In a recent ruling, the Uttar Pradesh Real Estate Appellate Tribunal (UP REAT) addressed the issue of whether a promoter could deduct 15% of the unit cost as earnest money upon cancellation of allotment due to the allottee's default, and whether interest is payable on the refundable amount. The case, Naveen Nishchal Vs. S. J. P. Hotels and Resorts Pvt. Ltd., was decided on 2026-05-28.
The tribunal upheld the promoter's right to deduct 15% of the total cost of the unit as earnest money, as per the terms of the agreement and the Real Estate (Regulation and Development) Act, 2016. It also ruled that the promoter must pay interest on the refundable amount from the date of receipt of payment until the date of refund, at the rate prescribed under the Act.
This decision clarifies the legal position on earnest money deductions in cases of allottee default, providing guidance for both promoters and buyers in Uttar Pradesh. The ruling emphasizes the importance of adhering to contractual terms while ensuring compliance with statutory provisions regarding refunds.
