Punjab RERA has ruled that when both the allottee and the developer commit breaches of their respective contractual obligations, neither party can ordinarily seek specific performance or rely upon the other party’s default to secure an unfair advantage. In such circumstances, the Authority may instead examine the overall conduct of both parties and grant an appropriate monetary remedy.
The ruling was delivered by the Punjab Real Estate Regulatory Authority (RERA) in Rajesh Verma v. Punjab Urban Planning and Development Authority (PUDA), GC No. 0512/2022, reported as 2026 LLBiz RERA (TS) 144.
Dispute Over Residential Plot in Mohali
The dispute related to a 400-square-yard residential plot in Gateway City, Sector 118-119, SAS Nagar, Mohali.
PUDA had issued a Letter of Intent to Rajesh Verma on July 10, 2015, for a tentative consideration of ₹84 lakh. Subsequently, an allotment letter was issued on August 16, 2016. The allottee deposited ₹21 lakh towards the plot.
However, instalments subsequently became due on August 17, 2017, February 17, 2018 and August 17, 2018. According to the allottee, the project had not been adequately developed and therefore he did not pay the remaining instalments.
The allottee sought possession of the property without being required to pay interest on the outstanding amount. Alternatively, he sought a refund of the amount deposited along with interest.
PUDA, in February 2019, offered possession and called upon the allottee to clear the outstanding dues together with applicable interest. However, the allottee did not act upon the offer and subsequently approached Punjab RERA seeking possession with the required amenities or, alternatively, refund with interest.
Punjab RERA Finds Defaults on Both Sides
After examining the circumstances, Punjab RERA found that both parties had failed to fully perform their respective obligations.
The Authority observed that the allottee was not justified in withholding the instalments merely on the ground that the project had not progressed as expected. Importantly, the payment schedule was not linked to the stage-wise development of the project. Consequently, the Authority treated the allottee as being in default of the agreed payment schedule.
At the same time, PUDA was also found to have failed to offer possession within a reasonable period.
Thus, the case was not one where the conduct of only one party was responsible for the failure of the transaction. Both sides had contributed to the dispute.
Principle of Clean Hands Applies
Punjab RERA relied upon the broader equitable principle that a person seeking equitable relief must approach the adjudicating authority with clean hands.
The Authority noted that where the allottee has defaulted in making payments while the developer or authority has also failed to perform its obligations within the stipulated or reasonable period, neither party can ordinarily claim an absolute right to specific performance or forfeiture merely by pointing to the other party’s default.
This principle is particularly significant in real estate disputes because contractual obligations between developers and allottees are generally reciprocal. An allottee is expected to make payments according to the agreed schedule, while the developer or development authority must fulfil its corresponding obligations relating to development, possession and delivery.
A party cannot conveniently rely upon one contractual breach while ignoring its own failure to perform.
PUDA’s Power to Forfeit the Amount
The Authority also considered PUDA’s statutory power under Section 45(3) of the Punjab Regional and Town Planning and Development Act, 1995.
The provision empowered PUDA to take action, including cancellation of allotment and forfeiture of the amount, in cases involving breach of the applicable terms.
However, the Authority noted that PUDA had not cancelled the allotment or actually exercised the forfeiture power. Instead, it continued to retain the amount deposited by the allottee.
Therefore, PUDA’s failure to cancel the allotment did not provide it with an unlimited right to retain the allottee’s money indefinitely.
The Authority held that PUDA’s conduct could not absolve it from its continuing obligation to deal appropriately with the amount retained from the allottee.
No Entitlement to Possession Under Section 18 of RERA
Punjab RERA further held that the allottee had not established a clear entitlement to possession under Section 18 of the Real Estate (Regulation and Development) Act, 2016.
Section 18 generally provides remedies to an allottee where a promoter fails to hand over possession in accordance with the terms of the agreement.
However, the Authority found that the facts of the present dispute did not justify granting possession as claimed by the allottee, particularly considering his own payment defaults and the subsequent offer of possession made by PUDA.
Nevertheless, the Authority considered the overall circumstances and concluded that the allottee was entitled to receive a refund of the ₹21 lakh deposited by him, together with interest.
PUDA Directed to Pay ₹43.68 Lakh
Punjab RERA partly allowed the complaint and directed PUDA to refund the ₹21 lakh principal amount deposited by Rajesh Verma.
In addition, the Authority awarded ₹22.68 lakh as interest, making the total amount payable ₹43.68 lakh as on August 31, 2026.
The Authority further directed PUDA to pay ₹18,900 per month from September 1, 2026 until the payment is actually made.
The amount was made recoverable as land revenue. The Authority also directed that a Debt Recovery Certificate could be issued if PUDA failed to comply with the order.
Key Legal Takeaway for Developers and Homebuyers
The Punjab RERA ruling carries an important lesson for both real estate developers and homebuyers.
For allottees, merely alleging delay or deficiency in development may not justify withholding instalments where the contractual payment schedule is unconditional or not linked to construction milestones. At the same time, developers cannot indefinitely retain an allottee’s money after failing to fulfil their own obligations or after choosing not to formally cancel the allotment in accordance with law.
The decision demonstrates that RERA authorities may examine the conduct of both parties, rather than mechanically granting relief to one side.
The central principle is one of fairness: a party in breach cannot automatically obtain equitable relief simply by highlighting the breach committed by the opposite party.
The case therefore reinforces the importance of timely payment by allottees, timely possession by developers, proper contractual compliance and legally appropriate action when either side commits a default.
Conclusion
The Punjab RERA decision in Rajesh Verma v. PUDA highlights the importance of reciprocal performance in real estate transactions. Where both the allottee and the developer are responsible for breaches, the dispute cannot necessarily be resolved by granting specific performance to one side or permitting forfeiture against the other.
Instead, the Authority may consider the complete factual circumstances and mould the relief to achieve a fair outcome.
For developers as well as homebuyers, the ruling serves as a reminder that RERA remedies are not a substitute for contractual discipline. Both sides must honour their obligations, maintain proper documentation and take timely legal action when disputes arise.