An allottee is entitled to a refund with interest when project completion is unreasonably delayed.

The allottee deposited ₹1,85,000 with the Lucknow Development Authority (LDA) on 31 January 2012 for a flat in Sopan Enclave.

LDA allotted Flat C-401 on 11 July 2014; the scheme was estimated to be completed within 24 months, but the completion certificate was issued only on 17 February 2020.

After LDA’s 2019 demand for pending dues and possession went unanswered, the allottee sought a refund.

The Regulatory Authority dismissed the claim on 24 February 2020.

The Tribunal allowed the allottee’s appeal and directed LDA to refund the booking amount after a 20% deduction, with interest at MCLR + 1% until payment.

LDA appealed, relying on brochure Clause 8.2, which provided for a 20% deduction from the registration amount and refund of the balance without interest.

The High Court also noted that the allotment had not been cancelled and that the allottee’s wife had purchased another LDA flat in 2014.

1. Whether Clause 8.2, requiring a 20% deduction and excluding interest on the balance refund, could be enforced against the allottee.

2. Whether the Tribunal’s refund direction involved an error of law warranting interference in the appeal.

The Court applied the principles of contract law that a court may decline to enforce an unfair or unreasonable contractual term imposed by a party with superior bargaining power, relying on Pioneer Urban Land & Infrastructure Ltd. v. Govindan Raghavan and LIC of India v. Consumer Education & Research Centre.

It also relied on the principle that compensation must be fair and proportionate to the loss and deprivation suffered, as discussed in GDA v. Balbir Singh and Parsvnath Developers Ltd. v. Mohit Khirbat.

The Court referred to the doctrine of unjust enrichment: a person should not retain money or benefits that, in equity and good conscience, belong to another.

Section 18 of the Real Estate (Regulation and Development) Act, 2016 was referred to in the Tribunal’s discussion of relief for delay.

Clause 8.2 was, in the Court’s view, ex facie one-sided, unfair and unreasonable, and LDA therefore could not rely on it to deny interest on the refund.

The project substantially exceeded its estimated 24-month completion period: the booking money was paid in January 2012, while the completion certificate was issued in February 2020.

Further, LDA had not cancelled the allotment, yet retained the booking money.

The Court considered that retention, in these circumstances, unjust enrichment and found no error of law in the Tribunal’s direction to refund 80% of the booking amount with interest.

The appeal was dismissed, leaving in place the direction to refund the booking amount after a 20% deduction, with interest at MCLR + 1% until payment.