Court’s Decision:
The High Court of Jammu & Kashmir and Ladakh dismissed the petition seeking a refund of Rs. 3 lakhs deposited as earnest money for a residential flat at Shahjar Apartments, Bemina, on grounds of the petitioner’s failure to adhere to the payment schedule stipulated in the letter of intent. The Court held that the forfeiture of the earnest money by the respondents was legally justified due to the petitioner’s non-compliance with contractual terms.
Facts:
The petitioner applied for the allotment of a 3BHK residential flat at Shahjar Apartments, Bemina, and deposited Rs. 3 lakhs as earnest money as part of the allotment process. According to the payment schedule outlined in the letter of intent dated 13.12.2018, the petitioner was required to deposit further instalments towards the flat’s premium. Despite receiving multiple communications, the petitioner failed to deposit the subsequent amounts. The respondent, Srinagar Development Authority, issued public notices stating that the allotment had been cancelled, and the earnest money was forfeited.
Issues:
Whether the petitioner is entitled to a refund of the Rs. 3 lakhs deposited as earnest money despite failing to comply with the agreed payment schedule.
Petitioner’s Arguments:
The petitioner argued that despite paying the earnest money, the flat was not allotted, and the respondents had unlawfully retained the amount. The petitioner claimed that this constituted a violation of their fundamental rights, as the money was held without justification.
Respondent’s Arguments:
The respondents contended that the petitioner had been repeatedly informed to make the payments as per the schedule outlined in the letter of intent. The petitioner’s failure to make these payments justified the forfeiture of the earnest money, in line with the terms outlined in the registration form and letter of intent.
Analysis of the Law:
The Court reviewed the terms of the contract, noting that the registration form explicitly stated that failure to deposit the first instalment within the prescribed time would lead to the forfeiture of the earnest money without notice. It was clear that the earnest money was to be adjusted against the first instalment, but the petitioner did not comply with this requirement.
Precedent Analysis:
The Court did not reference any specific judgments or precedents in its ruling. The decision was based primarily on the interpretation of the contract terms between the petitioner and the respondents.
Court’s Reasoning:
The Court held that the petitioner had been informed multiple times to deposit the subsequent instalments, which he failed to do. As per the contractual terms, the earnest money was forfeited upon the petitioner’s failure to deposit the instalments within the stipulated time. The Court further noted that the petitioner had not challenged the cancellation of the allotment but only sought the refund of the earnest money, which was not permissible under the terms agreed upon by both parties.
Conclusion:
The petition was dismissed as the forfeiture of the earnest money was in accordance with the contractual obligations and the petitioner failed to demonstrate any legal grounds for the refund.
Implications:
This judgment reinforces the principle that parties must adhere to the terms of a contract, particularly in cases of property allotment. Non-compliance with payment schedules, as agreed upon in the letter of intent and registration forms, can lead to forfeiture of earnest money, and courts are unlikely to intervene in such cases unless there is evidence of legal or procedural impropriety.
