HARERA Delivers Big Win for Neo Square Investors: Assured Returns Upheld & Illegal Charges Quashed
- rit arora
- Jan 1
- 3 min read
In a significant relief for commercial real estate investors, the Haryana Real Estate Regulatory Authority (HARERA), Gurugram, has passed a decisive order against M/s Neo Developers Private Limited. The ruling, dated November 11, 2025, addresses key grievances regarding the "Neo Square" project in Sector 109, specifically concerning unpaid assured returns and arbitrary monetary demands raised by the builder.
The Core Dispute: Delays and Broken Promises
The complainants, who booked commercial space in the "Neo Square" project, approached HARERA after the developer failed to adhere to the Buyer's Agreement and Memorandum of Understanding (MoU) executed in April 2018.
The primary grievances filed by the investors included:
Delayed Possession: The project was supposed to be completed by October 2021 (36 months + grace period). However, the Occupation Certificate (OC) was only obtained in August 2024, causing a delay of nearly 3 years.
Unpaid Assured Returns: The developer had promised a monthly assured return of Rs. 45,000/- until the unit was leased out. The payments stopped, leaving investors without their promised income.
Arbitrary Demands: Upon offering possession in late 2024, the developer demanded over Rs. 12 Lakhs in "Fit-out Charges", along with Holding Charges and Labour Cess, none of which were part of the original agreement
Key Highlights from the HARERA Order
The Authority, ruled extensively in favor of the allottees. Here are the critical points of the judgment:
1. Assured Returns Must Be Paid
HARERA upheld the validity of the MoU. The Authority directed the builder to pay the monthly assured return of Rs. 45,000/- from the effective date (17.04.2020) up until the date the Occupation Certificate was obtained (14.08.2024).
The Authority noted that since the "Assured Return" amount was higher than the standard delayed possession interest, the investors were entitled to the higher benefit.
The developer must clear these outstanding dues within 90 days, failing which an interest rate of 8.85% p.a. will apply.
2. "Fit-Out Charges" Declared Illegal
In a major relief, the Authority set aside the developer's demand for Fit-out Charges amounting to Rs. 12,39,000/-. The developer had asked for this payment to be made to a third party (M5 Hospitality LLP). HARERA ruled this demand arbitrary and unsustainable because:
It was not mentioned in the Buyer’s Agreement or MoU.
The developer failed to provide any transparency or justification for these costs.
3. No Holding Charges or Labour Cess
The order strictly prohibits the developer from charging:
Holding Charges: Citing Supreme Court precedents (Varun Gupta vs. Emaar MGF), HARERA ruled that builders cannot charge holding fees when they are already at fault for delaying the project.
Labour Cess: The Authority reiterated that Labour Cess is a tax to be paid by the employer (builder), not the homebuyer. Demanding this from the allottee was deemed unfair trade practice.
4. Directives on Development Charges
The builder was directed to charge development charges strictly on an actual and pro-rata basis. They must provide documentary proof of what they paid to the government departments before recovering it from the allottees.
Key Takeaway: If your builder is demanding charges not listed in your BBA (Builder Buyer Agreement), or if they have stopped assured returns before the specific conditions (like leasing or OC) are met, you have strong legal grounds to challenge them under RERA.
The complainants were represented by Lex Horizon through its team of Advocates, Mr. Rit Arora and Mr. Anurag Arora.
Find the judgment here
