Allahabad HC: Brochure Clause Cutting 20 Percent and Denying Interest Is Unfair
On 6 October 2026, the Allahabad High Court dismissed the Lucknow Development Authority's appeal, holding its brochure clause allowing a 20 percent deduction and refund without interest was ex-facie one-sided and unfair, after a 2012 booking was completed only in 2020. The tribunal's 80 percent refund with interest stands. What Bengaluru buyers should check in booking terms.
On 31 January 2012, a buyer paid a booking amount of Rs 1,85,000 to the Lucknow Development Authority for a flat in its Sopan Enclave scheme. The flat was allotted on 11 July 2014, with the scheme estimated to be completed in 24 months. The completion certificate came on 17 February 2020. When the buyer sought his money back, the authority relied on a brochure clause allowing it to deduct 20 percent and refund the rest without interest. On 6 October 2026, the Allahabad High Court called that clause "ex-facie one sided, unfair and unreasonable".
The judgment, in Lucknow Development Authority v. Shivaji Singh, RERA Appeal No. 118 of 2026, was delivered by Justice Saurabh Lavania. We read the judgment, published with a LiveLaw report on 16 October 2026. It concerns a Lucknow authority, but the question it answers, whether a seller can rely on fine print to keep a buyer's money, matters to Bengaluru buyers booking with public agencies or private developers alike. This is buyer guidance on a reported judgment, not legal advice.
The short answer. The High Court dismissed the authority's appeal, holding that Clause 8.2 of its brochure was one-sided and unfair and that the authority was not entitled to its benefit. It noted the project was not completed within the estimated 24 months, that the authority never cancelled the allotment, and that it had used the money, which it described in terms of unjust enrichment. The result is that the appellate tribunal's order stands: a refund of 80 percent of the booking amount with interest at MCLR plus 1 percent. The trade-off: a buyer who withdraws may still lose part of a booking amount, as here, but a clause that also denies interest after years of delay can be challenged.
What did the Allahabad High Court decide?
That the authority could not rely on its brochure clause. Clause 8.2, quoted in the judgment, provided that on withdrawal of money after allotment, 20 percent of the registration amount would be deducted and the balance refunded without interest. The court held: "The Clause 8.2 is not in consonance with the basic principles of the law of Contract as to the view of this Court the same is ex-facie one sided, unfair and unreasonable term of the Contract. Therefore, the Applicant - L.D.A. is not entitled to the benefit based upon Clause 8.2, as prayed."
Finding no substantial question of law and no error by the tribunal, the court dismissed the appeal. The judgment lists Abhishek Khare as counsel for the authority and Anurag Singh and Utkarsh Kumar for the buyer, and is marked as approved for reporting. The flat in question was Flat No. C-401 in Sopan Enclave, Priyadarshini Yojana, on Sitapur Road in Lucknow.
What had the tribunal ordered?
A refund with interest, after a 20 percent deduction. The U.P. Real Estate Appellate Tribunal allowed the buyer's Appeal No. 911 of 2021 on 12 August 2026. As extracted in the judgment, it directed the authority "to refund the booking amount after deducting 20 percent, with interest at MCLR+1 percent till the date of payment," within 45 days of the order being uploaded. The tribunal noted that the authority admitted none of the allotments was cancelled, that it did not invoke Clause 8.2, and that it "failed to refund single penny" and used the booking money for commercial purposes.
By our arithmetic, 80 percent of Rs 1,85,000 is Rs 1,48,000, on which the tribunal's interest runs. The judgment does not state the MCLR to be applied, so we do not compute the interest.
| Date | Event | Source | What it shows a buyer |
|---|---|---|---|
| 31 January 2012 | Booking amount of Rs 1,85,000 paid | Judgment | The money was held for years |
| 11 July 2014 | Flat C-401 in Sopan Enclave allotted | Judgment | The 24 month estimate began to matter |
| 17 February 2020 | Completion certificate issued | Judgment | Not completed within a reasonable period, the court held |
| 12 August 2026 | Tribunal orders refund of 80 percent with interest | Judgment | Interest was added despite the clause |
| 6 October 2026 | High Court dismisses the authority's appeal | Judgment | The clause could not be relied on |
Why had the regulator first dismissed the claim?
Because of another brochure clause. The judgment records that the Regulatory Authority dismissed the buyer's refund claim on 24 February 2020. The tribunal, as extracted in the judgment, said the authority had committed a manifest error in misreading Clause 1.1 of the brochure, whose purpose was to prevent an applicant from applying for a unit in a later government scheme if the applicant already owned a plot or unit in such a scheme. The tribunal said the burden of proving that lay on the development authority, which failed to discharge it with cogent evidence.
The tribunal also said the authority never cancelled the buyer's other allotment in the Panchsheel scheme by issuing a cancellation order, that by accepting deposits as per the payment schedule it had waived the Clause 1.1 condition, and that cancellation could not be pleaded in an affidavit without an order of cancellation. The judgment also notes that the authority had written to the buyer on 4 August 2019 asking him to pay pending dues and take possession of the Sopan Enclave flat, and that he did not reply. None of this changed the High Court's view of Clause 8.2.
Why did the court call the clause unfair?
Because of how it operated in this case. The court gave three reasons. The clause was ex-facie one sided and unfair. The project was not completed within a reasonable period, the estimated 24 months, given that the booking amount was paid on 31 January 2012 and the completion certificate issued on 17 February 2020. And 80 percent of the booking amount had been used by the authority, which, the court said, should have been returned after cancellation of the allotment on default or any other ground, but the authority did not cancel the allotment.
On that last point the court added: "Unjust enrichment occurs when a person retains money or benefits which in justice, equity and good conscience, belong to someone else." Before reaching its conclusion, the judgment also discusses principles on clauses imposed by an economically stronger party on a weaker one and on inequality of bargaining power.
What else happened to the buyer?
The judgment records that, because the allotted flat was not made available within a reasonable period, the buyer's wife bought another flat in an authority scheme from its allottee by a registered sale deed dated 6 September 2014. The tribunal rejected the authority's argument that this purchase barred the buyer, saying the authority could not point to any prohibition in the brochure on buying a resale unit from a private person. The tribunal also dealt with a separate unit in the Panchsheel scheme, holding the buyer entitled to possession and delay interest there.
What does this mean for a Bengaluru buyer?
Read refund and withdrawal clauses before you pay. Booking forms, brochures and allotment letters from both public agencies and private developers often set out what happens if you withdraw. This judgment, from another state's High Court, shows a court refusing to let a seller rely on a clause that kept part of the money and denied interest after years of delay, where the seller had not cancelled the allotment and had used the funds.
It is not a promise that every deduction will be struck down. Here the tribunal still allowed a 20 percent deduction, and the buyer did not get the full amount back. But it supports asking hard questions about forfeiture terms. For a Bengaluru ruling on what a developer owes when it cancels an allotment itself, see our report on the K-RERA Casagrand Lotus compensation order, and for how interest periods are fixed, see our report on the East North VVS Realty refund ruling.
What should you ask before paying a booking amount?
Ask what happens to your money if the project is late. Ask the seller to point to the clause that governs withdrawal, the percentage it can deduct, and whether interest is paid on any refund. Ask what completion period is estimated and in which document. Keep the brochure or booking terms you relied on, with its date, because in this case the exact wording of the brochure clause was at the heart of the dispute.
A seven-point checklist on booking and refund terms
- Keep a dated copy of the brochure or booking terms you rely on.
- Find the withdrawal or cancellation clause and note any deduction percentage.
- Check whether refunds under that clause carry interest.
- Note the estimated completion period and where it is stated.
- Ask in writing whether the seller has cancelled your allotment before assuming it has.
- Keep proof of the date and amount of every payment.
- If a refund is withheld for years, take advice on challenging an unfair clause.
Frequently asked questions
What did the Allahabad High Court decide about the LDA refund clause?
On 6 October 2026, it held that Clause 8.2 of the Lucknow Development Authority's brochure, allowing a 20 percent deduction and refund without interest on withdrawal after allotment, was ex-facie one-sided, unfair and unreasonable, and that the authority was not entitled to its benefit.
How much does the buyer get back?
The High Court dismissed the authority's appeal, so the appellate tribunal's order of 12 August 2026 stands. It directed a refund of the booking amount after deducting 20 percent, with interest at MCLR plus 1 percent till the date of payment. By our arithmetic, 80 percent of Rs 1,85,000 is Rs 1,48,000.
Why did the court reject the authority's case?
It said the clause was one-sided and unfair, the project was not completed within the estimated 24 months, and the authority used 80 percent of the booking amount without cancelling the allotment, describing that in terms of unjust enrichment. It found no substantial question of law.
What should Bengaluru buyers check before paying a booking amount?
Find the withdrawal or cancellation clause, note any deduction percentage and whether refunds carry interest, and note the estimated completion period. Keep a dated copy of the brochure or booking terms you relied on, since the exact wording of the clause decided this dispute.
Last updated 2026-11-04. PropNewz Team.
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