Punjab RERA Orders PUDA to Refund ₹21 Lakh to Allottee Despite Payment Defaults
Rajesh Verma v. Punjab Urban Planning and Development Authority (PUDA)
GC No. 0512/2022
The Punjab Real Estate Regulatory Authority (Punjab RERA) has held that where both the allottee and the developer are found to have breached their respective obligations, neither party can ordinarily claim equitable relief such as specific performance or forfeiture of earnest money.
The Authority, chaired by Rakesh Kumar Goyal, accordingly directed the Punjab Urban Planning and Development Authority (PUDA) to refund ₹21 lakh deposited by allottee Rajesh Verma, along with interest. The total amount payable was assessed at ₹43.68 lakh as on August 31, 2026.
Dispute Over 400-Square-Yard Plot in Mohali
The case concerned a 400-square-yard residential plot in Gateway City, Sector 118-119, SAS Nagar, Mohali.
PUDA issued a Letter of Intent to Verma on July 10, 2015, for a tentative consideration of ₹84 lakh. An allotment letter was subsequently issued on August 16, 2016, pursuant to which Verma deposited ₹21 lakh towards the plot.
Verma thereafter failed to pay instalments due on August 17, 2017, February 17, 2018 and August 17, 2018.
He contended that the project had not been adequately developed and sought possession without interest on the outstanding dues. Alternatively, he sought a refund of the amount deposited along with interest.
Allottee's Payment Defaults Not Justified
PUDA informed Verma in February 2019 that possession was available and called upon him to clear the outstanding amount along with interest. Verma, however, did not act upon the offer.
Punjab RERA noted that the payment schedule under the allotment was not linked to the progress of development. It therefore rejected the contention that Verma was justified in withholding the instalments and held that he had defaulted on his payment obligations.
PUDA Also Found at Fault
At the same time, the Authority found shortcomings on PUDA's part concerning the timely offer of possession.
Punjab RERA noted that PUDA had the power under Section 45(3) of the Punjab Regional and Town Planning and Development Act, 1995, to cancel the allotment and forfeit the amount in the event of a breach. However, PUDA did not exercise that power and continued to retain the amount deposited by Verma.
The Authority observed that PUDA's conduct did not extinguish its obligation to deal with the money retained by it in accordance with law.
Neither Party Entitled to Equitable Relief
While considering the competing defaults, Punjab RERA relied on the established principle that a person seeking equitable relief must approach the forum with clean hands.
The Authority observed that while the allottee had defaulted in making payments, the developer had also failed to fulfil its obligations relating to timely handover. In such circumstances, neither party could ordinarily claim specific performance or forfeiture of earnest money.
The Authority therefore declined to grant Verma possession under Section 18 of the Real Estate (Regulation and Development) Act, 2016.
₹43.68 Lakh Payable to Allottee
Despite finding Verma in default of the payment schedule, Punjab RERA held that the circumstances justified a refund of the ₹21 lakh deposited by him, together with interest.
The complaint was accordingly partly allowed, with PUDA directed to pay:
₹21 lakh towards the principal amount;
₹22.68 lakh towards interest; and
₹43.68 lakh in total as on August 31, 2026.
PUDA was further directed to pay ₹18,900 per month from September 1, 2026, until the amount was actually paid.
The Authority also directed that the amount would be recoverable as land revenue and that a Debt Recovery Certificate would be issued in the event of non-compliance.
Ruling Highlights Importance of Mutual Compliance
The decision highlights that a party's own contractual default does not automatically entitle the opposite party to the relief of forfeiture or specific performance. Where defaults are attributable to both sides, the regulatory authority may examine the conduct of each party and mould the relief to ensure that neither side derives an unfair advantage from the other's breach.
