Can Promoter forfeit the advance deposit of Homebuyers/ Allottees, as EMD, upon termination of the agreement in case of default by Allottees in subsequent instalment? – Godrej Properties Ltd. Vs. Mr. Amit Agarwal – Maharashtra REAT
The Bench of Maharashtra REAT held that:
(i) The part payment of purchase price cannot be forfeited unless it is a guarantee for the due performance of the contract. In other words, if the payment is made only towards part payment of consideration and not intended as “earnest money” then the forfeiture clause will not apply.
(ii) The submission of the Promoter that Clause 13(b) which provides for forfeiture of 20% of the total consideration cannot be construed as “earnest money” and therefore Promoter is not entitled to forfeit the amount paid by the Allottee as part payment of consideration to the Promoter.
(iii) the Promoter’s claim of loss on account of brokerage cannot also be accepted.
