Consumer court directs Godrej Projects to refund Rs 51.36 lakh to homebuyer

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The National Consumer Disputes Redressal Commission (NCDRC) has ordered  Godrej Projects Development Ltd to refund the entire principal amount of Rs. 51.36 lakh to a homebuyer along with 9 percent interest as a compensation for its failure to provide a 24 metre road connecting the project. The road was portrayed in the advertisements and buyer agreements, the NCDRC said adding that road connectivity was an important feature which propelled buyers to take a decision to buy into the project.

It also held the builder responsible for ‘deficiency of service’ for not providing  regular water supply, electricity supply and sewerage treatment plant.

The buyer in this case had booked an apartment spread across an area of 2324 sq. ft (super area) in the project Godrej Summit in August 2014 and had signed the builder buyer agreement in October 2015.  The builder obtained the occupancy certificate in June 2017 following which it raised a demand of balance payment from the buyer.

The buyer after he visited the site found that the unit was not in accordance with the plan and that the 24m road was not existing, safety measure as promised were not there and the  proximity from Dwarka Expressway  etc. were not available as promised by the builder and therefore held back the final installment.

The builder cancelled the allotment of the flat in December 2017 and forfeited the earnest money amounting to Rs 46.94 lakh.

"...in view of the foregoing observations with respect to non-provision of 24 m wide road outside the project area as well as deficiency in provision of other utilities on regular basis till the committed time-frame of  offer of possession, the complainant was justified in seeking refund of their deposits…," it said.

"Careful consideration of the pleas of complainant and OPs (opposite parties) regarding responsibility for construction of 24m wide road outside project area and relevant documents in this regard show that no doubt the responsibility for land acquisition and construction of that road lies with the state authorities, OPs have admitted that they are accountable to pay for the proportionate cost towards the said acquisition and construction."

"No doubt, the said issue is pending before the Hon’ble High Court of Punjab & Haryana for adjudication, the way proposed 24 m road outside the project area leading to the Dwarka Expressway, which was a key feature of the project, was portrayed in the advertisements/brochure of the OPs and the Buyers’ Agreements, it was certainly an important factor for the prospective purchasers to book the units in the said project believing that such a connectivity would exist when the project is completed," the order noted.

The order said that on account of uncertainty about the construction of this project as well as the possible timeframe even if the road gets constructed finally, has certainly put the allottees of the project at a disadvantage.

As regards deficiencies with respect to regular water supply, electricity supply and sewerage treatment plant, a perusal of written statement/reply of the OPs show that grievances of the complainant in this regard are genuine and such utilities are being presently provided to the allottees on adhoc basis only till the concerned state authorities make permanent arrangements for provision of such utilities on regular basis by laying down the proper infrastructure for the same, the order said.

It directed the developer to  refund the entire principal amount of Rs.51,36,338 to the buyer, alongwith compensation in the form of simple interest at the rate of  9 percent  per annum from the date of each payment till the date of refund.  The principal amount refundable is subject to verification of actual amount paid by the complainant based on receipts etc, it said.

The builder has also been asked to pay an amount of Rs 25,000 as cost of litigation to the  complainant and directed the builder to make the payment within  three months from the date of the order.

It said that if the buyer has taken a loan from a bank or financial institutions and if it is still outstanding, the refund amount will be first utilized for repaying the outstanding amount of such loans and balance will be retained by the buyer. The buyer has been directed to submit the requisite documents from the concerned bank(s)/financial institution(s) to the builder within four weeks from receipt of the order to enable them to issue refund cheques/drafts accordingly.

The builder in its response denied the allegations made by buyer and said that the  commission lacks pecuniary jurisdiction in the present matter. “…the ambit of jurisdiction of Commission is strictly limited to examine the question of deficiency in service and not to go behind the agreement or terms of the agreement.” It said that the buyer is not a consumer in the present case as he has bought the flat for investment purpose, as per clause 19 of ABA the matter should first be settled through arbitration and hence present complaint is not maintainable.

The builder contended that there was no deficiency of service on its part as the construction of 24 metre road connecting highway and drinking water was to be done by the state authorities.

“This order made it clear that even non-construction of a 24 m wide road as projected by the builder in its brochure at the time of selling the housing unit can be a ground for refund for an allottee. The NCDRC has ordered refund, even though the builder claimed that the 24 m wide road was the responsibility of the state government,” said Piyush Singh, Partner,  PSP Legal, who argued on behalf of the homebuyer.

"This is a landmark judgment since developers make tall promises in their brochure and lure people to book apartment. In case of this project, even today the entry and exit to the project is through a revenue rasta and even the layout of the project was changed without obtaining requisite approval from authorities,” he added.

A comment from the builder is awaited.