Citation Codes

Equivalent Citations

citation codes

Case Number

CC/1344/2017

Disposition

in part

Advocates

Judges

Ram Surat Ram Maurya, Presiding Member
Inder Jit Singh, Member

Acts

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Smart Summary

Concise Analytical Summary of the Opinion

Factual and Procedural Background

The complainant, Siddhartha Loiwal, booked a flat in the project "Vatika Tranquil Heights" (Sector-82-A, Gurgaon) with M/s. Vatika Limited in 2013 and paid multiple instalments totalling substantial sums between 15.11.2013 and subsequent dates. The booking/allotment process involved emails, demand letters, an allotment letter dated 08.10.2014 (allotting Unit No. 302, Tower-E, area 2290 sq.ft., under a construction-link payment plan) and a Builder-Buyer Agreement (BBA) provided by the opposite party on 21.07.2015 which the complainant alleged contained material variations from prior marketing/brochure representations.

The complainant filed a consumer complaint on 11.05.2017 alleging deficiency in service and unfair trade practice, seeking (i) refund of amounts deposited with interest at 18% p.a. from date of deposit, (ii) compensation for mental agony, (iii) costs and (iv) other reliefs. The opposite party filed a written reply contesting the claims and alleged the complainant had defaulted in payments, had sought to renege on the deal, and was not a consumer but a speculative investor. The opposite party also filed IA/5605/2021 seeking dismissal on the ground that the complainant was not a consumer. The parties filed evidence affidavits and written synopses. The complainant also filed IA/11334/2022 seeking correction of his name in prior orders.

Legal Issues Presented

Whether the complainant qualifies as a "consumer" under Section 2(1)(d) of the Consumer Protection Act, 1986, or whether his booking was for a commercial/speculative purpose such that the complaint is not maintainable (IA/5605/2021).
Whether the opposite party committed deficiency in service / unfair trade practice by (a) representations about the project (including alleged timelines for possession), and (b) material variations between marketing/brochure and the Builder-Buyer Agreement.
Whether the complainant breached the payment terms (non-payment of the "On Start of Foundation" demand due 03.03.2017) and, if so, whether forfeiture of earnest money and brokerage is permissible and, if so, in what proportion.
What reliefs are appropriate (refund with interest, deduction/forfeiture, compensation, costs), and the applicable interest rate and deductions to be applied on refund.

Arguments of the Parties

Complainant's (Siddhartha Loiwal) Case — Summary of Allegations

Booked a flat on 15.11.2013 after reliance on representations and publicity about project amenities and possession timelines; paid booking amount Rs. 800,000 and further instalments aggregating significant sums (payments detailed in the record).
Objected to variations in the Builder-Buyer Agreement dated 21.07.2015 as compared to brochure/marketing: (i) road on two sides vs one side in BBA map, (ii) project area marketed approx. 13 acres but BBA shows 11.22 acres, (iii) BBA contained a price escalation clause, and (iv) possession due date in BBA was 48 months from date of BBA.
Claimed delays, demanded execution of BBA (required for obtaining loan), and alleged the project stalled later due to land ownership issues; sought refund with interest, compensation and costs for deficiency in service and unfair trade practice.

Opposite Party's (M/s. Vatika Limited) Case — Summary of Defences

Contended that complainant paid only about one-third of the total price in a delayed and scattered manner and thereafter sought to renege on the contract.
Asserted the complainant did not sign and return the Builder Buyer Agreement despite reminders; alleged complainant defaulted on instalments and attempted to fabricate issues about bank financing without documentary proof.
Argued the complainant booked flats as speculative investor (citing other bookings/ownership) and therefore was not a "consumer"; sought dismissal of complaint as not maintainable (IA/5605/2021).
Maintained that if BBA had been signed earlier, possession would have been deliverable by July 2019 and that the complaint filed in 2017 was premature and frivolous; prayed for dismissal and forfeiture for breach.

Table of Precedents Cited

Precedent	Rule or Principle Cited For	Application by the Court
Laxmi Engineering Works v. P.S.G Industrial Institute (1995) 3 SCC 583	Interpretation that the Explanation to Section 2(1)(d) is an exception to an exception; "commercial purpose" lacks statutory definition and must take dictionary meaning; purchases for earning livelihood by self-employment excluded from "commercial purpose".	The court used this reasoning to treat "commercial purpose" as a matter of fact to be decided per case, and to assess whether the complainant booked the flat for commercial/speculative purposes or personal use.
Sanjay Bansal v. Vipul Limited (Civil Appeal No. 19611 of 2013; decided 12.04.2019)	Held that the number of flats booked is not decisive for determining "consumer" status; the purpose of booking must be examined.	The court relied on this principle to reject the opposite party's contention that multiple bookings (or prior bookings) made the complainant a non-consumer without examining the complainant's stated purpose.
Lilavati Kitrilal Mehta Medical Trust v. Unique Shanti Developer (2020) 2 SCC 265	Same proposition: the purpose for which flats were booked/purchased is determinative, not merely the number of flats.	Applied to evaluate the complainant's claim that the booking was for residential use of his family and not for commercial/speculative purposes; supported rejection of IA/5605/2021.
Maula Bux v. Union of India (1969) 2 SCC 554 : (1970) 1 SCR 928	Forfeiture of amounts for breach must be reasonable; if forfeiture is in the nature of a penalty, Section 74 of the Contract Act, 1872 applies and actual damage must be proved.	The court invoked this principle to require that any forfeiture of earnest money must be reasonable and not penal, noting difficulty in proving actual damage where the flat remains with the developer.
Sirdar K.B. Ram Chandra Raj Urs v. Sarah C. Urs (2015) 4 SCC 136	Reiterated limits on forfeiture/penalty principles and requirement of reasonableness / actual damage proof in case of forfeiture for breach.	Applied alongside Maula Bux to guide the court's view that forfeiture must be reasonable and that the developer must prove actual damage if seeking penal forfeiture.
Ramesh Malhotra v. EMAAR MGF Land Ltd. (CC/438/2019; decided 29.06.2020) and related Commission decisions (Mrs. Prerana Banerjee v. Puri Construction Ltd., CC/3328/2017; Mr. Saurav Sanyal v. IREO Grace Pvt. Ltd., CC/730/2017)	These Commission decisions held that forfeiture of 10% of the basic sale price is a reasonable amount to be forfeited as "earnest money".	The court relied on these Commission precedents to determine that 10% of the basic sale price is a reasonable forfeiture to be applied in the present matter when ordering refund after deduction.

Court's Reasoning and Analysis

The court proceeded in a structured fashion, beginning with statutory definitions and moving to factual application:

Statutory framework: The court quoted Section 2(1)(d) (definition of "consumer") and Section 2(1)(o) (definition of "service") of the Consumer Protection Act, 1986, and noted historical amendments adding "housing construction" to the definition of "service" and the Explanation limiting "commercial purpose."
Interpretation of "commercial purpose": The court relied on Laxmi Engineering and later Supreme Court authority (Sanjay Bansal; Lilavati) to hold that whether a booking is for commercial purpose is a question of fact and that the number of flats booked is not decisive. The court examined the complainant's documentary record and statements and found no evidence that the complainant engaged in buying and selling properties as a business.
Maintainability (IA/5605/2021): On the basis above, and noting the complainant's explanation about prior property (sold pre-possession on account of structural defect) and residence with his father, the court found no reason to disbelieve the complainant's statement that the booking was for the residence of his family. Consequently, IA/5605/2021 (seeking dismissal for lack of consumer status) was rejected.
On representations/variation claims: The complainant's claim that possession would be delivered within 36 months was not established by the advertisements filed (no such clause) nor by emails. Of the listed variations between brochure and BBA, only the variation concerning acreage (approx. 13 acres vs 11.22 acres in BBA) was proved; the court considered that variation not substantial. Other alleged variations (road on two sides vs one side; price escalation clause; possession period in BBA being 48 months) were either not proved or not sufficient to allow the complainant to repudiate the contract, particularly since the complainant continued to make payments (notably on 08.11.2015).
Breach by complainant and forfeiture: The allotment letter specified a construction-link payment plan; a demand for "On Start of Foundation" was raised by the opposite party on 03.03.2017 and was not paid by the complainant. The complaint itself was filed on 11.05.2017. The court found that the complainant had thus committed breach of contract entitling the developer to forfeit amounts, subject to the legal limitation that forfeiture must be reasonable (Maula Bux; Sirdar K.B. Ram Chandra Raj Urs).
Quantum of forfeiture: Citing prior decisions of the Commission (Ramesh Malhotra v. EMAAR MGF Land Ltd., Mrs. Prerana Banerjee v. Puri Construction Ltd., Mr. Saurav Sanyal v. IREO Grace Pvt. Ltd.), the court treated 10% of the basic sale price as a reasonable forfeiture for earnest money. Applying the principles on forfeiture and the Commission precedents, the court concluded that refund should be ordered after deduction of 10% of basic sale price and any brokerage paid.
Interest on refund and other reliefs: The court declined the complainant's prayer for 18% p.a. interest and instead directed refund with interest @9% per annum from date of respective deposit until date of refund. The court allowed the complainant's IA/11334/2022 to correct his name in earlier orders.

Holding and Implications

Core Holding: The complaint is partly allowed.

Direct orders and consequences (as stated in the opinion):

The opposite party is directed to refund the entire amount deposited by the complainant with interest at the rate of 9% per annum from the date of respective deposit till the date of refund.
The refund is to be made after deducting 10% of the basic sale price (forfeiture as reasonable earnest money) and brokerage, if any was paid by the complainant.
The opposite party is directed to make the refund within two months from the date of the judgment.
IA/5605/2021 (challenge to maintainability on ground of non-consumer status) is rejected.
IA/11334/2022 (correction of the complainant's name in cause title of earlier orders) is allowed and the name corrected from "Siddartha" to "Siddhartha" in specified orders.

Broader implications: The court applied established statutory definitions and cited Supreme Court and Commission precedents to (a) confirm that whether a booking is for commercial purpose is a question of fact to be decided on available evidence, (b) reaffirm limits on contractual forfeiture (forfeiture must be reasonable and not penal), and (c) follow existing Commission practice treating 10% of basic sale price as reasonable forfeiture. The opinion does not announce any new legal principle; it applies existing authorities to the facts at hand and provides specific remedial directions affecting the parties (refund with 9% interest minus 10% of basic sale price and brokerage).

This summary is based exclusively on the content of the provided opinion and does not add, infer or presume facts or legal points beyond what the opinion itself states.

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SIDDHARTHA LOIWAL v. VATIKA LTD.

1. Heard Mr. Vidur Mohan, Advocate, for the complainant and Mr. S.K. Sahni, Advocate, for the opposite party.

2. Siddhartha Loiwal has filed above complaint, for directing the opposite party to (i) refund entire amount deposited by him with interest @18% per annum from the date of respective deposit till the date of refund; (ii) award compensation for mental agony; (iii) award costs of litigation; and (iv) any other relief which is deemed fit and proper in the facts and circumstances of the case.

3. The complainant stated that M/s. Vatika Limited (the opposite party) was a company, registered under the Companies Act, 1956 and engaged in the business of development and construction of group housing project. The opposite party launched a group housing project in the name of “Vatika Tranquil Heights” at Sector-82-A, Gurgaon in the year, 2013 and made wide publicity of its amenities and facilities. Believing upon the representations of the opposite party, the complainant booked a flat on 15.11.2013 and deposited booking amount of Rs. 8/- lacs. The opposite party raised a demand of Rs. 1391346.53, vide letter dated 14.01.2014. The complainant, vide an email dated 15.01.2014, requested to share the draft of BBA, so that he could know the terms and conditions, as by that time allotment letter was not issued. The opposite party wrote a reminder mail dated 20.01.2014, for payment. The complainant paid total Rs. 3478366/- due to repeated demand. Then a meeting was arranged on 08.10.2014, in which, the complainant came to know that (i) the opposite party had increased super area from 2150 sq.ft to 2290 sq.ft., (ii) the complainant was allotted a flat of preferential location without his consent, (iii) Tower E, in which the complainant was allotted the flat, had 4 apartments on every floor and all the apartments naturally had a corner and PLC charges was realized showing it as a corner flat. The opposite party issued allotment letter dated 08.10.2014, allotting Unit No. 302, Tower-E, area 2290 sq.ft., “construction link payment plan” and proposed layout but it did not contain the terms and conditions. The opposite party again raised demand of Rs. 695673/-, which was deposited on 19.11.2014. The opposite party raised demand of Rs. 271798/- through letter dated 16.02.2015, for increased area. The opposite party supplied a format of the application for extension of period for payment and asked to sign and return it. Later on, the opposite party vide email dated 10.03.2015, informed that interest free extension was valid up to 16.03.2015 and the date was extended for fifteen days. The complainant made payment within extended period. The opposite party again raised demand, which was protested by the complainant and he demanded for execution of builder buyer agreement, which was required for obtaining the loan. The opposite party vide email dated 04.03.2015, informed to take loan from HDFC or ICICI Bank and on sanction of the loan, builder buyer agreement would be executed. After repeated requests, the opposite party sent Builder Buyer's Agreement on 21.07.2015, in which, the complainant found variations from brochure i.e. (i) The project was marketed as built on 2 sides of the road but map supplied with BBA showed that the road was only on one side of the project. (ii) The project was marketed approx. on 13 acres land but in BBA only 11.22 acres land was shown. (iii) BBA contained Price Escalation clause. (iv) Due date of possession was shown 48 months from the date of BBA. The complainant wrote several emails during 29.07.2015 to 25.09.2015, raising his protest against one sided and arbitrary clauses but the opposite party did not give any satisfactory reply. In the meantime, bereavement happened in the family of the complainant. Due to delaying the commencement of the project, the period of licence also expired. The opposite party sent reminder dated 13.10.2015 for signing BBA and returning its one copy with warning to cancel allotment. The opposite party issued demand letter dated 23.10.2015 for Rs. 1233403/- on “Start of Excavation”. The complainant proposed to deposit it under protest on 08.11.2015, but he was coerced to cut “under protest”. The complainant approached HDFC and ICICI Bank for sanction of the loan, who informed that the project was not approved by the bank till then. The complainant raised query/protest as to how renewal of licence was granted for 11.85 acres land, although original licence was for 11.218 acres land and demanded environmental clearance but the opposite party did not respond. The opposite party issued reminder dated 10.12.2015 and final notice dated 22.01.2016 to the complainant for signing BBA. The complainant deposited Rs. 11697/- on 04.01.2016 for TDS, Rs. 9433/- on 08.12.2016 for VAT. The complainant, vide emails dated 13.12.2016 and 04.01.2017, inquired about the progress of the project but did not receive any reply. The complainant visited the site on 29.12.2016 and found that due to issue relating to ownership of the land, the project was fully stalled. The opposite party raised demand on “Start of Foundation” through letter dated 15.02.2017. The opposite party issued a reminder dated 05.04.2017, for above demand with warning to cancel the allotment. Then this complaint was filed on 11.05.2017, alleging deficiency in service and unfair trade practice.

4. The opposite party filed its written reply on 18.07.2017 and contested the complaint. The opposite party stated that after paying 1/3 of the total cost, the complainant went completely bust financially and started exploring ways and means to wriggle out of the deal. Having paid the sums due in respect of the apartment in question, he did not return Builder Buyer Agreement sent to him after his signature in spite of repeated reminders by the opposite party to him. Thereafter the complainant started finding faults in the contents of the agreement and tried to rake up a false and baseless controversy by levelling bland allegations about the alleged non-financing of the said apartment by the bank without adducing an iota of documentary evidence in this respect. It is also not proved that the complainant has ever applied for a home loan before any financial institutions. The complainant has also committed default in payment of the instalment. The Builder Buyer Agreement was sent to him on 21.07.2015 for his signature. In case he had signed it then, the possession would have been delivered to him in July, 2019. The complaint was filed in the year 2017 which is premature. The present complaint has been filed on various false and frivolous allegations and is liable to be dismissed. The complainant has supressed the material fact and has also tried to mislead the Commission by subversions and distortion. The complainant is not a consumer rather booked the flat as speculative investors. Annexure-3 of the complainant reveals that the complainant expressed interest for investing in three bedroom residential apartment in the proposed “Tranquil Heights” on 15.11.2013. The said expression of interest does not contain any condition or assurance about handing over possession within 36 months or by November, 2016 as alleged. The opposite party had not given any verbal assurance for handing over possession within 36 months or floated any advertisement of the project “Tranquil Heights” in the year 2013. The complainant paid only approximately 1/3 price with delay and scattered manner. The complainant was aware of Licence No. 22 of 2011 dated 24.03.2011 issued in favour of the opposite party for development of the project. Said Licence was renewed on 15.10.2015. In order to wriggle out from the contract the complainant raised frivolous queries which have been replied by the opposite party. The complaint has no merit and liable to be dismissed. Due dates of instalment and dates of deposit by the complainant are given below:—

Instalment/Sum Due Amount Due Date Amount Paid Date Paid Expression of Interest 695673 15.11.13 800000 15.11.13 Within 3 months 1391347 13.02.14 266150 1000000 17.02.14 TDS 20870 20870 21.02.14 Within 6 Months 1391347 15.05.14 1377432 15.05.14 TDS 13914 13914 21.02.14 Interest on overdue instalments 7811 24.02.14 to 11.06.14 Not Paid Within 12 months 695673 19.11.14 695673 20.11.14 Balance till Allotment incl.TDS 271798 04.02.15 5962 256507 9329 17.03.15 17.03.15 24.03.15 Interest on overdue instalments 45972 09.03.15 to 01.4.15 Not paid Start of Excavation 1233403 08.11.15 1233399 08.11.15 TDS/VAT 21130 07.11.16 11697 9434 08.02.16 09.12.16 Start of Foundation 816820 03.03.17 Not Paid Total 6605758 5700367

5. The complainant filed Rejoinder Reply and Affidavit of Evidence & Affidavit of Admission/Denial of documents of Siddhartha Loiwal and documentary evidence. The opposite party filed Affidavit of Evidence of Vipin Marya and Affidavit of Admission/Denial of documents of Sanjay Kumar Jha and documentary evidence. Both the parties have filed their written synopsis.

6. The opposite party has filed IA/5605/2021, for dismissing the complaint as not maintainable alleging that the complainant was not a consumer. The opposite party stated that the complaint owned a residential house i.e. Flat No. B-1, Ground Floor, Mega Floors, Sun City, Sector-54, Gurgaon-122002 and had booked (i) Apartment No. A-1501 in the project “Presidia” of Pioneer Urban Land & Infrastructure Ltd. on 13.05.2010, (ii) Apartment No. E-302 in “Tranquil Heights” on 15.11.2013, (iii) Two apartments as mentioned by HDFC in the email dated 02.11.2015. From which it is proved that the complainant had not booked Apartment No. E-302 in “Tranquil Heights” for his own use but as a speculative for future gain. The complainant filed his Reply to above application and stated that Flat No. B-1, Ground Floor, Mega Floors, Sun City, Sector-54, Gurgaon-122002, belonged to his father; as the complainant did not have any accommodation, he was residing with his father. The complainant booked Flat No. 203 in the project “Orchid Petals” in his name in 2004 but due to structural issues, it was sold to Lt. Gen. Raj Kumar on 23.08.2010, before taking its possession. Due to structural issue in above flat, the complainant booked Apartment No. A-1501 in the project “Presidia”, in the year 2010, in his name but could get possession over it till due date and the complainant has filed CC/78/2020, which is pending before this Commission. The complainant took loans for purchasing above flats, which were repaid. Then the complainant booked Apartment No. E-302 in “Tranquil Heights” for residence of his family. He has denied that Apartment No. E-302 has been booked for commercial purposes.

7. We have considered the arguments of the parties and examined the record. The word “consumer” has been defined under Section 2 (1) (d) and word “service” has been defined under Section 2 (1) (o) of the Consumer Protection Act, 1986, (hereinafter referred to as the Act) which are quoted below:—

Section-2 (1) (d).- “consumer” mean any person who,-

(i) buys any goods for a consideration which has been paid or promised or partly paid and partly promised, or under any system of deferred payment and includes any user of such goods other than the person who buys such goods for consideration paid or promised or partly paid and partly promised, or under any system of deferred payment, when such use is made with approval of such person, but does not include a person who obtains such goods for resale or for any commercial purpose; or

(ii) hires or avails of any services for consideration which has been paid or promised or partly paid and partly promised, or under any system of deferred payment and includes any beneficiary of such services other than the person who hires or avails of the services for consideration paid or promised or partly paid and partly promised, or under any system of deferred payment, when such services are availed of with the approval of the first mentioned person, but does not include a person who avails such services for any commercial purpose;

Explanation.- For the purpose of this clause, “commercial purpose” does not include use by a person of goods bought and used by him and services availed by him exclusively for the purposes of earning livelihood by means of self employment.

Section 2(1) (o) : - “service” means service of any description which is made available to potential users and includes, but not limited to, the provision of facilities in connection with banking, financing, insurance, transport, processing, supply of electrical or other energy, board or lodging or both, housing construction, entertainment, amusement or the purveying of news or other information, but does not include the rendering of any service free of charge or under a contract of personal service;”

8. The term “housing construction” has been added by Act No. 50 of 1993, under Section-2(1) (o) of the Act. Earlier the Explanation was added by Act No. 50 of 1993 w.e.f. 18.06.1993 under Sction-2(1) (d) (i) of the Act. By Act No. 62 of 2002, w.e.f. 15.03.2003, Section-2(1) (d) (ii) was also amended and the term “but does not include a person who avails such services for any commercial purpose” has been added in it and the Explanation was placed in last. Scope of the Explanation as well as expressions “commercial purpose” and “the purposes of earning livelihood by means of self-employment” came up for consideration before Supreme Court in relation to purchase of goods in Laxmi Engineering Works v. P.S.G Industrial Institute ., (1995) 3 SCC 583. In which, it has been held that the Explanation was an exception to an exception. Expression “commercial purpose” has not been defined, as such, its dictionary meaning has to be taken into consideration. “Commerce” means financial transaction, especially buying and selling of merchandise on large scale. As in the Explanation, the purposes of earning livelihood by means of self-employment, has been excluded from the purview of commercial purpose as such purchase of commercial goods for earning livelihood by means of self-employment, will not exclude such buyer from the purview of the “consumer” so long as it is used by the buyer or his family members or with the help of one or two other persons. It is question of fact and has to be decided in each case independently. Supreme Court in Civil Appeal No. 19611 of 2013 Sanjay Bansal v. Vipul Limited (decided on 12.04.2019) and Lilavati Kitrilal Mehta Medical Trust v. Unique Shanti Developer, (2020) 2 SCC 265, held that number of flats booked by the buyer is not a decisive factor of ‘consumer’ rather the purpose for which the flats were booked/purchased has to be examined.

9. The complainant admitted that he had sold Flat No. 203 in the project “Orchid Petals” to Lt. Gen. Raj Kumar on 23.08.2010, before taking its possession but has stated that it was sold due to structural issues. There is no evidence to prove that the complainant is engaged in purchasing and selling the properties. The complainant has stated that he had booked the flat in dispute for residence of his own family and not for any commercial purpose. There is no reason to disbelieve the statement of the complainant. IA/5605/2021 is rejected.

10. The complainant has filed above complaint for refund of his amount along with consequential relieves. The complainant took plea that the opposite party advertised the project “Tranquil Height” in the year 2013, in which they represented that the said project would be launched shortly and possession would be delivered within 36 months of the booking. Some downloaded advertisements have been filed but it does not contain any clause for delivery of possession within 36 months of the booking. There is no mention for delivery of possession within 36 months of the booking in emails between the parties also.

11. The complainant has stated that in Builder Buyer's Agreement sent to him on 21.07.2015, he had found variations from brochure i.e. (i) The project was marketed as built on 2 sides of the road but map supplied with BBA showed that the road was only on one side of the project. (ii) The project was marketed approx. on 13 acres land but in BBA only 11.22 acres land was shown. (iii) BBA contained Price Escalation clause. (iv) Due date of possession was shown 48 months from the date of BBA. Except variation-ii, other variations have not been proved. Variation-ii is not substantial. The complainant thereafter deposited instalment on 08.11.2015 as such it could not be a ground to go out of the deal. So far as delay is concerned, 48 months period would expire in July, 2019 as such at that time it could not be said that the project was unreasonably delayed. So far as letter dated 11.01.2022 is concerned, the complainant was not paying instalment, therefore, he cannot question subsequent delay.

12. Allotment Letter dated 08.10.2014 contained Payment Plan as “construction link payment plan”. The opposite party raised demand of “On Start of Foundation” on 03.03.2017, which has not been deposited by the complainant and this complaint was filed on 11.05.2017. Therefore the complainant has committed breach of the contract and his earnest money and brokerage amount are liable to be forfeited. Supreme Court, in Maula Bux v. Union Of India ., (1969) 2 SCC 554 : (1970) 1 SCR 928 and Sirdar K.B. Ram Chandra Raj Urs v. Sarah C. Urs, (2015) 4 SCC 136, held that forfeiture of the amount in case of breach of contract must be reasonable and if forfeiture is in the nature of penalty, then provisions of Section-74 of Contract Act, 1872 are attracted and the party so forfeiting must prove actual damage. After cancellation of allotment, the flat remains with the developer as such there is hardly any actual damage. This Commission in CC/438/2019 Ramesh Malhotra v. EMAAR MGF Land Ltd. (decided on 29.06.2020), CC/3328/2017 Mrs. Prerana Banerjee v. Puri Construction Ltd. (decided on 07.02.2022) and CC/730/2017 Mr. Saurav Sanyal v. IREO Grace Pvt. Ltd. (decided on 13.04.2022) held that 10% of basic sale price is reasonable amount to be forfeited as “earnest money”.

13. The complainant has filed IA/11334/2022 for correction of his name in cause title in the orders dated 27.08.2021, 08.03.2022, 12.07.2022 & 04.10.2022. IA is allowed. In the cause title of CC/1344/2017, in the orders dated 27.08.2021, 08.03.2022, 12.07.2022 & 04.10.2022 “Siddhartha” be read in place of “Siddartha”.

14. In view of aforesaid discussions, the complaint is partly allowed. The opposite party is directed to refund entire amount deposited by the complainant with interest @9% per annum from the date of respective deposit till the date refund, after deducting 10% of basic sale price and brokerage, if any paid, within a period of two months from the date of this judgment.

SIDDHARTHA LOIWAL v. VATIKA LTD.

Concise Analytical Summary of the Opinion

Factual and Procedural Background

Legal Issues Presented

Arguments of the Parties

Complainant's (Siddhartha Loiwal) Case — Summary of Allegations

Opposite Party's (M/s. Vatika Limited) Case — Summary of Defences

Table of Precedents Cited

Court's Reasoning and Analysis

Holding and Implications

SIDDHARTHA LOIWAL v. VATIKA LTD.

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