Chhattisgarh RERA Directs Refund to Plot Buyer, Says Builder Cannot Enforce Unfair Deduction Beyond Supreme Court Norm

News Citation : 2026 LN (CG-RERA) 42

June 30, 2026 : In a significant order protecting the rights of homebuyers, the Chhattisgarh Real Estate Regulatory Authority (RERA), Raipur, has directed a developer to refund the balance amount payable to a plot purchaser after holding that the contractual clause permitting a 25% deduction could not prevail over the legal principles laid down by the Supreme Court. The Authority ruled that only a 10% deduction from the basic sale price was permissible in the facts of the case and ordered refund of the remaining amount to the allottee. The order was passed on 30 June 2026 in a complaint filed under Section 31 of the Real Estate (Regulation and Development) Act, 2016.

The dispute arose between complainant Rajan Sah and J.R.S. Developers in relation to Plot No. 15 in the registered “Nirvana Garden Phase-3” project at Naradaha, Raipur. According to the complaint, the parties executed a plot purchase agreement on 13 December 2019 for a total sale consideration of ₹19,54,745. The buyer claimed that he paid substantial amounts towards the booking and subsequent instalments but was later unable to proceed with the transaction because of personal and medical difficulties, including serious kidney-related health issues. He alleged that despite repeated requests, the developer failed to refund the deposited amount and returned only ₹1 lakh after a prolonged delay, compelling him to approach RERA for relief.

The developer contested the complaint and argued that the agreement itself permitted cancellation of the allotment with deduction of 25% of the deposited amount if the purchaser failed to fulfil the contractual obligations. It further claimed that the complainant had not paid the amount asserted in the complaint and maintained that the admissible refund had already been paid in accordance with the terms of the agreement. The developer also contended that no further amount was legally recoverable.

After examining the pleadings, payment receipts and documents produced by both parties, the Authority framed issues relating to its jurisdiction, limitation and the complainant’s entitlement to relief. RERA held that it had jurisdiction to adjudicate disputes concerning refund arising from a registered real estate project under Section 31 of the Real Estate (Regulation and Development) Act, 2016. It also found that the complaint had been filed within the limitation period prescribed under the Limitation Act, 1963.

While analysing the evidence, the Authority noted that documentary proof established payment of ₹6.60 lakh by the complainant. It observed that only ₹1 lakh had admittedly been refunded through an online transfer. Although the developer claimed to have paid the remaining ₹3.95 lakh in cash, it failed to produce any documentary proof or receipt supporting that assertion. The Authority therefore accepted only the online payment of ₹1 lakh as established and rejected the claim regarding the alleged cash refund.

A significant aspect of the ruling concerns the enforceability of cancellation clauses in builder-buyer agreements. Referring to the Supreme Court’s decision in Godrej Projects Limited v. Anil Karlekar & Another (Civil Appeal No. 3334 of 2023, decided on 3 February 2025), the Authority observed that in cancellation cases, the builder can ordinarily deduct only 10% of the basic sale price instead of imposing a higher contractual deduction. The order specifically relied on the Supreme Court’s observation regarding “Cancellation of allotment – Direction to refund with order to deduct only 10% of Basic Sale Price.”

Applying the above principle, RERA held that from the admitted payment of ₹6.60 lakh, the developer could deduct only 10%, amounting to ₹66,000. Consequently, the complainant became entitled to a refund of ₹5.94 lakh. Since ₹1 lakh had already been returned through banking channels, the Authority concluded that the balance amount of ₹4.94 lakh remained payable by the developer.

The Authority also examined the obligations of promoters under Section 18 of the Real Estate (Regulation and Development) Act, 2016, which governs refund and compensation where a promoter fails to perform obligations under the agreement or the Act. Explaining the provision in simple terms, RERA observed that where a promoter fails to honour statutory or contractual obligations, an allottee may be entitled to refund, interest and other appropriate relief depending upon the circumstances. The Authority further noted that contractual clauses cannot be enforced in a manner inconsistent with binding judicial precedents or the protective framework of the RERA legislation.

The order carries wider significance for the real estate sector as it reinforces that developers cannot rely solely on one-sided contractual clauses imposing excessive forfeiture when higher judicial precedents prescribe a more balanced standard. It also highlights the importance of maintaining proper documentary records of refunds, as unsupported claims of cash payments may not be accepted in adjudicatory proceedings. For homebuyers, the decision reiterates that RERA remains an effective forum for seeking refund of deposited amounts where disputes arise regarding cancellation of allotments and refund obligations.

Case Reference: Rajan Sah v. J.R.S. Developers, Chhattisgarh Real Estate Regulatory Authority (RERA), Raipur, Case No. M-PRO-2026-03567.