Haryana RERA Directs Emaar MGF To Refund Homebuyers After Delayed Possession Of Nearly 4 Years

Authority also allowed the builder to deduct 10 percent of the basic sale consideration of the flat, which was Rs 94.60 lakh, since the complaint was filed almost five years after the offer of possession was issued.

Background Facts

Homebuyers (Complainants) purchased a flat in the builder's (Respondent) project “Palm Gardens” located at Sector 83 in Gurugram, Haryana. The total price of the flat was Rs. 1.22 crore. Out of this amount, the homebuyers paid Rs. 94.68 lakh to the builder which included the initial booking payment of Rs. 7.5 lakh.

The builder and the homebuyers executed the buyer's agreement on 12 September 2012. Under Clause 10 of that agreement, the builder was required to hand over possession by 12 December 2015.

Despite receiving more than 77 percent of the total price, the builder failed to deliver possession on time. The offer of possession finally came only in October 2019 (almost four years late) and the demands raised at that stage were inconsistent and arbitrary.

Therefore, Homebuyers approached Authority seeking a refund of entire amount they had paid along with interest as per Section 18 of the RERA Act.

Contentions of Builder

Builder argued that the complaint should not be entertained because it is barred by limitation. According to them, the due date of possession under the buyer's agreement was 12 December 2015 and the homebuyers did not assert their rights within the time allowed by law.

Builder also contended that the complaint is barred by estoppel as they have already offered possession through a letter dated 23 October 2019 and after accepting that offer, the homebuyers cannot now come back with fresh objections or demands.

Builder further contended that the delay in completing the project was not intentional. They blamed several force majeure events including defaults by the contractor, insolvency proceedings against the contractor and delays caused by other allottees who were not paying their instalments on time.

Observation and Direction by Authority

Authority noted that builder received occupation certificate on 17 October 2019 and offered possession on 23 October 2019. Despite these homebuyers filed their refund complaint much later on 5 September 2024. Given this delay, Authority held that the builder is entitled to deduct the earnest money while processing the refund.

Authority traced the legal position on earnest money through a line of Supreme Court cases. It noted that in Maula Bux versus Union of India (1970) and Sirdar K.B. Ram Chandra Raj Urs versus Sarah C. Urs (2015) the Court made it clear that forfeiture has to be reasonable.

Authority then referred to NCDRC decisions like Ramesh Malhotra versus Emaar MGF (2020), Saurav Sanyal versus IREO (2022) and Jayant Singhal versus M3M India (2022). These decisions settled that keeping up to 10 percent of the basic sale price is generally a fair measure of earnest money forfeiture.

Authority held that in view of the Supreme Court's rulings, the builder cannot retain more than ten percent of the sale consideration as earnest money.

Therefore, the Authority directed the builder to refund Rs 94.68 lakh after deducting 10% of the basic sale consideration of Rs 94.60 lakh along with interest at 10.85% per annum, calculated from the date of filing of the complaint until the actual date of refund.

Case – Babulal Aggarwal & anr Versus Emaar MGF Land Limited

Citation – Complaint No. 4373 of 2024