• Returning flat to company: Emaar MGF


     I have took a flat from Emaar MGF  2 years back on CLP Plan in Gurgaon. Property is still under construction. 
     Due to certain urgency , I need to return the flat to the company. Following is the clause in contract regarding cancellation of allotment " "The Allottee (s) understands and agrees the payment of earnest money is to
ensure the fulfillment of terms and conditions of the Agreement. Out of the
amount (s) paid / payable by Allottee (s) towards the Total Consideration,
the Company shall treat 15% of the Total Consideration as earnest money
(hereinafter referred to as the "Earnest Money" to ensure fulfillment of
the terms and conditions as contained in this Agreement, by the Allottee

Also, the "delayed payment charges as applicable" + "the brokerage amount
including service tax" along with the earnest money shall be debited from
the account and if in case the refund is applicable the same shall only be
process once the unit is resold to a new Buyer." 
   Is it justified to deduct such a huge amount (15%) and what does the Indian property law (Which article and clauses )says in this case ? Cancellation clause was not informed to me at the time of registration of flat. I received builder buyer agreement after I had payed 20% payment and then I Had no option but to sign the contract. 

   Requests you to kindly answer in detail as I am in deep financial problem and what should I do
   according to you .


Ashish Sood 
Asked 3 years ago in Property Law from Gurgaon, Delhi
1. Most of the big shot builders make such unreasonable causes whcih suits their object  incorporated on the sale agreement.

2. Since most such sale agreement are typically pre-drafted in which the buyer can not make any changes except the description of flats to be purchased.

3. There is conflict of opinion among high courts as to whether on cancellation of agreement the builder can forfeit the whole earnest money or huge percentage out of consideration m0ney already paid. In most case where the court finds that the buyer has no say in drafting the sale agreement it declares such clauses as ' unconscionable'.

4. In any case, if the cancellation amount is huge and is more than the booking amount then the court generally intervenes to set aside such such clause.

5. in the instant case, you can challenge this clause on the consumer forum and ask for refund of the same if not already deducted. I have successfully reversed such cancellation charges from the consumer in several of such incidents made by big real estate companies in Kolkata.
Devajyoti Barman
Advocate, Kolkata
12849 Answers
166 Consultations

5.0 on 5.0

1) terms of contract are sacrosanct 

2) once you have signed sale deed you are bound by the terms of agreement . 

3)under the circumstances for forfeiture of 15%of sale price as earnest money is legal

4)since the earnest money was primarily a security for the due performance of the agreement and, consequently, the seller is entitled to forfeit the  deposit as per agreement
Ajay Sethi
Advocate, Mumbai
45580 Answers
2677 Consultations

5.0 on 5.0

1) In Delhi Development Authority v. Grihstrapana Cooperative Group Housing Society Ltd. 1995 Supp (1) SCC 751, this Court following thejudgment of the Privy Council in Har Swaroop and Shree Hanuman Cotton Mills(supra), held that the forfeiture of the earnest money was legal.

2) . In V. Lakshmanan v. B.R. Mangalgiri and others (1995) Suppl. (2) SCC33, this Court held as follows: "The question then is whether the respondents are entitled to forfeit the entire amount. It is seen that a specific covenant under the contract was that respondents are entitled to forfeit the money paid under the contract. So when the contract fell through by the default committed by the appellant, as part of the contract, they are entitled to forfeit the entire amount.

13)  "In Housing Urban Development Authority and another v. Kewal Krishan Goel and others (1996) 4 SCC 249, the question that came up for consideration before this Court was, where a land is allotted, the allottee deposited some installments but thereafter intimated the authority about his incapacity to pay up the balance installments and requested for refund of the money paid, was the allotting authority entitled to forfeit the earnest money deposited by the allottee or could be only entitled to forfeit 10% of the total amount deposited by the allottee till the request is made? Following the judgment in Shree Hanuman Cotton Mills (supra),this Court held that the allottee having accepted the allotment and having made some payment on installments basis, then made a request to surrender the land, has committed default on his part and, therefore, the competent authority would be fully justified in forfeiting the earnest money which had been deposited and not the 10% of the amount deposited, as held by the High Court. In that case, this Court took the view that the earnest money represented the guarantee that the contract would be fulfilled.
Ajay Sethi
Advocate, Mumbai
45580 Answers
2677 Consultations

5.0 on 5.0

1. You have agreed to the term of forfieture of that 15% and signed the agreement from where you can not go back now,

2. However, you stated :I received builder buyer agreement after I had payed 20% payment and then I Had no option but to sign the contract",

3. If that is so then how did you pay the said 15%? Based on what document did you pay that amount ot 15% of total consideraion?

4. If you had paid the said amount based on brochue or some other document which did not specify about the said forfieture cluase, then you can file a consume5r complaint case against the builder alleging deficiency in service and unfair business praction claiming refund of the said amount, interest, damage and cost,

5. You shall have to take the stand that the builder was in a dominating position when you were forced to sign the said agreement for the fear of loosing the entire amount you have already paid.
Krishna Kishore Ganguly
Advocate, Kolkata
18510 Answers
448 Consultations

5.0 on 5.0

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