The Builder Has Cancelled My Booking for Missed Instalments and Is Forfeiting My Money: What Can I Recover?

The builder can cancel your allotment only in the manner your registered agreement for sale allows, and what he keeps after cancelling is limited to a reasonable earnest money. A builder cancelled booking forfeiture notice that keeps 20 percent of the whole price, adds interest and pays the balance "after resale" is open to challenge on all three counts, even though the missed instalments are a genuine default under Section 19(6) of the Real Estate (Regulation and Development) Act, 2016. Section 11(5) says the promoter may cancel "only in terms of the agreement for sale", and its proviso lets you go to the Authority if the cancellation was outside those terms, unilateral or without sufficient cause. On the money, the Supreme Court in Godrej Projects Development Ltd v Anil Karlekar (3 February 2025) cut a 20 percent forfeiture clause down to 10 percent of the basic sale price, the figure the consumer commissions have treated as reasonable since 2015.

Part of the RERA and homebuyer disputes practice at S Jain & Attorneys, Bangalore.

This page is for a Bengaluru buyer who paid around a third of the price under a registered agreement, missed two demands after a job change and a slow loan disbursal, and now holds a cancellation notice. The buyer who wants out and asks how much he loses is answered too. Builder delay itself sits in the builder delay pillar.

Three points from that table carry most of the weight.

Can the builder cancel my booking because I missed two instalments?

Yes, if your agreement makes non-payment a ground for termination and he followed its notice steps, because paying on time is your statutory duty. Section 19(6) of RERA makes every allottee "responsible to make necessary payments in the manner and within the time as specified in the said agreement for sale", and Section 19(7) adds interest for delay. Section 13(2) requires the agreement to state the payment dates and each side's default interest, so the schedule you signed is the yardstick, and two missed demands are a default under it.

What he cannot do is cancel in a way the agreement does not authorise. Section 11(5) confines him to its terms, which in most Bengaluru agreements means a written demand, a cure period, a further notice, then termination. If your notice skipped the cure step, was emailed when the agreement says registered post, or came while the builder was past his own possession date, the proviso to Section 11(5) sends you to K-RERA on the ground that the cancellation was "not in accordance with the terms of the agreement for sale, unilateral and without any sufficient cause".

K-RERA has decided both kinds of case. In Sunil Shirish Shah v Total Environment Habitat Pvt Ltd (CMP/211005/0008418, Full Bench, 9 October 2023) the buyers paid about half the price by 2017, then nothing for four years while emailing that they would pay once they had "a clear line of sight" on delivery. A pre-cancellation notice on 19 February 2021 gave seven days, and termination followed on 14 April 2021. The Authority held that the allottees "committed the breach of agreement" and that the termination was "for sufficient cause and in accordance with law". In Prashanth Ramdas v Total Environment Constructions Pvt Ltd (Complaint 00027/2024, Bench 4, 23 March 2026) the document allowed cancellation "at the sole discretion of the promoter". The Authority called that "ex-facie one sided, unfair and unreasonable" and ordered the Rs 5,00,000 refunded within sixty days.

Key takeaway. Two missed instalments are a real default, and a cancellation that followed the agreement's notice steps will usually stand. The fight worth having is about the money kept, the interest added and the date of refund.

Builder cancelled booking forfeiture: how much can he legally keep?

A reasonable earnest money, 10 percent of the basic sale price in the reported cases, and nothing beyond it unless the builder proves an actual loss.

Satish Batra v Sudhir Rawal (18 October 2012) drew the first line. A buyer paid Rs 7,00,000, 10 percent of a Rs 70 lakh price, as earnest money and then could not pay the balance. The seller kept all of it because the clause was clear, the sum was paid at signing as security, and the seller had to pay double if he defaulted. The Court added the sentence the builder's lawyer will not quote: "part-payment of purchase price cannot be forfeited unless it is a guarantee for the due performance of the contract." Slab-linked instalments are part-payment of price, whatever label the agreement gives them.

Maula Bux v Union of India (19 August 1969, three judges) supplies the test. Forfeiture of earnest money "if the amount is reasonable, does not fall within Section 74" of the Contract Act. But where the party in breach has undertaken "to forfeit a sum of money which he has already paid", that undertaking "is of the nature of a penalty" and Section 74 applies: reasonable compensation, not exceeding the sum named, with proof of loss where loss can be proved. Kailash Nath Associates v DDA (9 January 2015) restated it: "Section 74 will apply to cases of forfeiture of earnest money under a contract", and "if damage or loss is not suffered, the law does not provide for a windfall."

Godrej Projects Development Ltd v Anil Karlekar (3 February 2025) applied those rules to a flat cancellation. The agreement defined 20 percent of the basic sale price as earnest money and allowed forfeiture of all of it plus interest. The National Commission allowed only 10 percent, Rs 17,08,140 on a basic price of Rs 1,70,81,400, and the Supreme Court agreed. Satish Batra did not govern because that clause was reciprocal and this one was not, the agreement was "one-sided and totally tilted in favour of the Developer" once its Rs 5 per square foot delay compensation was set against the buyer's exposure, and the National Commission's view since DLF Ltd v Bhagwanti Narula in 2015, that 10 percent of the basic sale price is reasonable, needed no upsetting. The review petition was dismissed on 11 December 2025.

K-RERA applies the same proportionality to a booking amount. In Naish Solutions Pvt Ltd v Total Environment Constructions Pvt Ltd (Complaint 01467/2023, Bench 4, 15 October 2025) the promoter kept a Rs 5,00,000 booking after the buyer withdrew within a month. The Authority said the clause "must be interpreted reasonably, particularly in the absence of any demonstrated loss", held forfeiture of the whole sum "neither justified nor proportionate", and ordered it refunded within sixty days.

Is 20 percent of the total price plus interest a lawful deduction?

Not as a package, though each piece has to be attacked separately. Take a price of Rs 1 crore, Rs 35 lakh paid, and a notice forfeiting Rs 20 lakh, adding interest on the two missed demands, and refunding the remainder after resale.

First, the base. The Godrej benchmark is 10 percent of the basic sale price, not of a total consideration with car park, club membership, deposits and taxes rolled in. If the basic price is Rs 90 lakh, the benchmark is Rs 9 lakh. Second, the interest. Section 2(za) says interest payable by the allottee runs "from the date the allottee defaults in payment to the promoter till the date it is paid", and Section 19(7) ties it to the amount in default. So it runs on two overdue demands for the days each was overdue, at the rule 16 rate, computed as in the MCLR post. Third, the timing. Ireo Grace Realtech v Abhishek Khanna (11 January 2021, three judges) examined a clause refunding the balance "without any interest, and after forfeiting and deducting the Earnest Money, interest on delayed payments, brokerage/commission/charges" and "only after resale of the said Apartment", and called it wholly unfair because the money would come "at an uncertain future date". Godrej had a similar clause, and the Court still ordered payment within six weeks.

On those numbers the buyer's position is a deduction near Rs 9 to 10 lakh plus a few weeks of interest on two demands, and a refund of the remaining Rs 24 to 25 lakh within sixty days, against the builder's Rs 20 lakh plus interest whenever the flat sells. That is the shape of the argument, not a promise.

Common mistake. Arguing that nothing can be forfeited. Satish Batra and Godrej both let the builder keep a reasonable earnest money from a defaulting buyer. A buyer who concedes the 10 percent and fights the rest is believed on the rest.

Is the cancellation notice itself valid, and what if the builder was already late?

Check three things: whether the cure notice the agreement requires was sent and served the way it says, whether the cure period had run out when the termination issued, and whether the builder was past his own possession date. A termination issued on day 20 of a 30-day cure period, or served on an email address the agreement does not name, is outside "the terms of the agreement for sale" and falls within the proviso to Section 11(5).

Mutual default is harder. The builder's side is Section 18: if he fails to give possession by the agreed date, you may withdraw with interest or stay and draw interest for every month of delay, as explained in the delayed possession answer. Your side is Section 19(6) and (7). When both are in default the forums ask who was in breach first. Godrej examined the developer's own delay clauses before deciding the buyer's forfeiture. Ireo Grace went further: because the developer had itself defaulted, including a delay of over seven months in obtaining the fire NOC, the Court directed that "the Developer shall not deduct the Earnest Money of 20% from the principal amount, or any other amount", and ordered the whole deposit refunded with 9 percent simple interest.

The Shah order shows the other edge. The buyers said they stopped paying because construction was slow. The Full Bench answered that Section 18 gave them a remedy and that "holding the payment for many years" without using it "become one of the reason for causing the construction delay". If the builder is late, say so in writing, invoke Section 18 by name, and pay under protest or withdraw.

Can I pay now and keep the flat?

Often yes, and the offer should go in writing within days, with proof that the money exists, because nothing in RERA forces a builder to take you back once a valid termination has issued. Many agreements allow revival before resale on payment of dues and interest. Section 19(8) says the allottee's obligations and interest "may be reduced when mutually agreed to between the promoter and such allottee", the hook for a negotiated waiver of part of the interest against immediate payment. A promoter who has not resold has every reason to take a cheque rather than defend a K-RERA complaint.

Make the offer unconditional and specific: the two overdue demands, interest at the rule 16 rate to the date of payment, a demand draft or bank confirmation of sanctioned disbursal, and a request to withdraw the termination in writing, sent to the address the agreement names. If the builder refuses and moves to resell, the K-RERA complaint should ask for an interim order under Section 36 restraining resale. The Shah buyers offered to pay only after the termination letter, were refused, and the Authority did not interfere.

I have a home loan: who gets the refund and what happens to my EMIs?

The bank is repaid first out of the refund, up to what it disbursed, and you keep paying the EMI until the loan is closed or restructured. That is what the tripartite agreement says, and most builder agreements say the same, including the Godrej clause directing the balance "to the Buyer or to his banker/financial institution, as the case may be".

The arithmetic is unforgiving. If the bank disbursed Rs 20 lakh of your Rs 35 lakh and the builder returns Rs 25 lakh, the bank takes Rs 20 lakh plus interest and you receive about Rs 5 lakh of your own Rs 15 lakh. If the builder returns only Rs 15 lakh, the Rs 5 lakh shortfall is your liability under the loan. Inform the bank in writing the day the notice arrives, ask it to stop disbursals, and ask for a foreclosure statement. Do not stop the EMI: the loan is a separate contract and a default on it reaches your credit record long before any K-RERA order. Pre-EMI paid on a flat that never came is a separate claim, covered in the pre-EMI recovery post, and arises only where the builder was in delay.

I want to exit myself: how much do I lose?

Expect to lose a reasonable earnest money, around 10 percent of the basic sale price under the reported cases, and expect no interest on what comes back, because a voluntary exit is your breach and not the builder's. The Godrej buyers walked away after possession was offered because prices had fallen, recovered everything above 10 percent of the basic price, and lost the 6 percent interest the National Commission had given them because they had probably used the money to buy elsewhere. The Naish buyer got the full Rs 5,00,000 back but "no interest is warranted on the said refund" because the exit was voluntary and the project was not delayed. The Ramdas buyers got theirs "without interest" for the same reason, with MCLR plus two percent running only if the promoter missed the sixty-day deadline.

Two things move the figure. How early you withdraw, because Naish tied proportionality to the absence of "any delay to the project" or "financial loss or hardship in terms of resale, scheduling, or marketing of the said unit". And whether you signed a registered agreement or only a term sheet, because Naish and Ramdas were term-sheet cases in which the Authority still took the complaint under Section 31. If your agreement has a withdrawal clause with its own deduction, read it against the 10 percent benchmark and Section 74 before accepting the number.

Will I get GST and stamp duty back?

Stamp duty on a registered agreement for sale is not refunded merely because the deal was cancelled, and GST is a question for your chartered accountant, so plan the exit on the assumption that both are gone unless you act inside the statutory windows. Section 47 of the Karnataka Stamp Act, 1957 lists the cases in which the Deputy Commissioner may allow a "spoiled" stamp on an executed instrument, such as one that "totally fails of the intended purpose" through a person's refusal to act under it. A cancellation for the buyer's default sits awkwardly in that list. Section 48 fixes the clock: six months from the date of the instrument for the refusal-to-act case, one year in the other executed-instrument cases. Section 52A lets the State Government grant relief outside those sections where "just and equitable". Apply early.

GST paid on the instalments is a builder-side matter: whether he can adjust it, and whether any of it flows back to you, depends on his own filings and on timing rules under the GST law, which is why this page prints no rate and gives no view. Have your chartered accountant raise it with the builder in writing before the cancellation statement is signed. The registration fee is separate from stamp duty and is not refunded.

Which forum, which form, and what does it cost?

K-RERA on Form N is the route to set aside a bad cancellation and recover the money, Form O is the route for compensation, and the consumer commission is a parallel route RERA does not close.

One route is closed. Section 79 bars a civil court from entertaining a suit on anything the Authority can decide and from granting any injunction against action under the Act, which is why the Shah buyers' application under Section 9 of the Arbitration Act was held not maintainable. The arbitration clause will not get you a stay on resale. The consumer route stays open because of Imperia Structures Ltd v Anil Patni (2 November 2020, three judges), which held that Section 79 "does not in any way bar the Commission or Forum", that Section 88 saves other laws, and that Section 18 gives its remedy "without prejudice to any other remedy available". Housing construction is a "service" under Section 2(42) and a buyer for his own use a "consumer" under Section 2(7), a point answered separately. Pick one forum and stay in it. Where you want the resale stopped, only K-RERA has Section 36. The RERA and homebuyer disputes practice handles both routes, and the consumer protection practice covers the commission route.

What have K-RERA and the Supreme Court done in cancellation cases?

Read together, the decisions give a defaulting buyer a settled position. Satish Batra lets the builder keep a reasonable earnest money and nothing paid as price. Maula Bux and Kailash Nath put any larger deduction inside Section 74, where it needs proof of loss. Pioneer and Ireo Grace refuse to enforce one-sided termination and refund clauses. Godrej fixes the working figure at 10 percent of the basic sale price and denies interest to a buyer who left by choice. K-RERA's orders track the same line: Shah upholds a termination after years of unexplained non-payment, Naish and Ramdas return booking money in full where no loss was shown or the clause was one-sided.

Where these cases actually turn, in my experience of reading the orders and the agreements behind them, is on three documents rather than on any argument: the payment ledger, which shows who was late first and for how long, the notice trail, which shows whether the cure steps were followed and how the notices were served, and the ratio between the sum kept and any loss the builder can point to. What I tell clients is to assemble those three before deciding whether to fight for the flat or for the money. A buyer who cannot show one written protest during two years of non-payment is asking the forum to rescue him from his own silence, and Shah is the answer he will get. A buyer with a clean ledger until the job change, a prompt written offer to pay, and a notice that skipped the cure period is asking a different question.

Step by step: the first thirty days after the notice

1. Read the default and termination clause the same day: cure period, mode of service, and whether earnest money is a percentage of the basic price or the total consideration.
2. Build the ledger: every demand and payment with its date, every email raising the builder's own delay.
3. Reply in writing before the cure period ends. If you want the flat, make an unconditional offer of the arrears with rule 16 interest and proof of funds. If you want out, dispute the forfeiture figure, the interest and the after-resale refund, and demand the balance within sixty days.
4. Write to your bank the same week: notice enclosed, stop disbursals, foreclosure statement requested. Keep paying the EMI.
5. Do not sign the builder's cancellation note or no-dues letter until the refund figure and date are agreed in writing.
6. If the builder refuses, file Form N with K-RERA under Section 31 with the Rs 1,000 demand draft, asking to set aside the termination or, alternatively, for refund of everything above a reasonable earnest money, and for a Section 36 order restraining resale.
7. Where the builder's own delay preceded the cancellation and you want compensation beyond refund and interest, file Form O under Section 71 or plead it in a consumer complaint. Apply to the Deputy Commissioner of Stamps within the Section 48 window, and have your chartered accountant raise GST with the builder in writing.
8. After the order, count sixty days. If the promoter has not paid, apply for recovery as arrears of land revenue under Section 40 and rule 25, and for penalty under Section 63.

Deadlines and indicative timelines

The consumer route has a hard two-year limit, the RERA route has none written into Section 31, and the stamp duty window is the shortest of all. Section 69 of the Consumer Protection Act, 2019 bars a complaint filed more than two years from the cause of action, here the notice or the refusal to refund, unless the commission records reasons for condoning the delay. Section 31 of RERA carries no period, but evidence thins and a resale takes the flat off the table. Section 48 of the Karnataka Stamp Act gives six months or one year from the date of the instrument, which may already have passed.

On the other side, Section 29(4) of RERA asks the Authority to decide within sixty days and record reasons if it cannot, and Karnataka rule 17 gives the promoter sixty days from the date a refund becomes due. The Naish complaint was filed on 21 September 2023 and decided on 15 October 2025, and both it and Ramdas record that the sixty days could not be met "due to multiple adjournments sought by advocates / parties". Budget eighteen months to two years for a contested complaint, sixty days after the order for payment, and a sixty-day appeal window under Section 44(2) with the promoter's deposit under Section 43(5).

Deadline warning. The consumer clock runs two years from the cancellation notice or the refusal to refund, and the stamp duty clock under Section 48 of the Karnataka Stamp Act may run out within six months or a year of the agreement. Diarise both the day the notice arrives.

The points below are the ones buyers most often get wrong in the month after the notice.

Mistakes buyers make after a cancellation notice

Going silent is the first and the worst: the Shah buyers lost because four years of non-payment sat in the record with no written invocation of Section 18. Signing the builder's cancellation note to "start the refund process" is the second, because it converts the dispute into an agreed figure. Stopping the EMI is the third. Filing under the arbitration clause is the fourth, because Section 79 sends you back out. Claiming Section 18 interest when your own default triggered the cancellation is the fifth, because it costs credibility on the size of the deduction. Treating the 20 percent as unarguable because you signed it is the sixth. Paying "reinstatement charges" in cash is the seventh, because a sum not in the agreement and not receipted cannot be proved.

Three checks on the deal itself decide how strong you are. Confirm the project is registered, using the RERA registration check. Confirm that what you hold is an agreement for sale and not an allotment letter or term sheet, as explained in the sale agreement and sale deed post. And check the charges bundled into the "total consideration" the builder is computing 20 percent on, since the extra-charges post explains which were never part of the price and reproduces the K-RERA proforma agreement for sale that the registration certificate requires promoters to follow.

Frequently Asked Questions

This article is for general informational purposes only and does not constitute legal advice. Consult a qualified advocate for advice on your specific situation.

Related Guides

Cancellation and forfeiture disputes are handled by the firm's RERA and homebuyer disputes practice and, where the consumer route is chosen, by the consumer protection practice.

• Builder Delay and Fraud: How Homebuyers in India Can Fight Delayed Possession and Recover Compensation
• The Builder Wants More Money Before Handing Over My Flat: Which Charges I Must Pay and Which I Can Refuse
• How Much Delay Interest Does the Builder Owe Me? The K-RERA Calculation at SBI MCLR Plus Two Percent