer Urban Land and Infrastructure Limited (supra) was considering similar clauses in an Agreement between a Developer and an Apartment Purchaser. This Court observed thus : "6.4. A perusal of the apartment buyer's agreement dated 8-5-2012 reveals stark incongruities between the remedies available to both the parties. For instance, Clause 6.4(ii) of the agreement entitles the appellant builder to charge interest @18% p.a. on account of any delay in payment of instalments from the respondent flat purchaser. Clause 6.4(iii) of the agreement entitles the appellant builder to cancel the allotment and terminate the agreement, if any instalment remains in arrears for more than 30 days. On the other hand, as per Clause 11.5 of the agreement, if the appellant builder fails to deliver possession of the apartment within the stipulated period, the respondent flat purchaser has to wait for a period of 12 months after the end of the grace p....
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....dent flat purchaser. The appellant builder could not seek to bind the respondent with such one-sided contractual terms." 28. The view taken by this Court in the case of Pioneer Urban Land and Infrastructure Limited (supra) was followed in the case of Wing Commander Arifur Rahman Khan and Aleya Sultana and others v. DLF Southern Homes Private Limited (Now Known as Begur OMR Homes Private Limited) and others (2020) 16 SCC 512. 29. Further, a three-judge Bench of this Court in the case of Ireo Grace Realtech Private Limited (supra) approved the legal position as laid down in the case of Pioneer Urban Land and Infrastructure Limited (supra). 30. It is further to be noted that when the cases of Pioneer Urban Land and Infrastructure Limited (supra), Wing Commander Arifur Rahman Khan and Aleya Sultana and others (supra) and Ireo Grace Realtech Private Limited (supra) were decided, they were decided based on the provisions of the Consumer Protection Act, 1986. Relying on the provisions of Section 2(1)(r) of the Consumer Protection Act, 1986, which defines the term "unfair trade practice", this Court held that the contractual terms which are ex facie onesided, unfair and unreasonab....
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....pective purchaser fails to fulfill the conditions, it also provided for payment of double the amount of earnest money by the vendor to the purchaser in case the vendor fails to complete the transaction. As such, the said term cannot be said to be one-sided. 35. Similarly, in the case of Desh Raj and others (supra), this Court was considering an Agreement to Sell with respect to the landed property. A perusal of the judgment would reveal that it was a case of an Agreement between two equal Parties and there are no terms in the Agreement which could be said to be one-sided and tilted totally in favour of one of the Parties. 36. We are, therefore, of the view that the present case would not be governed by the law laid down by this Court in the cases of Satish Batra (supra) and Desh Raj and others (supra), but would be governed by the law as laid down in the cases of Pioneer Urban Land and Infrastructure Limited (supra), Wing Commander Arifur Rahman Khan and Aleya Sultana and others (supra) and Ireo Grace Realtech Private Limited (supra). 37. It will further be relevant to refer to the following observations by a Bench consisting of three learned Judges of this Court in the ca....