In a significant ruling, the National Consumer Disputes Redressal Commission (NCDRC) addressed a statutory appeal concerning consumer rights under the Consumer Protection Act, 2019. The appeal arose from a judgment dated December 23, 2022, involving a private limited company in real estate development that had booked a residential flat with a major real estate developer.

The case began when the respondent company booked a flat in the 'Omkar 1973 Worli' project on September 22, 2015, initially paying a booking amount of ?51,00,000. Over time, the respondent paid a total of ?6,79,97,071 toward the flat, which was eventually allocated to them via an Allotment Letter dated June 29, 2016. The anticipated possession date was set for December 31, 2018. However, in March 2017, the developer advanced the possession date to the first quarter of 2017, urging the respondent to pay the remaining balance of ?28,87,80,526 within 30 days.

Complications arose when the respondent discovered that the flat had already been reserved for another individual, Mr. Nakul Arya. Consequently, the respondent declined to take possession, leading the developer to cancel the allotment and forfeit the entire deposit amount of ?7,16,41,493.

   

The respondent subsequently approached the NCDRC, alleging deficiency in service and unfair trade practices. The appellant contended that the respondent was not a consumer under Section 2(7) of the Act, arguing that the purchase was for commercial purposes given the respondent’s status as a real estate company.

However, the NCDRC ruled that the respondent did qualify as a consumer. It cited precedents from earlier cases, affirming that the dominant intention behind the purchase was residential use, not commercial gain. The commission emphasized that merely being a real estate developer did not automatically classify the transaction as commercial.

The NCDRC further noted that the developer had caused confusion by double allotting the flat. The dispute regarding the flat's allotment persisted until a rectification deed was executed in March 2018, resolving the issue of double allocation. Given this context, the NCDRC determined that the cancellation of the respondent's allotment and the subsequent forfeiture of funds were unjustified.

The NCDRC ordered the developer to refund the forfeited amount along with interest. Specifically, the developer was directed to return ?7,16,41,493, with compensation accruing at 6% per annum until payment was made, increasing to 9% in case of delays. Additionally, the commission mandated an immediate partial refund of ?3,00,00,000 within two weeks, with the remainder to be settled by December 31, 2024.

This case highlights critical aspects of consumer rights in real estate transactions, particularly concerning the definition of a consumer and the obligations of developers. The ruling not only reinforces the legal protections afforded to consumers but also emphasizes the importance of clarity and fairness in real estate dealings. The appeal was ultimately dismissed, affirming the NCDRC's decision and upholding the respondent’s rights as a consumer. This outcome serves as a significant precedent in addressing similar disputes in the future.