RFA 37/2020 Page 1 of 31

* IN THE HIGH COURT OF DELHI AT NEW DELHI

% Reserved on:12

th

February, 2026

Pronounced on: 18

th

May, 2026

+ RFA 37/2020, CM APPL. 67118/2025 & CM APPL. 9723/2026

M/S R. C. SOOD & CO. DEVELOPERS PVT. LTD.

(EROS GROUP)

S-1, American Plaza

International Trade Tower

Nehru Place, New Delhi. .....Appellant

Through: Mr. Vikas Mishra, Mr. Kartik Magar

Karti, Mr. Sanchit Gawri and

Mr. Krishna Dev Yadav, Advocates.

versus

1. SHRI SHARAD MAHESHWARI

S/o Shri Ram Babu Maheshwari

R/o C-5/31, Ground Floor

Safdarjang Development Area, New Delhi.

2. SMT. VANDANA MAHESHWARI

W/o Shri Sharad Maheshwari

R/o C-5/31, Ground Floor

Safdarjang Development Area, New Delhi. .....Respondents

Through: Mr. Manish Kaushik and Mr. Mishal

Johari, Advocates.

CORAM:

HON'BLE MS. JUSTICE NEENA BANSAL KRISHNA

J U D G M E N T

NEENA BANSAL KRISHNA, J.

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1. The Regular First Appeal under Section 96 read with Order XLI CPC

has been preferred against the Judgment and Decree dated 30.09.2019,

whereby the Suit of the Plaintiff/Respondent has been decreed for a sum of

Rs.18,00,000/- along with pendente lite and future interest @ 6% per

annum.

2. The Plaintiff/Respondent had filed a Suit bearing No.9719/2016 for

Recovery of Rs.52,71,118/- along with pendent lite and future interest.

3. The facts in brief, are that the Defendant, a Real Estate Developer and

owner of land in Village Ghasola Badshahpur, District Gurgaon, Haryana,

launched a residential project known as “Rosewood City” consisting of

Duplex independent villas called “Grand Mansions”. The Plaintiff applied

for a built-up villa, vide Application dated 22.02.2008 and paid

Rs.10,00,000/-, as booking amount.

4. Subsequently, an Agreement to Sell dated 27.02.2008 was executed in

respect of Villa No. C-01, admeasuring approximately 510.39 sq. yds.,

having a super built-up area of about 4900 sq. ft., for a total consideration of

Rs.2,50,00,000/-.

5. The Plaintiff further paid a sum of Rs.25,00,000/- through cheque on

22.03.2008 and Rs.27,00,000/- through cheque on 30.06.2008. The Plaintiff

thus, made a payment of total Rs.62,00,000/-, towards this Agreement dated

27.02.2008.

6. It is the case of the Plaintiff that the original documents relating to the

allotment were lost during transit, which was intimated to the Defendant

vide letter dated 12.03.2009, requesting it to supply of complete documents.

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Though some documents were supplied, the schedule of construction and

specifications, were not provided despite repeated requests.

7. The Plaintiff alleged that upon visiting the site in September–October

2008, he found the construction to be slow and of inferior quality,

whereupon he raised objections and sought either compliance with

specifications or refund of his money.

8. The Defendant, however, assured completion of construction and

persuaded the Plaintiff to continue with the project.

9. Although the payments were commensurate with the construction

progress, the absence of an available construction schedule meant the

Plaintiff could not determine the expected stage of completion, the actual

work performed, or the specific due dates for instalments.

10. Despite this, the Defendant via letter dated 09.03.2009, unilaterally

and arbitrarily cancelled the Plaintiff’s allotment. The Defendant further

forfeited the earnest money of Rs. 62,00,000/-, which was 25% of the

Villa’s composite price, in an illegal and wrongful manner.

11. "The Plaintiff sent reminders on 30.03.2009 and 15.04.2009, asking

the Defendant to withdraw the cancellation and provide the necessary

documents. However, the Defendant failed to take any action or even reply,

leaving the Plaintiff's concerns completely unaddressed.

12. In the absence of any response, the Plaintiff was left with no choice

but to send a letter dated 04.05.2009, claiming a refund of the entire amount

of Rs. 62,00,000/-, along with interest at the rate of 18%.

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13. Thereafter, vide letter dated 12.05.2009, the Defendant refused to

refund the money and reiterated that the Plaintiff was left with no right, title,

or interest in the Villa, following the cancellation of the Agreement dated

27.02.2008. The Defendant went to the extent of holding the Plaintiff liable

for Rs. 50,000/-, as the balance amount of earnest money, that was allegedly

due.

14. While the Plaintiff was in the process of initiating litigation, Mr.

Mohit Sharma, DGM (Sales & Marketing), contacted the Plaintiff to propose

a meeting regarding the Agreement to Sell. During this meeting, the Plaintiff

requested that the Defendant rescind the cancellation and complete the Villa.

15. However, this proposal was outrightly rejected by the Defendant’s

official stating they were not in a position to reverse the cancellation

decision. The Plaintiff then, requested a refund of Rs.62,00,000/-, along with

interest, plus Rs.20,00,000/-, in damages which was also declined.

16. In lieu of the original Villa, Mr. Mohit Sharma offered the allotment

of Villa No. B-69, situated on 430 square yards with a super built-up area of

4,800 square feet, for a total consideration of Rs.2,11,00,000/-. Under

compelling circumstances and coercive bargaining, the Plaintiff was left

with no option but to accept this one-sided proposal.

17. Mr. Mohit Sharma thereafter, summoned the Accounts Manager, Mr.

Navin C. Shaily and informed him of the understanding, and requested that

the details be recorded via email. The following day, Mr. Sharma provided

the Application Form in duplicate, for the allotment of Villa No. B-69. The

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Plaintiff signed the forms and completed all necessary procedures in the

presence of Mr. Sharma, handing over one copy, while retaining the second.

18. On 24.06.2009, Mr. Shaily emailed the requisite papers to the

Plaintiff. Mr. Sharma further confirmed via telephone that the detailed

Agreement and other formalities would be finalized by 27.06.2009, in line

with the understanding reached on 23.06.2009, which had been confirmed

by the Minutes of the Meeting, emailed by the Plaintiff.

19. On 27.06.2009, the Plaintiff met with Mr. Mohit Sharma at his

request, only to discover that the Defendant was again unilaterally and

arbitrarily changing the Villa. Mr. Sharma stated there was no room for

further discussion. He then insisted that the Plaintiff settle the entire claim

for 44,00,000/-. He claimed that if the Plaintiff agreed, the Defendant would

cooperate regarding two plots in Lake Wood City, Surajkund, Faridabad,

and provide free membership to an "International Standard Spa & Club"

proposed for that development.

20. The Plaintiff was threatened that failure to agree to this new proposal,

would result in the total loss of the 62,00,000/-, which was already paid

under the first Agreement to Sell. Consequently, the Plaintiff was coerced

into accepting this unilateral proposal and was forced to sign a "Full and

Final Settlement" along with other documents. The Plaintiff was

subsequently handed a cheque for 44,00,000/-, against a total lawful claim

of 62,00,000/-.

21. Following the realization of the cheque for 44,00,000/-, the Plaintiff

sent an email dated 30.06.2009 lodging a formal protest regarding the

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receipt of the payment and the Defendant's failure to pay the outstanding

balance of 18,00,000/-.

22. Mere acceptance of 44,00,000/-, instead of the full claim of

62,00,000/, ostensibly as a "full and final settlement" is “non-est” in the

eyes of the law, as it was executed under undue influence and coercive

bargaining.

23. Consequently, the Plaintiff filed the Suit claiming 18,00,000/-, along

with interest at the rate of 18% per annum compounded quarterly.

24. The Defendant in its Written Statement, raised a preliminary

objection, asserting that the Plaint fails to disclose any cause of action.

25. The Defendant claimed that the Plaintiff failed to address the demands

for instalments raised by the Defendant, for reasons best known to the

Plaintiff. Consequently, the Plaintiff committed a breach of the Agreement

to Sell dated 27.02.2008. The Defendant emphasized that the Agreement to

Sell contained a clear stipulation, requiring payments to be made strictly in

accordance with the prescribed schedule.

26. The Defendant further asserted that multiple letters and reminders

were sent to the Plaintiff, prior to the cancellation of the Villa allotment.

Specifically, prior to the letter dated 09.03.2009, a letter dated 19.02.2009

was dispatched to the Plaintiff. This correspondence clarified the

Defendant's position and brought various terms of the Agreement to the

Plaintiff's attention.

27. According to the Defendant, the Plaintiff ignored all the

correspondence and instead, concocted a narrative to evade his contractual

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obligations. As a result of the Plaintiff’s repeated failure to remit the

instalments, the Defendant was left with no option, but to cancel the

provisional allotment and the Agreement to Sell.

28. It is asserted that the Plaintiff suppressed material facts which led to

the cancellation of the provisional booking. Specifically, the Plaintiff

concealed that on 18.06.2009, he submitted a letter to the Defendant stating

that due to the recession in the real estate and financial sectors, he was no

longer interested in the Villa. In that letter, the Plaintiff sought the

cancellation of the provisional reservation and requested a refund after the

adjustment of 18,00,000/-, cancellation fee. Notably, this letter was omitted

from the Plaint.

29. Furthermore, the Plaintiff failed to disclose the execution of an

Undertaking-cum-Indemnity Bond and a separate Undertaking at the time of

receiving 44,00,000/-, as part of a full and final settlement. Consequently,

the Plaintiff has performed a complete reversal of their position, by

concocting a false plea in a well-planned manner.

30. The Plaintiff has already received 44,00,000/- in full and final

settlement of the claim and is not entitled to any further amount. Having

received the full payment under the terms of the settlement, the Plaintiff is

now estopped from raising any plea regarding entitlement to additional

funds. The suit is misconceived and is not maintainable.

31. On merits, all allegations made in the Plaint, were denied. The

Defendant asserted that the Agreement contained a clear stipulation that

payments were to be made in accordance with the Payment Schedule.

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Clause 4 of the Agreement to Sell (ATS) provided that the Defendant was

entitled to cancel the villa allotment and was entitled to 25% of the sale

price.

32. Despite repeated reminders, the Plaintiff failed to pay the outstanding

instalments and issued only one cheque, dated 08.11.2008, for a sum of

27,00,000/-, which was subsequently dishonoured for "insufficient funds."

Furthermore, despite receiving the cancellation letter dated 09.03.2009, the

Plaintiff did not raise any objection at that time. Instead, the Plaintiff began

seeking copies of the property documents, under the pretext of having lost

the originals. The Defendant maintained there was no obligation to supply

these documents, as the Agreement to Sell had already been cancelled.

33. It is further asserted that the Plaintiff voluntarily entered into a full

and final settlement and accepted the cheque for 44,00,000/- in satisfaction

of all claims. The Defendant denied that the settlement was executed under

any undue influence or coercion.

34. Further, by executing the Undertaking-cum-Indemnity Bond and a

separate Undertaking on 27.06.2009, the Plaintiff waived all rights and titles

under the Agreement to Sell. The Defendant reiterated that the Plaintiff had

personally sought the cancellation of the provisional reservation via the

letter dated 18.06.2009. Consequently, it was submitted that the Suit is

devoid of merit and is liable to be dismissed.

35. The Plaintiff in the Replication reaffirmed and reiterated the

assertions made in the Plaint.

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36. Based on the pleadings, the following issues were framed on

27.05.2011: -

(i) Whether the cancellation of the allotment of the

Villa in suit vide letter dated 09.03.2009 was illegal, as

alleged? OPP.

(ii) Whether the forfeiture of the earnest money by

the defendant. was illegal as alleged by the plaintiff? If

so, to what effect? OPP.

(iii) Whether the defendant paid a sum of Rs. 44

Lakhs to the plaintiff in full and final settlement of all his

claims and, therefore, the suit is not maintainable? OPD.

(iv) Whether the plaintiff executed the receipt dated

18th June, 2009 under undue influence and compelling

circumstances as alleged by the plaintiff? OPP.

(v) Whether the plaintiff is entitled to claim any

amount from the defendant? OPP.

(vi) Whether the plaintiff is entitled to interest and if

so at what rate, on what amount and for what period.

(vii) Relief.

37. PW-1 Mr. Sharad Maheshwari, Plaintiff No. 1, tendered his

evidence-in-chief by way of an affidavit Ex. PW1/A. Through the said

affidavit, he proved the application form dated 22.02.2008 Ex. P-1, the

Agreement to Sell dated 27.02.2008 Ex. P-2, and the receipts

acknowledging payments made by the Plaintiff amounting to ₹62 lakhs Ex.

P-3, Ex. P-4 and Ex. P-5. He further proved the correspondence exchanged

between the parties, including the letter dated 09.03.2009 issued by the

Defendant Ex. P-6, the reply dated 12.03.2009 sent by the Plaintiff Ex. P-7,

and the subsequent letter dated 04.05.2009 seeking refund Ex. P-8, along

with the reply dated 12.05.2009 issued by the Defendant Ex. P-9

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38. The Defendant examined DW-1 Shri Ashok Kumar Singh, Senior

Manager (Accounts), who proved documents in support of the defence.

These included the authority letter and affidavit in his favour Ex. DW-1/1,

the letter dated 27.09.2008 requesting payment of ₹27,00,000/- towards

Instalment-D Ex. DW-1/2, the letter dated 20.12.2008 demanding

outstanding payment for Instalment-E Ex. DW-1/3, and the letter dated

19.02.2009 regarding the said instalments Ex. DW-1/4. He further proved

Receipt No. 41 dated 04.03.2009 for ₹27,00,000/- Ex. DW-1/5 and the

intimation regarding dishonour of the cheque for ₹27,00,000/- Ex. DW-1/6.

The Defendant also relied upon the letter dated 09.03.2009 regarding

cancellation of allotment Ex. D-1, the letter dated 04.05.2009 sent by the

Plaintiff Ex. D-2, the letter dated 12.05.2009 along with acknowledgment

Ex. D-3, and the letter dated 18.06.2009 written by the Plaintiff Ex. D-6

39. The learned District Judge held that the Plaintiff’s testimony

regarding the slow pace of construction, remained uncontroverted. It was

further observed that the demand letters were required to be sent via

Registered Post with acknowledgment due. However, the Defendant failed

to produce any postal receipts to prove the delivery of the alleged demand

letters to the Plaintiff regarding the payment of instalments.

40. Consequently, the court held that the Defendant's cancellation of the

villa allotment was illegal.

41. It was further observed that the Defendant’s deduction of 18,00,000/-

constituted a forfeiture of earnest money, which could not be justified by

seeking protection under the plea of a "full and final settlement." The court

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held that this amount of 18,00,000/-, could not have been adjusted under

the pretext of a settlement, as asserted by the Defendant.

42. The court found no evidence to demonstrate that the Defendant had

suffered any actual financial loss due to the non-payment of instalments or

the cancellation of the allotment. Accordingly, it was held that the sum of

18,00,000/-, being in the nature of an illegal forfeiture of earnest money,

was liable to be refunded to the Plaintiff.

43. The learned District Judge accepted the Plaintiff's plea that the

settlement was signed under undue influence and coercion. The court held

that a party may succumb to the pressure exerted by the other party to a

bargain, when that party occupies a significantly stronger position.

Consequently, it was held that the Settlement and Receipt dated 27.06.2009

were not voluntarily signed or agreed to by the Plaintiff.

44. Based on these findings, the Suit was decreed in favour of the Plaintiff

for the recovery of 18,00,000/-, along with interest at the rate of 6% per

annum from the date of the filing of the Suit. However, the Plaintiff’s claim

for damages amounting to 20,00,000/- was denied as the Plaintiff had failed

to lead any evidence to establish or substantiate the claim for such damages.

45. Aggrieved by the Judgment and the Decree dated 30.09.2019, the

Defendant/Appellant has preferred the present Appeal.

46. The grounds for challenge, are that the dispute between the parties

pertained to non-compliance with the terms and conditions of the Agreement

to Sell, which ultimately culminated in a full and final settlement. It is

contended that the Respondents/Plaintiffs committed a breach of the

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Agreement to Sell dated 27.02.2008 by failing to pay the instalments

stipulated in the payment schedule, despite several reminders and notices

issued by the Appellant. The learned District Judge failed to appreciate that

the Respondents/Plaintiffs did not adhere to the payment schedule and

deliberately defaulted on the instalments, thereby compelling the Appellant

to cancel the provisional allotment.

47. Under Clauses 2 and 3 of the Agreement to Sell dated 27.02.2008, the

Appellant was entitled to forfeit 25% of the sale price as earnest money

upon the cancellation of the provisional allotment, in case the

Respondents/Plaintiffs fail to remit payments as per the schedule. The

Appellant possessed an absolute right to forfeit said earnest money as

liquidated damages, resulting from the non-performance of the Agreement

48. The learned District Judge failed to consider that, admittedly, via

letter dated 18.06.2009, the Respondents themselves expressed that they

were no longer interested in the property due to the recession in the real

estate and financial sectors. In that correspondence, they sought a refund of

44,00,000/-, as a full and final settlement after the adjustment of 18,00,000/-

toward the earnest money. Consequently, the Respondents accepted the

refund of 44,00,000/-, and the settlement was entered into voluntarily and

willingly, without any coercion or pressure.

49. The learned District Judge erred by disregarding the Appellant's

conduct and adopting a contrary view, erroneously observing that the parties

were not on an equal footing at the time of the settlement.

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50. Both, an Undertaking-cum-Indemnity Bond and a separate

Undertaking, each dated 27.06.2009, were duly executed by the

Respondents at the time of the settlement. They accepted a cheque dated

27.06.2009 for a refund of 44,00,000/-, as a full and final settlement in

respect of the Suit Property. Once this payment was received and

subsequently encashed by the Respondents, no further liability or claims

remained outstanding against the Appellant.

51. It has not been considered that a well-planned and concocted narrative

was spun by the Respondents, despite the bona fide conduct and intention of

the Appellant to fulfil the terms of the Agreement to Sell and voluntarily

refund the due amount of 44,00,000/-. The Appellant denied that this sum

was received by the Plaintiffs/Respondents under protest or as a result of

pressure tactics and undue influence.

52. It is further contended that the Respondents were the party in breach

of the Agreement to Sell dated 27.02.2008. Despite repeated requests and

reminders sent by the Appellant, the Respondents issued only one cheque,

dated 08.11.2008, for 27,00,000/-, which was subsequently dishonored on

04.03.2009 due to “insufficient funds”.

53. Contrary to the facts on record, the learned District Judge drew an

adverse inference against the Appellant based on the non-availability of

postal or courier receipts, erroneously assuming a failure to prove the Letters

of Demand or a default in payment by the Respondents.

54. Crucially, the payment schedule was explicitly time-linked, not

construction-linked as alleged by the Respondents. Therefore, the contention

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that construction was progressing at a slow pace, is irrelevant to the

Appellant's right to demand instalments, as those payments were tied to a

fixed timeline, rather than construction milestones.

55. It has not been considered that the Cancellation Letter dated

09.03.2009 was served by the Appellant upon the Respondents, and that the

Respondents failed to raise any objection in their letter dated 12.03.2009.

The Respondents falsely claimed to have lost all original documents

pertaining to the Suit Property during transit; however, they provided no

particulars, and no FIR or public notice was ever issued in this regard. Since

it was the Appellant who cancelled the allotment of the Suit Property, there

was no occasion to supply the documents afresh to the Respondents.

56. Following the issuance of the Cancellation Letter dated 09.03.2009,

the Respondents never came forward to remit the instalments or to protest

against the alleged deficiencies in construction. Furthermore, the

Cancellation Notice has been erroneously held as illegal, arbitrary, and

unjustified. The letter dated 12.05.2009 sent in response to the Respondents’

letter dated 04.05.2009 duly informed the Respondents that the failure to pay

instalments on time, would result in the cancellation of the allotment and the

forfeiture of earnest money in terms of the Agreement to Sell. Ultimately,

the Appellant accepted the request of the Respondents made via the letter

dated 27.06.2009 and refunded the sum of 44,00,000/-. The Respondents

are, therefore, guilty of the suppression of material and vital facts.

57. Reliance has been placed on Kailash Nath Associates vs. DDA, 2015

(4) SCC 136 and Rakesh Kumar vs. Vinod Vats, RFA 181/2017, decided by

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a Co-ordinate Bench of this Court, wherein it was held that a seller cannot

forfeit any amount except a nominal sum unless, actual loss is proven.

However, these judgments are inapplicable to the present case, as the dispute

does not pertain to a unilateral forfeiture, but rather to a full and final

settlement voluntarily entered into by the parties.

58. Furthermore, in the case of Satish Batra vs. Sudhir Rawal, (2012) 132

DRJ 705, the Hon’ble Supreme Court of India observed that where earnest

money is provided by the buyer to bind the contract as part of the purchase

price, it shall be forfeited if the transaction falls through due to the default or

failure of the purchaser.

59. In fact, the Appellant has not even forfeited 10% of the total sale

consideration. The forfeited amount of 18,00,000/-, is less than 10% of the

total sale consideration of 2,50,00,000/-.

60. Furthermore, it is denied that any undue pressure or coercion was

exerted on the Respondents. The Supreme Court of India, in New India

Assurance Company Ltd. vs. Genus Power Infrastructure Ltd., (2015) 2

SCC 424, held that a bald plea of fraud, coercion, duress, or undue influence

is insufficient; the party raising such a plea must prima facie establish the

same by placing cogent material before the deciding authority.

61. Reliance is placed on Wishwa Mittar Bajaj & Sons vs. BPTP Ltd.,

OMP (Comm.) No. 427/2017 dated 21.12.2017, and Mihir Buildcon Pvt.

Ltd. vs. Ajnara Infrastructure (P) Ltd., (2016) SCC Online Del 5367. In

these judgements, it was held that once an Indemnity-cum-Undertaking is

executed between the parties, it is not open for them to subsequently

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challenge its validity by alleging that it was entered into under duress or

coercion.

62. Consequently, the Impugned Judgment is contrary to the settled

position of law and is, therefore, liable to be set aside

63. Written Submissions have been filed by the Appellant on similar

lines as the contentions raised in the Appeal.

64. The Respondents have filed their Written Submissions wherein,

while the factual matrix remained largely undisputed. They asserted that the

learned District Judge correctly found the cancellation of the allotment to be

unilateral and illegal. This contention is based on the premise that no

Demand notice was ever served upon the Respondents, nor was any

instalment due as per the construction schedule.

65. Clause 45 of the Agreement to Sell dated 27.02.2008 expressly

mandated that any communication between the parties must be served upon

the allottee, by the Company through pre-paid registered acknowledgment

post. Furthermore, Schedule ‘A’ of the Agreement to Sell stipulated that

payments would become due only within 15 days of the issuance of a

Demand Notice.

66. In the present case, although the Appellant alleged that Demand

Notices were issued via letters dated 27.09.2008, 20.12.2008, and

19.02.2009, they failed to prove service of these Notices upon the

Respondents. Consequently, the Respondents have asserted that in the

absence of proof of service, no default can be attributed to them. The

cancellation of the villa allotment on the grounds of non-payment of

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instalments is, therefore, entirely unjustifiable, as the Appellant failed to

fulfil the mandatory contractual prerequisites for demanding payment and

subsequently terminating the allotment.

67. Furthermore, Schedule ‘A’ of the Agreement to Sell dated

27.02.2008, provided that /Defendant had failed to produce its Schedule of

construction for the Villa. The payments were to be demanded, as per the

schedule of construction. Thus, there was no question of payment of

instalments, due to the delay and default of the Respondents/Plaintiffs, in

raising the construction, as per the Schedule. Since the construction was not

going on the site as per the agreed schedule of construction, the

Respondents/Plaintiffs could not have demanded further instalments, which

were linked with the progress of construction.

68. It is further contended that there were no sufficient grounds for the

forfeiture of the earnest money or any other amount by the

Appellant/Defendant. The Respondents/Plaintiffs further assert that the full

and final settlement was signed under undue influence, coercion, and

compelling circumstances, and was a result of the principle of “necessitas

non habet legem”. In support of this contention, reliance is placed on

Ambika Construction vs. Union of India, (2006) 13 SCC 475, and MD,

NTPC Ltd. vs. Reshmi Constructions, (2004) 2 SCC 663.

Submissions heard and the record perused.

69. The present Appeal is directed against the Judgment and Decree dated

30.09.2019, whereby the Suit of the Plaintiff/Respondent has been decreed

for recovery of ₹18,00,000/-, along with the interest @6%.

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70. It is an admitted case of the parties that the Respondents/Plaintiffs

entered into an Agreement to Sell dated 27.02.2008 with the

Appellant/Defendant, M/s R.C. Sood and Company Developers Pvt. Ltd.,

for the purchase of Villa No. 01, Block C, admeasuring approximately

510.39 square yards in 'Grand Mansions', Rosewood City, Gurgaon. As per

the said Agreement, the total sale consideration was 2,50,00,000/-, which

was to be paid in instalments, via a 'cash down' plan, or in a manner and at

such intervals as stipulated under Schedule ‘A’ annexed to the Agreement.

71. The Agreement further provided that the fully constructed Villa was

to be delivered within 25 months from the date of execution, contingent

upon the Respondents/Plaintiffs complying with the contractual terms and

remitting all payments due and payable as per the payment plan.

72. The relevant Clause Nos. 3, 4 and 45 of the Agreement, read as

under:-

“3. That the Company and the Allottee hereby agree

that the amount paid on reservation and subsequent

instalments as the case may be, will collectively

constitute die Earnest Money which is 25% (Twenty five

percent) of the composite price of the Villa.

4. The payment of all dues of the Company in

accordance with the dates and periods mentioned in the

Agreement is the essence of the Agreement. All dues are

payable at New Delhi in the Office of the Company.

Payments by cheques and drafts shall be drawn on

banks at New Delhi. The. Allottee shall make all

payments in time without any reminders from the

Company.

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The Allottee agrees, that in case of his failure to pay

the Company the amounts due and as demanded by the

Company in terms of this Agreement and. the

schedules thereto the Company shall have the absolute

right to cancel this Agreement at its sole discretion and

in such a case the Earnest Money as paid by tine

Allottee will stand. forfeited as liquidated damages for

non- performance of the terms of the Agreement. The

Company would thereafter be free to deal with the said

Villa in any manner at its sole discretion. The Allottee

will however be entitled to refund of the balance money

paid by him till that date only after resale of the Villa.

The Company will however not be liable for payment of

any Interest thereon.

45. That all notices to be served on the Allottee and

the company as contemplated by this Agreement shall be

deemed to have been duly served if said to the allottee of

the Company by pre-paid Registered Acknowledgement

Due Post at their respective addresses as specified

herein above.

It shall be the duty of the Allottee to inform the.

Company of any subsequent change in the above

address by Registered AD Post falling which all

communications and letters posted at the above address

shall deemed to have been received by the Allottee.

In case there are joint Allottees, all communications

shall be sent by the Company to the Allottee whose name

appears first and at the address given by him, which

shall for all purposes be considered as served on all the

Allottees.

It is hereby agreed between the parties that all letters

posted to the Allottee by the Registered Post on the

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address mentioned in this Agreement (or on the changed

address) intimated by the Allottee to the Company in

written by Registered Post) shall be deemed to have

been delivered or sufficiently served whether the same

are returned undelivered or refused delivery by the

Allottee.

I. Whether the Payments of Instalments was Time-Linked or

Construction-Linked:

73. The Appellant/Defendant contends that the Respondents/Plaintiffs

failed to adhere to the payment timeline stipulated in Schedule ‘A’ of the

Agreement to Sell dated 27.02.2008. It is the Appellant/Defendant’s case

that the transaction was governed by a time-linked plan, making

instalments due on specific calendar dates, regardless of construction

progress. The language of the Schedule mandated payments on or before

specific calendar dates, thereby establishing a time-linked obligation of

payment, independent of site progress.

74. They maintain that the failure to remit these payments constituted a

material breach of contract, thereby justifying the subsequent cancellation of

the allotment and the forfeiture of earnest money.

75. Conversely, the Respondents/Plaintiffs assert that the payment

obligations were commensurate with construction milestones. They allege

that during a site visit in late 2008, the construction was found to be

progressing at a slow pace and inferior quality material, was being used.

76. Furthermore, the Respondents/Plaintiffs asserts that the loss of their

original documents in transit, created a transactional gap regarding their

RFA 37/2020 Page 21 of 31

specific payment obligations, as the Respondent was not aware of the extent

of construction and the instalment to be paid. They contend that the

Appellant/Defendant failed to provide copies of the Construction and

Payment schedule despite multiple requests, which he claim was a

prerequisite for further payments.

77. Both parties anchor their respective positions on Schedule ‘A’ of the

Agreement to Sell.

78. It is evident from Schedule ‘A’ that while a timeframe was provided

for each instalment, the actual demand for payment was to be made based on

the progress of construction. This is evident from the endorsement at the

end, that “the sequencing mentioned above is indicative; payments will be

requested according to the construction schedule.” Therefore, the

responsibility to pay the instalments was construction-linked, as rightly

claimed by the plaintiff.

79. The Appellant, had examined DW-1, Shri Ashok Kumar Singh,

who in his cross-examination admitted that payments were required to be

made as per the actual progress of construction of the Villa in different

phases. However, he was unable to produce the Actual Schedule of

Construction, being followed at the site.

80. From the cross-examination of DW-1, Shri Ashok Kumar Singh, it

emerged that he was not personally aware of either the contents of the

Builder Buyer Agreement or the relevant facts pertaining to the construction.

Furthermore, he was unaware of the stage the construction of the Villa had

reached during the relevant period of September and October 2008.

RFA 37/2020 Page 22 of 31

81. The Plaintiffs' claim that construction progress was slow and

materials were of inferior quality, remains uncontroverted as the Defendant

failed to cross-examine the Plaintiffs, on these material aspects or to prove

otherwise.

82. From the testimony of PW-1, Sharad Maheshwari as well as DW-1,

Shri Ashok Kumar Singh, it is established that the allegation that the

materials used were sub-standard in nature was not rebutted. It was clearly

established that the construction at the site was slow and that sub-standard

materials, were being used. The Defendant was unable to prove the actual

extent of construction undertaken at the site, in September and October

2008.

83. It is evident that the construction-linked instalments could not be held

to be due, given the deficit in construction and the lack of progress, as per

the schedule. Therefore, the Defendant Company was not justified in

demanding instalments in advance, without the actual completion of the

construction stages, as envisaged in the Schedule of Construction. The

failure of Defendant to produce the Schedule or even provide evidence

regarding the extent of construction, fully supports this conclusion.

Consequently, the demands for instalments were not sustainable, as rightly

observed by the learned District Judge.

II. Whether the Demand Letters for Instalments, were required to

be Issued:

84. The second aspect is that the Schedule ‘A’ to the Agreement to Sell

EX. A-2, stipulated that payments would become due and payable, only

RFA 37/2020 Page 23 of 31

within 15 days, as and when a Letter of Demand was issued by the

Appellant.

85. According to Defendant, they had issued Demand Letters dated

27.09.2008 Ex. DW-1/2, 20.12.2008 Ex. DW-1/3, and 19.02.2009 Ex. DW-

1/4, though the plaintiff denied receiving any of the Demand Letters.

86. In terms of Clause 45 of the Agreement Ex-P2, all Notices were to be

served by the Appellant via pre-paid Registered Acknowledgement Due

Post, at the address mentioned in the Agreement. While these three Letters

have been placed on record, but there are no corresponding postal or courier

receipts for any of them. The Plaintiffs have denied receiving these letters;

therefore, the onus was on the Defendant to produce the postal receipts or

the Acknowledgment Cards, to prove that these letters were duly served

upon the Plaintiffs.

87. The responsibility to pay instalments was, first, linked to construction

progress and, second, contingent upon receiving a Letter of Demand. The

Defendant has miserably failed to prove that the demands were raised in

correlation to the construction carried out at the site, or that these Demand

Letters Ex. DW-1/2 to Ex. DW-1/4 were ever served upon the Plaintiffs. It is

significant to note that while general correspondence was conducted via

email, the Defendant chose to send demand letters solely by post, with no

electronic reminders ever issued.

88. Therefore, it cannot be said that the Plaintiffs were in default of

payment, despite the alleged demands.

III. Whether cancellation of Agreement Ex. A-2 was justified:

RFA 37/2020 Page 24 of 31

89. The Plaintiff pleaded that the cancellation of the allotment was

arbitrary, unreasonable, and contrary to customary market practices. He

further deposed in his Affidavit of Evidence, that the revocation of his right,

title, and interest along with the illegal forfeiture of the earnest money and

the threat to create third-party interests in the suit property, was wrongful.

90. Notably, the Plaintiff has not denied being served with the

cancellation letter dated 09.03.2009 Ex. D-1, issued by the Defendant. The

Defendant/ Appellant claimed cancellation of the Allotment, on the ground

of non-payment of instalments by the Plaintiffs.

91. The Appellant relied upon Clause 4 of the Agreement Ex-P2, which

provided: “in case of failure to pay the company the amount due and as

demanded by the company in terms of the Agreement and the schedule

thereon, the company shall have the absolute right to cancel the Agreement

at its sole discretion and in such a case, the earnest money paid by the

allottee shall stand forfeited as liquidated damages for non-performance of

the terms of the Agreement.”

92. Clause 31 further stipulated that interest at 18% p.a. compounded

quarterly, was leviable on any delays.

93. The Defendant argued that, pursuant to Clause 4 of the Agreement,

the payment schedule was of the essence of the contract. It was their

assertion that, under the terms of Clause 4, a failure to remit payment,

rendered the allotment liable to cancellation and the earnest money subject

to forfeiture.

RFA 37/2020 Page 25 of 31

94. The Appellant contended that prior to issuing the Cancellation Letter

dated 09.03.2009, the Defendant had sent a letter dated 19.02.2009 Ex. DW-

1/4 asserting that a demand for an instalment of Rs. 54,00,000/- had

previously been made through letter dated 20.12.2008 Ex. DW-1/3.

95. However, the Defendant had failed to establish that any of these

Demand letters were actually served upon the Respondents, as discussed

above. In view of this lack of evidence regarding service of demand Letters,

the plaintiff could not be held as a defaulter. There was no valid basis for

the termination of the Agreement or the forfeiture of funds.

96. The cancellation of the Villa allotment vide letter dated

09.03.2009, was rightly held by the learned District Judge to be illegal,

arbitrary, and unjustified.

IV. Whether the Settlement dated 27.06.2009 was voluntary and

Binding:

97. The central question that arose was whether the Settlement dated

27.06.2009 was voluntary, or whether it was executed under coercion and

pressure, as asserted by the Plaintiff.

98. It is undisputed that the Plaintiff had already paid Rs. 62 lakhs under

the Agreement. Being dissatisfied with the progress of construction and the

quality of materials which the Plaintiff alleged were inferior; he sought a full

refund.

99. The Defendant, however, declined the refund by its letter dated

12.05.2009 Ex. P-9, reiterating that the allotment stood cancelled and the

earnest money had been forfeited.

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100. The Plaintiff PW1, in his testimony, deposed that subsequent to the

cancellation, the Plaintiff issued a letter dated 30.03.2009 Ex. PW1/1 and a

reminder dated 15.04.2009 Ex. PW1/2, calling upon the Defendants to

withdraw the Letter dated 09.03.2009 and provide the requisite documents.

As the Defendant failed to reply, the Plaintiff was left with no alternative but

to seek a refund of the entire amount of Rs. 62 lakhs, with interest at 18%

p.a. compounded quarterly, plus Rs. 20 lakhs as damages, via letter dated

04.05.2009 Ex. P-8.

101. It was the Plaintiff's case in the Plaint, though notably not deposed by

him in his oral testimony as PW1, that while he was preparing the suit, Mr.

Mohit Sharma, DGM (Sales & Marketing) of the Defendant, invited him to

a meeting regarding the Villa allotment. During this meeting, the Plaintiff

requested the withdrawal of the cancellation and the completion of the Villa,

as per the construction schedule. This request was rejected, with the

Defendant stating they were not in a position to review the cancellation

decision.

102. However, when the Plaintiff insisted on a refund of his money with

compound interest, Mr. Sharma offered an alternative Villa No. B-69, 430

sq. yds., for a total sale consideration of Rs. 2,11,00,000/-, suggesting that

the Rs. 62 lakhs already paid, be adjusted toward this new allotment.

103. The Plaintiff accepted this proposition, as evidenced by the letter

dated 18.06.2009. In that letter, the Plaintiff stated he was no longer

interested in Villa No. C-01, but accepted the provisional allotment of Villa

B-69 in Eros Grand Mansions, Rosewood City, requesting that the Rs. 62

RFA 37/2020 Page 27 of 31

lakhs be transferred to Nehru Place Hotels Ltd., for that purpose. These

averments and the correspondence of 18.06.2009 demonstrate that,

following the cancellation, negotiations were undertaken to settle the matter.

104. By letter dated 25.06.2009 Ex. PW1/6, the Defendant confirmed the

allotment of the alternative villa and the adjustment of the funds previously

received. However, the subsequent correspondence between the parties

reveals that these negotiations ultimately failed to result in a fruitful

settlement.

105. Consequently, through letter dated 27.06.2009, the Defendant

informed the Plaintiff that, in view of the cancellation of the original

booking for Villa No. C-01, a sum of Rs. 44 lakhs, out of the Rs. 62 lakhs

received, was being returned in full and final settlement of the account.

106. The Plaintiff admitted that once negotiations fell through, the parties

entered into this settlement on 27.06.2009, resulting in the refund of Rs. 44

lakhs. In conjunction with this payment, the Plaintiff executed an Indemnity

Bond and two Undertakings Mark DX2 and DX3.

107. Subsequently, the Plaintiff sent an email dated 30.06.2009 Ex. PW1/7

acknowledging receipt of the Rs. 44 lakhs cheque, but asserting that the

payment was accepted "under protest." The Plaintiff contended that the

payment did not constitute a full and final settlement of the claims already

made to the Defendant. It was alleged that the acceptance of the reduced

amount, was the direct result of extreme pressure tactics, coercive

bargaining, and unfair trade practices. Accordingly, the Plaintiff requested

RFA 37/2020 Page 28 of 31

the Defendant to refrain from selling Villa C-01 and demanded that the

entire remaining balance be refunded within fifteen days.

108. It is well-settled that a plea of full and final settlement, must be

founded on free consent. Where the acceptance of a lesser amount occurs

under protest or coercive circumstances, it does not constitute a binding

accord and satisfaction and, consequently, does not extinguish the original

claim

109. The Plaintiff relied upon the maxim Necessitas non habet legem

(meaning 'necessity knows no law'), a principle recognized by the Supreme

Court in Ambika Construction v. Union of India (2006) 10 SCC 475 and

NTPC Limited v. Reshmi Construction. Whether the Plaintiff was compelled

to accept Rs. 44 lakhs as part of the Settlement under coercion or undue

influence, is a question of fact that must be determined by examining the

totality of the surrounding circumstances.

110. In these circumstances, it must be considered that the Defendant

already in possession of Rs. 62 lakhs, occupied a dominant position. This is

evidenced by its letter dated 09.03.2009 and subsequent correspondence,

wherein the Defendant asserted its intent to forfeit the said amount, pursuant

to Clause 4 of the Agreement to sell. These facts establish that the

Defendant, leveraging its dominant position, arbitrarily decided to withhold

the said amount.

111. The Plaintiff, thus occupied a vulnerable position and was left with no

viable alternative, but to accept whatever amount was offered. The learned

District Judge correctly observed that the Plaintiff, when pitted against a

RFA 37/2020 Page 29 of 31

large developer with superior bargaining power, was effectively coerced into

accepting the Rs. 44 lakhs offered by the Defendant.

112. The court rightly concluded that the Plaintiff’s acceptance and even

the encashment of the cheque, was vitiated by coercion and undue influence.

Consequently, the acceptance of a partial sum, cannot be construed as a

voluntary full and final settlement that would extinguish the Plaintiff's

original claim.

113. To conclude, the Defendant failed to prove that the cancellation of the

Agreement, was rightful. On the contrary, the evidence reflects that the

Defendant was unable to fulfil its contractual obligations under the

Agreement. Consequently, the Defendant is liable to return the entire

amount received from the Plaintiff in its entirety. There was no legal or

factual justification for the Defendant to deduct Rs. 18 lakhs, from the total

sum paid by the Plaintiff.

V. Whether Forfeiture of Rs. 18,00,000/- was justified:

114. It is admitted case that the plaintiff had paid Rs. 66,00,000/- out of

which Rs. 44,00,000/- were returned by the Defendant, under the alleged

voluntary settlement, while Rs. 18,00,000/- was forfeited. This forfeiture

needs to be considered from the perspective of Section 74 of the Indian

Contract Act, 1872, which provides that the party seeking to forfeit any

amount, is required to prove the loss or damage caused on account of

breach. Retention/Forfeiture of money, in absence of proof of loss, is not

permissible.

RFA 37/2020 Page 30 of 31

115. The Defendant's asserted that the deduction of Rs. 18 lakhs was made

in terms of Clause IV of the ATS, which permitted the forfeiture of 25% of

the sale consideration, as earnest money.

116. However, this is not a valid case for forfeiture, particularly as the

breach has been shown to be on the part of the Defendant. Furthermore, by

the Defendant's own admission, 25% of the total consideration does not

equal Rs. 18 lakhs.

117. Further, the Defendant has neither pleaded nor adduced any evidence

regarding any alleged financial loss arising from the allotment of the Villa.

Under the principles of contract law, the onus rests squarely on the

Defendant to prove that it sustained an actual loss to justify the forfeiture of

funds; however, the Defendant has wholly failed to discharge this burden.

118. The evidence of the Appellant, in fact reveals that soon after the

cancellation on 09.03.2009, the parties entered into negotiations during

which the Defendant expressed its inability to revoke the cancellation of

Villa No. C-01. Instead, the Defendant offered an alternative property, Villa

B-69, in a different project. This refusal to restore the original allotment,

strongly indicates that the Villa was no longer available, suggesting that the

Defendant had already entered into a transaction with a third party. This

sequence of events reinforces the conclusion that the Defendant suffered no

loss; rather sought to benefit from the arbitrary cancellation of the Plaintiff’s

allotment.

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119. Consequently, the learned District Judge correctly held that the

retention of Rs. 18 lakhs by the Defendant was illegal and that the Plaintiff

was entitled to a full refund of the amount, along with interest.

Conclusion:

120. The suit of the Plaintiff/Respondent has been correctly decreed for a

sum of Rs. 18 lakhs, together with interest at the rate of 6% per annum, from

the date of the institution of the suit till its actual realization.

121. The present Appeal is devoid of merit and is hereby, dismissed. All

pending Applications, are disposed of, accordingly.

(NEENA BANSAL KRISHNA)

JUDGE

MAY 18, 2026/va/RS