Supreme Court Rules on Refund in Godrej Projects vs. Anil Karlekar Case
New Delhi, February 3, 2025 – In a significant ruling, the Supreme Court of India has partially upheld a decision by the National Consumer Disputes Redressal Commission (NCDRC) regarding the refund policy of Godrej Projects Development Limited. The case pertained to a dispute between homebuyers and the developer over the cancellation of an apartment booking in the “Godrej Summit” project at Sector 104, Gurgaon.
2/7/20252 min read
Background of the Case
The dispute arose when the complainants, Anil Karlekar and others, booked an apartment in 2014 and later sought a refund following a downturn in property prices. Despite the developer offering possession in 2017, the buyers opted to cancel their booking, citing a fall in market prices and concerns about project connectivity.
Initially, Godrej Projects refused to refund the full amount, citing the agreement's forfeiture clause, which allowed a 20% deduction of the Basic Sale Price (BSP) as an earnest money deposit. The complainants filed a case with the NCDRC, seeking a refund of ₹51,12,310 with interest.
NCDRC Ruling and Supreme Court Appeal
On October 25, 2022, the NCDRC ruled that the deduction of 20% was excessive and directed the developer to deduct only 10% of the BSP while refunding the remaining amount with 6% simple interest. Godrej Projects challenged this order in the Supreme Court, arguing that the forfeiture clause was contractually agreed upon and should be enforced.
Supreme Court's Judgment
A bench comprising Justices B.R. Gavai and S.V.N. Bhatti upheld the NCDRC’s directive to limit the forfeiture to 10% of the BSP but set aside the order for additional interest payment. The Court found that the agreement was one-sided and heavily tilted in favor of the developer, making the 20% forfeiture clause unreasonable.
The judgment referenced prior rulings, including Pioneer Urban Land & Infrastructure Ltd. v. Govindan Raghavan, which emphasized that unfair contract terms in builder agreements cannot be enforced against homebuyers. The Court also cited the Consumer Protection Act, 2019, which defines "unfair contracts" as those imposing excessive obligations on consumers.
Implications of the Verdict
The ruling is expected to have wide implications for real estate transactions, reinforcing the principle that developers cannot enforce excessively harsh forfeiture clauses in agreements. It provides relief to homebuyers who cancel bookings due to market fluctuations and ensures that refunds are processed fairly.
The Supreme Court directed Godrej Projects to pay the balance amount of ₹12,02,955 to the complainants within six weeks, bringing closure to the long-standing dispute.
This decision strengthens consumer rights in the real estate sector and reaffirms judicial scrutiny over unfair builder-buyer agreements.