Builder Ordered to Refund with Interest After 30-Year Delay: NCDRC Sets Aside State Commission Ruling.


14 October 2024 Civil Revision >> Civil & Consumer Law   |   Property Law >> Civil & Consumer Law  

The National Consumer Disputes Redressal Commission (NCDRC) has recently delivered a significant judgment in a long-standing consumer dispute between M/s Agarwal Associates (P) Limited (the Builder) and Mr. S K Nigam (the Complainant/Buyer). The NCDRC, overturned the decision of the State Consumer Disputes Redressal Commission, Lucknow, Uttar Pradesh, and reinstated certain aspects of the initial order passed by the District Consumer Disputes Redressal Forum, Ghaziabad.

The case originated from the booking of a commercial flat by Mr. Nigam with M/s Agarwal Associates back in November 1989. While Mr. Nigam paid a substantial sum of Rs. 71,908/- towards the total cost of Rs. 1,54,200/-, he allegedly failed to adhere to the agreed payment schedule. Consequently, the District Forum in its order dated 06.03.2006 dismissed Mr. Nigam's complaint, stating that the builder could not be expected to provide the flat without full payment. The District Forum also suggested that Mr. Nigam could seek a refund of the deposited amount after a 20% deduction.


 

 

However, the State Commission, in its order dated 28.12.2021, allowed Mr. Nigam's appeal, setting aside the District Forum's order. The State Commission observed that Mr. Nigam had paid a significant amount between November 1989 and September 1990, yet the construction was not completed even by September 1994 or the time of filing the complaint. The State Commission deemed the 20% deduction clause arbitrary and directed the builder to provide details of interest payable to Mr. Nigam at 10% per annum from the date of deposit until the date of actual possession. The State Commission also stipulated timelines for payment by either party after calculation and awarded a cost of Rs. 50,000/- to Mr. Nigam.


Aggrieved by the State Commission's order, the Builder approached the NCDRC by filing a Revision Petition. The Builder's counsel argued that Mr. Nigam's failure to make timely payments justified the cancellation of the allotment and the forfeiture of 20% of the paid amount. They also contended that the construction was stalled due to the buyer's payment default and that they had requested Mr. Nigam to collect the due payment in 2006.

On the other hand, the Respondent's counsel argued that the Builder had failed to obtain the necessary Occupation Certificate and had not provided a specific completion date in the agreement. They highlighted that the construction remained incomplete even at the time of filing the initial complaint in 1994.

The NCDRC, after considering the arguments and perusing the records, framed the central issue as whether the Builder had committed a deficiency of service under the Consumer Protection Act. The Commission noted the "unreasonable delay" in the construction of the unit, despite Mr. Nigam having invested a substantial amount.

Crucially, the NCDRC highlighted that despite being directed to file the Occupancy Certificate for the unit by a specific date (20.06.2024), the Petitioner failed to do so. This led the Commission to presume that the Occupancy Certificate had not been obtained, indicating that the project remained incomplete. The NCDRC emphasized the significance of the Occupancy and Completion Certificates, citing the Hon'ble Supreme Court's judgment in Samruddhi Co-Operative Housing Society Ltd. Vs. Mumbai Mahalaxmi Construction Pvt. Ltd., which established the failure to obtain an occupancy certificate as a deficiency in service.

Furthermore, the NCDRC found a "fundamental error" in the State Commission's order regarding the possession status, noting that the State Commission had mistakenly assumed possession had been granted, contradicting the fact that construction was incomplete.

Drawing upon the principle of a reasonable time for completion in the absence of a stipulated date, the NCDRC referred to the Supreme Court's ruling in Fortune Infrastructure v. Trevor D’lima, which considered three years as a reasonable timeframe for completing a contract. In the present case, the NCDRC pointed out a delay exceeding 30 years despite the Builder receiving approximately 50% of the basic sale consideration.

The NCDRC rejected the Builder's argument that the delay was solely attributable to the Buyer's non-payment. The Commission noted the lack of evidence from the Builder regarding the stage of construction or any justification for the non-receipt of the Occupation Certificate due to the specific unit's incompletion. The Commission reiterated that a buyer cannot be made to wait indefinitely for possession, citing precedents from the Hon'ble Supreme Court in cases like Kolkata West International City Pvt. Ltd. Vs. Devasis Rudra and Pioneer Urban Land & Infrastructure Ltd. Vs. Govindan Raghvan, which upheld the buyer's right to a refund with interest in cases of unreasonable delay.

In its final order, the NCDRC set aside the orders of both the State Commission and the District Forum. The Commission directed the Petitioner/Builder to refund the entire amount deposited by the Respondent, along with interest at a rate of 8% per annum from the respective dates of deposit until realization, within a period of two months from the date of the order. Failure to comply within this timeframe would attract a higher interest rate of 12% per annum for the delayed period.

This order underscores the importance of timely completion of construction projects and the obligation of builders to obtain necessary certifications. It also reaffirms the rights of consumers to seek refunds with appropriate interest in cases of inordinate delays and failure to deliver promised properties.


Section 21, Consumer Protection Act - 1986  

Consumer Protection Act, 1986