Homebuyer Not Entitled For Refund On Cancellation If Payment Is Less Than 10% Of Sale Consideration: Haryana RERA
Haryana Real Estate Regulatory Authority (Authority) bench comprising of Ashok Sangwan (Member) denied refund to a homebuyer whose allotment was cancelled due to non-payment of instalments, holding that the homebuyer had paid less than 10% of the total sale consideration.The general rule followed by Haryana RERA is that if a builder cancels the allotment due to non-payment of instalments,...
Haryana Real Estate Regulatory Authority (Authority) bench comprising of Ashok Sangwan (Member) denied refund to a homebuyer whose allotment was cancelled due to non-payment of instalments, holding that the homebuyer had paid less than 10% of the total sale consideration.
The general rule followed by Haryana RERA is that if a builder cancels the allotment due to non-payment of instalments, the homebuyer is entitled to a refund of the amount paid after deducting 10% of the total sale consideration as earnest money.
Background Facts
Homebuyer (Complainant) booked two flats in the builder's (Respondent) project named “The Heartsong” located in Sector 108, Gurugram and was provisionally allotted two flats namely Unit No. B5/202 (Unit 1) on 05.04.2013 and Unit No. B4/102 (Unit 2) on 13.05.2013. However, no Buyer's Agreement was ever signed. Despite repeated reminders from the builder to execute the Agreement and make further payments, the homebuyer failed to act.
For Unit 2, the homebuyer paid Rs.7,00,000 but did not clear further dues, leading to its cancellation on 19.09.2013. The builder adjusted this amount against earnest money and delayed payment interest, leaving no refundable amount.
The homebuyer later expressed inability to pay due to financial constraints and requested the merger of both units into Unit 1. The builder conditionally agreed but asked the homebuyer to clear outstanding dues of Rs. 18,00,000. Since the homebuyer again failed to comply, Unit 1 was also cancelled on 28.02.2017 and later sold to a third party.
Therefore, the homebuyer approached the Authority seeking a refund of Rs. 11,36,802 after forfeiture of the booking amount of Rs. 7,00,000 along with interest at the prescribed rate from the due date of payment till the date of actual refund.
Contentions of Builder
Builder contended that the Buyer's Agreement for Unit 1 was sent on 01.07.2013. Despite reminders on 23.01.2015 and 15.05.2015, the homebuyer failed to complete the formalities or make the required payments.
The builder further contended that for Unit 2, several reminders were issued for payment. As no payment was made, a final notice was sent on 23.08.2013 and the allotment was terminated on 19.09.2013. Earnest money was forfeited as per the agreed terms.
The builder also contended that although Unit 2 was already cancelled, the homebuyer requested adjustment of that amount towards Unit 1. As a goodwill gesture, the builder offered to transfer Rs. 5.86 lakhs subject to clearance of dues by 26.11.2013. Since the homebuyer defaulted again, the offer was withdrawn.
Lastly, the builder contended that Unit 1 was terminated on 28.11.2013 and later reinstated on homebuyer's request. However, no payments were made thereafter. Due to continued default, the unit 1 was finally terminated on 28.02.2017.
Observation and Direction by Authority
Authority observed that the cancellation of both flats was a result of the homebuyer's continued failure to make timely payments despite several reminders and opportunities. The homebuyer neither executed the Buyer's Agreement nor cleared the outstanding dues.
Authority held that a builder cannot be expected to keep an allotment open indefinitely when the homebuyer fails to meet contractual obligations.
Authority noted that with respect to Unit 1, the homebuyer had paid only Rs.12,50,000, which was less than 10% of the total sale consideration of Rs. 1,28,12,050. Therefore, held that the amount was rightly forfeited as earnest money upon cancellation.
Authority observed that for Unit 2, the homebuyer's claim of merger with Unit 1 lacked evidence. It relied on the builder's reply stating that the merger was conditional on clearing dues by 26.11.2013, which was not done. Authority also referred to the builder's email dated 05.03.2014 wherein the builder rejected the merger request.
Accordingly, the Authority held that both units were cancelled due to the homebuyer's default and homebuyer is not entitled to any refund. Hence, the complaint was dismissed.
Case – Sanjiv Anand Versus M/s. Experion Developers Pvt. Ltd.
Citation- Complaint no. 2245 of 2025