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NCDRC blasts Parsvnath Developers for failing to refund money to homebuyers, seeks jail term for officials

Orders three years imprisonment for its managing director and directors of the company

Coming down heavily on a Delhi-based real estate developer Parsvnath Developers Ltd for failing to refund the money to homebuyers who had been waiting for possession of their homes for years, the National Consumer Disputes Redressal Commission (NCDRC) has ordered three years imprisonment for its managing director and the directors of the company.

Noting that the complainant “is a senior citizen and retired Army Officer of higher rank.  He has already crossed the age of 75 years and waiting for the refund of his money, which he had deposited with the JD towards the flat,” the bench headed by justice Deepa Sharma said that “I have given thoughtful consideration to the rival contentions. It is a decree against the JD."

"JD has failed to comply with the decree despite taking number of opportunities. They have not honoured their own undertakings and it seems that SLP has been filed with the sole intention to delay the payment of decretal amount. Moreover, there is no stay of the execution,” the order, a copy of which is with Moneycontrol, said.

The buyers’ counsel had argued that that the real estate developer had been seeking repeated adjournments and giving undertakings to comply with the order but had not honoured his own undertaking.

JD stands for judgment debtor or one against whom a judgment has been passed, in this case Parsvnath Developers Ltd.


In 2019, the consumer court had directed Parsvnath to refund the principal amount to homebuyers along with an interest at the rate of 12% for the deficiency in service and unfair trade practices following complaints filed by five buyers who were all retired army officers.

“It is apparent that despite the direction of this Commission to furnish the name of the Managing Director and Directors of JD, the JD has failed to comply with this direction. In view of the non-compliance of the directions and dishonouring their own undertaking, I sentence them, in exercise of my power U/s 72 of the Consumer Protection Act, 2019, for three years simple imprisonment and issue warrant of arrest  against the Managing Director and Directors of JD,” the order said.

The order also said that the warrant of arrest shall not be executed, “if the JD deposits the entire decretal amount before this Commission by 10.02.2021.”

This means that the developer has time until February 10 to deposit the amount.

The matter has been listed for March 24, 2021.

Responding to Moneycontrol’s queries, Parsvnath Developers Ltd said “In response, we would like to inform that in terms of order dated 15.01.2021 of the Hon’ble NCDRC, 20% of the decretal amount was to be paid to the Complainants on or before 03.02.2021, which we have been ready and willing to pay. However, due to some communication gap between the briefing counsel and the Counsel who appeared before the Hon’ble NCDRC through virtual hearing, the same could not be appropriately conveyed to the Hon’ble NCDRC. Even after the hearing of matters before Hon’ble NCDRC, on 03.02.2021, the Company had sent an email to the Complainant’s Counsel along with copies of Demand Drafts for 20% of the decretal amount, requesting him for collection of the Demand Drafts,” it said.

“The Company has already filed an application before the Hon’ble NCDRC seeking setting aside of order dated 03.02.2021. The said application and the Appeal filed by the Company against NCDRC previous Order before the Hon’ble Supreme Court are both now listed for hearing on 09.02.2021. The Company has a good case on merits and is hopeful in getting relief either from Hon’ble Supreme Court or the Hon’ble NCDRC as there was no default on the part of the Company. Even otherwise, as per the directions of Hon’ble NCDRC, the Company is required to comply with the order dated 03.02.2021 on or before 10.02.2021,” it added.

Legal experts have welcomed the order.

“This order is precisely the approach which is needed. Compliance of the commission’s order is sacrosanct as per the consumer protection code. Any attempt to evade it should be dealt with firmly. This order reassures aggrieved homebuyers that their interests are protected by a due process of law. In this order, the judge has rightly identified how the builder was trying to evade the process by using the special leave petition (SLP) mechanism before the apex court and has rightly rejected it. Such orders will surely set a precedent for others who fail to comply with the orders of the commission,” Aditya Parolia, advocate, PSP Legal told Moneycontrol.
Moneycontrol News
first published: Feb 8, 2021 05:15 pm

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