Court Declares One-Sided Brochure Clause Unfair and Emphasizes Doctrine of Unjust Enrichment in Real Estate Refund Dispute
In a significant judgment dated October 6, 2026, the Allahabad High Court (Lucknow Bench) dismissed the appeal filed by the Lucknow Development Authority (LDA) against the order of the U.P. Real Estate Appellate Tribunal directing the refund of 80% of the booking amount with interest to allottee Shivaji Singh. The case arose from LDA's failure to complete the Sopan Enclave housing project within the estimated 24 months, resulting in a delay of nearly eight years before issuance of the completion certificate.
The allottee had paid a booking amount of Rs. 1,85,000 on January 31, 2012, for a flat (No. C-401) in the project. However, the project was only completed in February 2020. The appellant LDA had deducted 20% of the booking amount on the basis of Clause 8.2 of their brochure which permitted such deduction on withdrawal of allotment. The Tribunal, however, found this clause to be ex facie one-sided, unfair, and unreasonable, and ruled against its enforcement.
The High Court, presided by Justice Saurabh Lavania, upheld the Tribunal's ruling and clarified that the LDA was not entitled to retain 80% of the booking amount without cancelling the allotment or refunding the money. The Court emphasized that retention of the allottee's money without cancellation of allotment amounted to unjust enrichment, which is against the principles of justice, equity, and good conscience.
The Court extensively referred to authoritative precedents, including the Supreme Court's observations in Pioneer Urban Land & Infrastructure Ltd. v. Govindan Raghavan (2019), Parsvnath Developers Ltd. v. Mohit Khirbat (2026), and Poornima Advani v. State (NCT of Delhi) (2025), to underline the unfairness of one-sided contract clauses in consumer contracts, especially in real estate dealings where bargaining power is unequal. It further highlighted the doctrine of unjust enrichment, explaining that a party cannot retain money which justly belongs to another, citing cases like Indian Council for Enviro-Legal Action v. Union of India (2011) and Ms. Shruti vs Baldev Singh (2017).
The Court also rejected LDA's arguments that the allottee was barred from subsequent allotments or purchases based on the brochure's terms, noting lack of evidence or cancellation orders. It ordered refund of 80% of the booking amount along with interest at MCLR plus 1% till payment, directing LDA to comply within 45 days.
This judgment reinforces the consumer-friendly interpretation of the Real Estate (Regulation and Development) Act, 2016 and the judiciary's commitment to curb unfair trade practices in the real estate sector. It clarifies that delays by developers beyond reasonable periods cannot be passed on to buyers in the form of forfeitures or unfair deductions.
Bottom Line:
Real Estate - Refund of booking amount - One-sided and unfair brochure clause permitting deduction on withdrawal cannot be enforced where project was not completed within reasonable time and authority retained allottee's money without cancelling allotment - Tribunal rightly directed refund of 80% booking amount with interest at MCLR+1%.
Statutory provision(s):
Real Estate (Regulation and Development) Act, 2016 Section 18
Lucknow Development Authority v. Shivaji Singh, (Allahabad)(Lucknow) : Law Finder Doc Id # 2993957
