In exercise of the powers
conferred on it under section-85 of the Real Estate (Regulation and
Development) Act, 2016 and all others powers enabling it in that behalf, the
Haryana Real Estate Regulatory Authority, Gurugram hereby makes the following
regulations: (a) These
regulations may be called the Haryana Real Estate Regulatory Authority,
Gurugram, (Forfeiture of earnest money by the builder) Regulations, 2018. (b) The power
to make regulations by the authority has been delegated by the Legislature by
virtue of powers conferred upon it by the statute. The regulations are
indispensable to the proper functioning of the authority and the objective of
framing regulations by the authority is to ensure that the authority works
effectively, and in the public interest and therefore these regulations have
been framed to contrive the procedures for forfeiture of the 'earnest money' in
all cases where the cancellation of the flat/unit/plot is made by the builder
in a unilateral manner or the buyer intends to withdraw from the project. (c) These
regulations will come into force from the date of their publication in the
official gazette. (d) These
regulations shall apply to all matters falling within the jurisdiction of the
Real Estate Regulatory Authority, Gurugram as notified by the State Government
of Haryana vide its notification No. 1/92/2017-ITCP dated 14.12.2017 which
comprises entire area of Gurugram district in respect of which cancellation of
the flat/unit/plot is made by the builder in a unilateral manner or the buyer
intends to withdraw from the project. (a) "Act"
means the Real Estate (Regulations and Development) Act, 2016 as amended from
time to time; (b) "Rules"
means the Haryana Real Estate Regulatory Authority (Regulation and Development)
Rules, 2017 as amended from time to time; (c) "Regulations"
means the Haryana Real Estate Regulatory Authority, Gurugram (Forfeiture of
earnest money by the builder) Regulations, 2018 as amended from time to time; (d) "Authority"
means the Haryana Real Estate Regulatory Authority, Gurugram (e) "Authority
Members" means the members of the Authority including the Hon'ble
Chairman; (f) "earnest
money" means the money deposited in good faith from buyer to seller
representing the desire of buyer to seal the deal for purchase of
flat/unit/plot. (g) "Builder
buyer agreement" means a Contract between the Builder to provide services
as specified for a consideration and the Buyer for fulfilling his end of the
promise to pay for the services rendered by the Builder as promised and
accepted by the Buyer. (a) Affordability,
transparency and bringing faith of homebuyers and investors into existence is main
agenda behind the introduction of the Real Estate (Regulation and Development)
Act, 2016 and in this context the authority intends to prescribe these
regulations to protect the home buyers from superfluous forfeiture of funds by
the builder in the form of earnest money. The deposit of earnest money to the
seller by the buyer shows that he/she is a serious contender, and the concerned
offer gets the attention it deserves. (b) This
builder-buyer agreement is an unduly significant document as it is a legal contract
between builder and buyer and is used in court against builder if he doesn't
keep his commitments. This agreement between the buyer and the seller for
purchase of flat/unit/plot contains various clauses which define the terms of
purchase and in which one of the significant clause is the clause relating to
the forfeiture of earnest money in case of cancellation of the flat/unit/plot
and the clause in some cases framed as such to deceive the buyers and provides
unreasonable forfeiture of funds in the form of earnest money. (a) As per
provisions contained in section 38 of the Haryana Real Estate (Regulation and
Development) Act, 2016 which reads as under:- "The Authority shall be
guided by the principals of natural justice and subject to the other provisions
of this Act and the rules made there under, the Authority shall have powers to
regulate its own procedure." (b) Further,
section 85 of the Haryana Real Estate (Regulation and Development) Act, 2016
states as under:- "The Authority shall, within
a period of three months of its establishment, by notification, make
regulations consistent with the Act and the rules made there under to carry out
the purposes of this Act" (c) The point
is further justified from the case of M/s. DLF V/s Bhagwati Narula dated
6.1.2015 decided by the Hon'ble National Consumer Disputes Redressal Commission
in Revision Petition No. 3860 of 2014 where it was categorically held "That only a reasonable
amount can be forfeited as earnest money in the event of default on the part of
the purchaser and it is not permissible in law to forfeit any amount beyond a
reasonable amount, unless it is shown that the person forfeiting the said
amount had actually suffered loss to the extent of the amount forfeited by
him." (d) A similar
view has been taken in the following cases which are re-produced below:- (a) In Maula
Bux V/s Union of India, the Hon'ble Supreme Court of India quoted the following
observations made by the judicial committee in Kunwar Chiranjit Singh V/s Har
Swarup: "that earnest money is part
of the purchase price when the transaction goes forward; it is forfeited when
the transaction falls through, by reason of the fault or failure of the vendee. Further, contracts with unjust
and one sided clauses can also held to be unconscionable contract." (e) In Indian
Oil Corporation Limited V/s Nilofer Siddiqui and Ors.: "it was held by the Supreme
court that, the said condition of the letter of allotment is unconscionable as
it gives IOCL an unfettered right to terminate the distributorship without
assigning any reason. In the instant case, respondent number 2 is far weaker in
economic strength and has no bargaining power with IOCL. At the time when the
letter of allotment was issued, respondent number 2 had no other means of
livelihood and was dependent on the grant of Indane Gas agency by IOCL for
sustenance of himself and family members. The letter of allotment contains
standard terms and respondent number 2 and 3 had no opportunity to vary the
same. The said condition of the letter of allotment provides for unilateral
termination of distributorship without assigning any reason which is liable to
be read down in the light of Article 14 of the Constitution of India as well as
observations made by this court in Central Inland Water Corporation Limited's
case (1986 AUR 1571)." (f) In the
instance case of Shakti Singh Versus M/s. Bestech India Pvt. Limited the
complainant had paid a booking amount of Rs. 20,00,000 vide 2 cheques dated
27.11.2012 and 23.2.2013 in lieu of apartment bearing number 1004. Therefore
the booking amount would constitute as the earnest money. The total sale price
of the apartment was Rs. 1,41,11,80. Hence the earnest money constitutes
14.173% of the total sale price. Whereas, as per the builder buyer agreement
dated 10.10.2013, the developer shall treat 20% of the sale price as earnest
money along with processing fee, brokerage and interest due. (g) A similar
view has been upheld in case of Balmer Lawrie and Co. Limited and Ors. V/s
Partha Sarathi Sen Roy and Ors. by the Supreme Court of India. Scenario prior to the Real Estate
(Regulations and Development) Act, 2016 was different. Frauds were carried out
without any fear as there was no law for the same but now, in view of the above
facts and taking into consideration the judgments of Hon'ble National Consumer
Disputes Redressal Commission and the Hon'ble Supreme Court of India, the
authority is of the view that the forfeiture amount of the earnest money shall
not exceed more than 10% of the consideration amount of the real estate i.e.
apartment/plot/building as the case may be in all cases where the cancellation
of the flat/unit/plot is made by the builder in a unilateral manner or the
buyer intends to withdraw from the project and any agreement containing any
clause contrary to the aforesaid regulations shall be void and not binding on
the buyer. The authority may take contrary
view in case the facts otherwise justify. HARYANA REAL ESTATE REGULATORY AUTHORITY
GURUGRAM (FORFEITURE OF EARNEST MONEY BY THE BUILDER) REGULATIONS, 2018
PREAMBLE