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Slams Builder's Illegal Forfeiture in Rosewood City Villa Row
A developer who unilaterally cancelled a buyer's villa allotment and pocketed ₹18 lakh as "" has been ordered to return every rupee after the found no proof of . Justice Neena Bansal Krishna dismissed the appeal filed by Eros Group, upholding the trial court's decree that directed full refund along with 6% interest.
From Dream Villa to Costly Cancellation Drama
In 2008, Sharad Maheshwari and Vandana Maheshwari booked Villa No. C-01 in the Grand Mansions project at Rosewood City, Gurgaon. They paid ₹62 lakh towards a ₹2.5 crore deal. What followed was a saga of missed construction schedules, ignored document requests, and increasingly desperate negotiations that ended with a disputed "full and final" settlement offering only ₹44 lakh.
The buyers visited the site in late 2008 and discovered construction moving at a snail's pace with substandard materials. Despite repeated written requests, the developer never supplied the promised construction schedule or specifications, leaving the couple unable to verify which instalment—if any—was actually due.
How the Developer Tried to Justify Its Actions
Eros Group contended the payment plan was strictly time-linked. According to them, the Maheshwaris defaulted despite demand letters dated , and . Clause 4 of the , they argued, gave them an absolute right to cancel and forfeit 25% of the sale consideration as .
The developer also relied on a letter dated in which the buyers supposedly sought cancellation due to market recession, followed by a signed and undertaking accepting ₹44 lakh in full settlement.
Buyers' Story of Slow Progress and Coercion
The Maheshwaris insisted payments were construction-linked, not calendar-driven. They pointed out that Clause 45 of the agreement required all demand notices to be sent by registered post with acknowledgment due—a requirement the developer completely ignored, producing no postal receipts whatsoever.
They described how, after the arbitrary cancellation on , they were summoned for meetings where refusal to accept a reduced settlement would allegedly result in losing the entire ₹62 lakh. The final "settlement" meeting on left them with no real choice, they claimed.
Why the High Court Found Cancellation Illegal
Justice Krishna carefully examined Schedule 'A' of the agreement and found explicit language that
"payments will be requested according to the construction schedule."
The sequencing was merely indicative. DW-1, the developer's own Senior Manager (Accounts), admitted during cross-examination that payments were linked to actual construction progress—yet no evidence of that progress was ever produced.
Most damningly, the developer failed to prove service of any demand letter as mandated by Clause 45. With no proof that instalments were legally due, the buyers could not be labelled defaulters. The cancellation was therefore illegal and arbitrary.
Key Observations
"The Defendant has neither pleaded nor adduced any evidence regarding any alleged financial loss arising from the allotment of the Villa. Under the , the onus rests squarely on the Defendant to prove that it sustained an to justify the forfeiture of funds."
"The Plaintiff, when pitted against a large developer with , was effectively coerced into accepting the Rs. 44 lakhs offered by the Defendant."
"Mere acceptance of ₹44,00,000/- instead of the full claim of ₹62,00,000/- ostensibly as a ' ' is , as it was executed under and ."
The Final Ruling and Its Wider Message
The High Court held that retention of ₹18 lakh violated . Because the developer suffered no proven loss and because the so-called settlement was vitiated by coercion, the entire amount became refundable. The appeal was dismissed with costs.
This judgment sends a clear signal to real estate developers across India: forfeiture clauses cannot be weaponised without concrete evidence of loss, and settlements extracted under financial duress carry no legal sanctity. Homebuyers who find themselves cornered into accepting less than their due now have stronger precedent to demand what is rightfully theirs.
