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.

MAHAREAT -When the Allottees asked the promoters to enter into an agreement for sale but the Promoters did not reply and did not enter into an agreement for sale thereupon Article 54 of Limitation Act, 1963 will not apply and also when the project is ongoing Section 22 of the Limitation Act, 1963 will be applied being continuing breach of contract.

When the Allottees asked the promoters to enter into an agreement for sale but the Promoters did not reply and did not enter into an agreement for sale thereupon Article 54 of Limitation Act, 1963 will not apply and also when the project is ongoing  Section 22 of the Limitation Act, 1963 will be applied being continuing breach of contract

M/s, Reddy Builders & Developers & ors V/s Hari Shankar Kankani & ors.

Appeal No, AT00600000053249/2021 in Complaint No. CC006000000195966 BEFORE THE MAHARASHTRA REAL ESTATE APPELLATE TRIBUNAL, MUMBAI

Fact of the main Complaint CC006000000195966:-

• Somewhere in the year 2005, The Respondents Allottees had booked a 3BHK flat under a pre-launched scheme in the project "Oregon" in Goregaon ,Mumbai undertaken by Appellants for a total consideration of Rs.38,99,740/-
• The Respondents Allottees paid an amount of Rs.6,90,000/- as booking amount which is more than 10% of the total consideration.
• The Appellant Company Reddy Builders issued allotment letter-cum-receipts to Allottees.
• The Allottees were continuously insisting the Promoters to execute the agreement for sale. Despite continuous follow-up of Allottees the Promoters conveniently avoided to execute the agreement for sale.
• The Appellant Company Reddy Builders agreed to handover the possession of the said flat to Allottees by 2012.
• However Till 2009, the Construction was not commenced due to some issue with slum dwellers.
• somewhere in the year 2021 ,being dissatisfied with the conduct of the Promoters, the Allottees filed Complaint No.CC006000000195966 and sought relief under Section 13 of the RERA Act,2016.
• The Appellant Company Reddy Builders appeared in the Complaint and remonstrated the Complaint by filing written submissions contending therein that the Complaint is liable to be dismissed primarily on following grounds viz; 
• (i) there ls no cause of action 
• (ii) the alleged transaction took place prior to RERA coming into force 
• (iii) the Complaint is not maintainable for want of proper pleadings 
• (iv) the Allottees are guilty of delay and latches 
• (v) the Complaint is hopelessly barred by the law of limitation.
• On 19/04/2021 After hearing the parties learned Authority disposed of the Complaint by directing the parties as under:
• a. If the Complainants are willing to seek refund of their money, the Respondent No.1 is directed to refund the entire money paid by the Complainants along with interest as prescribed under RERA and relevant rules made thereunder.
• b. If the Complainants are willing to be in the project the Respondent is directed to allot the flat having equivalent area as booked by the Complainants. An agreement for sale may be executed in accordance with the provisions of RERA and the relevant rules."
• Being aggrieved by the Order of  MahaRERA  the Appellants, who are Promoters, have preferred the captioned Appeal

The Authority Framed the following Question(s) for consideration:-

            Whether the Complaint is barred by the law of limitation?

Observations made by the Hon’ble Court:-

• It is not in dispute that after 2006 there was no correspondence between the parties till 2019.
• By the letters in 2019 & 2020 the Allottees asked the Promoters to enter into an agreement for sale.
• It is not in dispute that the Promoters have not replied the said letters.
• Article 54 of Limitation Act, 1963 speaks about the period of limitation for seeking specific performance of contract.
• There is limitation of three years for seeking relief of specific performance of contract.
• The period of limitation begins to run when the date fixed for performance, or, if no such date is fixed it begins when the plaintiff has noticed that performance is refused.
• In the instant case, there is no date fixed for performance of contract,
• As indicated above, by the letters, the Allottees have asked the promoters to enter into an agreement for sale. Promoters did not reply the said letters nor entered into an agreement for sale, It means the Allottees have noticed that performance of contract is refused by the promoters.
• it is not in dispute that the Promoters have commenced construction of the subject project somewhere in 2015-2016.
• Since it was an ongoing project, the Promoters have registered the project with MahaRERA and declared the date of completion of project as 31.07.2027,It means there is continuous cause of action.
• Section 22 of the Limitation Act, 1963 provides for the computation of limitation in the case of continuing breach of contract or tort. It provides that in case of a continuing breach of contract, a fresh period of limitation begins to run at every moment of time during which the breach continues.
• it relied on  Samruddhi Co-operative Housing Society Limited. Vs. Mumbai Mahalaxmi Construction Private Limited  Civil Appeal No 4000 of 2019 before the Supreme Court of India.

Court’s Order:-

Complaint is not barred by the law of limitation

Section 22 of the Limitation Act 1963 provides for the computation of limitation in the case of a continuing breach of contract or tort.

Supreme court of india in the matter of Balakrishna Savalram Pujari Waghmare v. Shree Dhyaneshwar Maharaj Sansthan AIR 1959 SC 798 held that Section 22 of the Limitation Act 1963 provides for the computation of limitation in the case of a continuing breach of contract or tort. It provides that in case of a continuing breach of contract, a fresh period of limitation begins to run at every moment of time during which the breach continues. 

Delhi High Court : only in cases where damage or loss is difficult or impossible to prove that the liquidated amount named in the contract, if a genuine pre-estimate of damage or loss, can be awarded.

Bhopal Dal Udyog v. Food Corporation Of India (Delhi High Court, Division Bench, decided on 04.01.2022), 

The Arbitrator had awarded Liquidated Damages (LD) in favour of the Respondent, relying on clause of the Agreement between the parties, in addition to the actual loss suffered by the Respondent (which was proved), as a result of the breach of Contract by the Appellant. 

The Court observed as follows:-

1. Section 74 of the Indian Contract Act, 1872 provides that when a sum has been named in a contract, as the amount to be paid on breach, the party complaining of breach is entitled, whether or not actual damage or loss is proved to have been caused, to receive from the party in breach, reasonable compensation not exceeding the amount so named. (Commonly called LD)

2. Such a sum named in the contract, is payable only if it is a genuine pre-estimate of damages, fixed by both parties, and found to be such by Court/arbitrator.

3. The expression "whether or not actual damage or loss is proved to have been caused thereby" means that where it is possible to prove actual damage or loss, such proof is not dispensed with. It is only in cases where damage or loss is difficult or impossible to prove that the liquidated amount named in the contract, if a genuine pre-estimate of damage or loss, can be awarded.

4. In the Present case as the actual damages suffered by the respondent were proven and accepted by the #Arbitrator, LD over and above such actual damages could not have been awarded.

(Reliance placed on Kailash Nath Associates v. DDA & Anr., (2015) 4 SCC 136)

On the basis of above, the Arbitral Award was set aside to the limited extent of the Liquidated Damages being awarded over and above the actual damages.

Supreme Court - All agreements of sale are bilateral contracts as promises are made by both - the vendor agreeing to sell and the purchaser agreeing to purchase. agreement of sale signed by the vendor alone and delivered and accepted by the purchaser is a valid contract, however, no practice of the purchaser alone signing an agreement of sale.

 In the Matter of  Alka Bose vs Parmatma Devi & Ors Complaint no. CIVIL APPEAL NO(s). 6197 OF 2000  decided on 17.12.2008 before Supreme Court of India

The defendant submitted that a contract for sale, like any other contract, is bilateral in nature under which both vendor and the purchaser have rights and obligations. It is submitted that an agreement for sale being a contract for sale, creating a right in the purchaser to obtain a deed of conveyance in terms of the agreement under which, the vendor agrees to convey to the purchaser, and the purchaser agrees to purchase, the subject-matter of the agreement for an agreed consideration, subject to the terms and conditions stipulated in the said agreement, it is bilateral. It is therefore contended that an agreement of sale is neither complete nor enforceable unless it is signed by both parties.

The apex court observed that

In India, an agreement of sale signed by the vendor alone and delivered to the purchaser, and accepted by the purchaser, has always been considered to be a valid contract. In the event of breach by the vendor, it can be specifically enforced by the purchaser. There is, however, no practice of the purchaser alone signing an agreement of sale.

An agreement of sale comes into existence when the vendor agrees to sell and the purchaser agrees to purchase,for an agreed consideration on agreed terms.

• It can be oral.

• It can be by exchange of communications which may or may not be signed.

• It may be by a single document signed by both parties.

• It can also be by a document in two parts, each party signing one copy and then exchanging the signed copy as a consequence of which the purchaser has the copy signed by the vendor and a vendor has a copy signed by the purchaser.

• Or it can be by the vendor executing the document and delivering it to the purchaser who accepts it.

• Section 10 of the Act provides all agreements are contracts if they are made by the free consent by the parties competent to contract, for a lawful consideration and with a lawful object, and are not expressly declared to be void under the provisions of the Contract Act.

Supreme Court - Time is not an Essence of Contract, However, if the parties agreed to a specified time in the agreement to perform their part of the Contract, then time is the essence of the Contract and parties shall adhere to the same.

 In the Matter of  I.S.Sikandar (D) By Lrs.& Ors vs K.Subramani & Ors Complaint no. Civil Appeal no. 7306 OF 2013 // (Arising out of SLP(C) No. 20367 of 2009) decided on  29.08.2013 before Supreme Court of India

The Court Observed that.

This position of law is well settled by this Court in the Constitution Bench judgment in Smt.Chand Rani (dead) by LRs. Vs. Smt. Kamal Rani(dead) by LRs. Appeal (civil)  3377 of 1979 decided on 18/12/1992 ; wherein this Court has held that it is a well settled principle of law, that in a case of sale of immovable property, time is not the essence of the contract. 

However, If the parties agreed to a specified time in the agreement to perform their part of the contract, then time is the essence of the contract and parties shall adhere to the same.

The Court also relied on the statement in Chand Rani Vs. Smt. Kamal Rani(supra) case whereas it was mentioned 

“It has to be ascertained whether under the terms of the contract the parties named a specific time within which completion was to take place, really and in substance it was intended that it should be completed within a reasonable time. An intention to make time the essence of the contract must be expressed in unequivocal language.””

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Karnataka Rera - No Compensation is payable for mental agony in case of breach of a contract.

 In the Matter of Suman Rupanagudi vs. Adarsh Developers Complaint no. CMP/190912/0004118 decided on 31.01.2020  before Karnataka Real Estate Regulatory Authority

Karnataka RERA tried to clear this ambiguity by placing reliance on the judgment of the Hon’ble Supreme Court of India in Ghaziabad Development Authority vs. Union of India. (2000)6 SCC113 The Hon’ble Supreme Court, while considering a case of breach of contract under Section 73 of the Indian Contract Act, 1872, held that no damages are payable for mental agony in case of breach of a contract.

In Lucknow Development Authority vs. M.K. Gupta,AIR1994 SC 787 the Hon’ble Supreme Court of India held that the liability for mental agony had been fixed not within the realms of contract but under the principles of administrative law.

In view of the same, Karnataka RERA refused to grant relief towards mental agony