Builder entitled to forfeit the earnest money in default of payment of instalments

National Consumer Disputes Redressal Commission (NCDRC):While reiterating that builder would be entitled to forfeit the amount paid by way of installments in a case where the allottee defaults in making the payment of the remaining instalments, NCDRC set aside the orders of Consumer Forum and State Commission directing DLF Southern Towns Pvt. Ltd. to refund the earnest amount. Earlier, Complainant applied for allotment of apartment in the project of DLF ‘New Town Heights DLF, Kakkanad’ for Rs.40,00,000/-. They paid Rs.4,00,000/- towards first installment. DLF promised to handover possession of the apartment by the end of 2009, but construction was delayed so, complainant did not remit subsequent installments. Later as DLF started construction, complainant expressed his willingness to remit the defaulted installments, but DLF demanded additional amount of Rs.1,70,000/-, and further informed that otherwise they will forfeit amount of first installment of Rs.4,00,000/-.  Alleging deficiency on the part of DLF, complainant filed complaint before District Forum for delivering flat after receiving balance amount or to refund the deposited amount. DLF submitted that it agreed to deliver possession of flat within 36 months, but complainant failed to return signed agreement and did not pay subsequent installments in spite of repeated demands. District forum allowed complaint and directed DLF to refund Rs.4,00,000/-. Appeal filed by DLF was also dismissed by State Commission. Before NCDRC, DLF submitted that as per terms and conditions of the application for provisional allotment, DLF was entitled to forfeit earnest money if allottee fails to sign and return agreement within 30 days and also as per Clause 17 of the agreement, if allottee fails in complying terms and conditions of the application DLF had the right to forfeit the entire amount of earnest money. After hearing the parties, Commission observed that as complainant failed to perform terms and conditions of the agreement in spite of repeated reminders, DLF was well within its rights to forfeit amount of earnest money. While referring to various judgments of Supreme Court and NCDRC, Commission noted, “In the light of aforesaid judgments, it becomes clear that as complainant has not paid any subsequent installments and committed default in making payments of installments and also committed default in returning back duly signed agreement, OP (DLF) had every right to forfeit amount of earnest money deposited by complainant and learned District forum committed error in allowing complaint and learned State Commission further committed error in dismissing appeal.”(DLF Southern Towns (P) Ltd. v. Dipu C. Seminlal, 2015 SCC OnLine NCDRC 1, decided on January 7, 2015)