#earnest money forfeiture

The Delhi High Court held that forfeiture of earnest money under an Agreement to Sell is not automatic; the party retaining the deposit must prove actual legal injury and quantifiable loss under Section 74 of the Indian Contract Act. The court distinguished the K.R. Suresh precedent, ruling it inapplicable to simple recovery suits, thereby strengthening a vendee's right to recover earnest money absent proven damages.

The NCDRC held that developers cannot forfeit more than 10% of the basic sale price as earnest money, directing Experion Developers to refund the excess amount paid by homebuyers with interest. The ruling protects consumers from unfair forfeiture clauses in real estate agreements and sets a benchmark for similar disputes across India.

Delhi State Consumer Commission rules that developers' failure to deliver possession is a continuing deficiency in service, extending limitation periods. The Commission also caps forfeiture of earnest money at 10% of the sale price, deeming higher deductions unreasonable under the Consumer Protection Act, 1986. This sets a precedent for homebuyers seeking relief against delayed projects and excessive penalties.

The Delhi State Consumer Commission ruled that failure to deliver plot possession constitutes a continuous deficiency in service under the Consumer Protection Act, and any forfeiture of earnest money beyond 10% of the sale consideration is unconscionable and unenforceable. This sets a critical precedent for homebuyers facing unjust penalties from developers who delay or deny possession, reinforcing buyer protections in real estate transactions.

Calcutta High Court holds that banks cannot forfeit earnest money when sale notices misrepresent property area, possession, or encumbrances, violating SARFAESI Rules.