Consumer Victory: Punjab Developer Ordered to Refund Investors After Project Delay.


18 October 2024 Civil Appeals >> Civil & Consumer Law   |   Consumer Law >> Civil & Consumer Law   |   Property Law >> Civil & Consumer Law  

In a significant ruling in the matter of Harminder Kaur & Another v/s C & C Towers Ltd., Punjab & Others for consumer rights, the National Consumer Disputes Redressal Commission (NCDRC) has overturned a lower court's decision, ordering a Punjab-based developer to refund investors who were promised modular office spaces in a stalled commercial complex. The appellants, who had invested in the project with the intention of establishing a music academy, were granted a substantial refund with interest, along with compensation for litigation costs.

The case centered on advertisements and promotional campaigns by the developer, which enticed the complainants to invest in the project located in Sector 57, Mohali. The investors paid a significant sum, representing 35% of the total cost, based on promises of timely completion and business potential. An allotment letter was issued, specifying a completion deadline of December 2014.


 

 

However, the developer failed to meet this deadline, and construction progress was minimal. Instead, they issued letters revising the project schedule and proposing alternative locations for the office spaces, further delaying the handover. Eventually, the developer offered to refund the deposits, but this was also delayed, and the investors discovered that the Greater Mohali Area Development Authority (GMADA) had issued a termination notice for the project due to non-completion.

Aggrieved by the developer's deficiency in service and unfair trade practices, the investors filed a complaint seeking possession of the property or a refund with interest, along with compensation for mental agony and litigation costs.

The developer contested the complaint, arguing that the investors were not "consumers" under the Consumer Protection Act, as they had intended to use the property for commercial purposes. They also cited an arbitration clause in the allotment letter and claimed that the investors had failed to meet their payment obligations.

The State Consumer Disputes Redressal Commission initially dismissed the complaint, ruling that the investors did not qualify as consumers. However, the NCDRC overturned this decision, emphasizing the investors' clear intention to use the property for self-employment, specifically to establish a music academy.

The NCDRC cited a Supreme Court judgment that clarified that "commercial purpose" does not exclude the use of goods or services for earning a livelihood through self-employment. The Commission also noted that the investors were related and had presented evidence of their qualifications, supporting their claim of intending to run a joint music academy.

Furthermore, the NCDRC criticized the developer's undue delay in completing the construction and their attempt to forfeit the investors' payments without justification. The Commission deemed such actions as unfair trade practices and a violation of consumer rights.

In its ruling, the NCDRC directed the developer to refund the deposited amount with 9% interest from the date of deposit until realization, and to pay Rs. 50,000 to each appellant as litigation costs. The developer was given six weeks to comply, with a provision for increased interest in case of further delay.

This judgment serves as a strong reminder to developers of their obligations to consumers and reinforces the importance of timely project completion and fair business practices. It also highlights the crucial role of consumer protection laws in safeguarding the rights of investors in real estate projects.


Consumer Protection Act, 1986