Coming down heavily on a real estate developer for ‘deficiency in service’ and ‘unfair trade practice’ and not handing over housing units within the stipulated time frame, the National Consumer Disputes Redressal Commission has ordered that the builder refund the money for the delayed project with interest, and pay the compensation and litigation cost to homebuyers who had sought a refund.
‘…we find, both, deficiency in service within the meaning of section 2(1)(g) & (o), and unfair trade practice within the meaning of section 2(1)(r), to be well and truly evident on the part of the builder co,” the order said.
‘In remedy, it is appropriate to direct the builder company to refund the principal amount deposited by the complainant with the builder co., with just and equitable interest, a lumpsum compensation, and cost of litigation, to the complainant,’ it said.
The commission was hearing the plea of 20 homebuyers who had invested Rs 10 crore in 2012 in Wave Garden housing project located in Mohali. Despite promising to deliver the units within three years, the developer had failed to complete construction even after seven years.
It noted that in respect of the interest on the amount deposited, ‘it is always desirable and preferable, to the extent feasible and appropriate in the facts and specificities of a case, that some objective logical criteria be identified and adopted to determine an apt rate of interest. The rate of interest cannot be arbitrary or whimsical, some reasonable and acceptable rationale has to be evident, subjectivity has to be minimized.’
For a residential unit, ‘the rate of interest for house building loan for the corresponding period in a scheduled nationalized bank (take, State Bank of India) would be appropriate and logical, and, if ‘floating’ / varying/ different rates of interest were/are prescribed, the higher rate of interest should be taken for this instant computation,’ it noted.
The lump sum compensation for loss and injury, for mental agony and physical harassment, hardship and difficulty, uncertainty, and helplessness, can neither be meagre nor exorbitant, it has to be just and equitable, commensurate with the loss and injury.
In our considered view, lump sum compensation of Rs 1 lakh would be just and appropriate in the given facts and specificities of the case. In respect of costs of litigation, too, a just and equitable cost is necessary. In our considered view, costs of litigation of Rs 1 lakh would be just and appropriate, the order said.
The apex consumer commission has also said the builder should be prompt and dutiful in making the necessary payments within the four weeks time and not doing so would attract higher penal interest.
‘Any further harassment, difficulty, and helplessness for the ordinary simple consumer by delaying payments or making reduced payments etc. (if the adjudication is not stayed or quashed or modified by a higher authority/ court) will be an unacceptable situation, to be viewed seriously - the harassment, difficulty, and helplessness of the consumer should end promptly and fully, the chapter should close. Therefore, if the builder co. delays the adjudicated payments beyond the time stipulated, it would and should attract higher / penal interest and other compensation/costs, which will be determined by this Commission if the contingency so arises,” the order said.
Legal experts said the judgment gives hope to homebuyers who have sought refund due to delay in getting possession of their units. "A homebuyer whose hard-earned money is stuck in such projects goes through huge suffering because its life savings is stuck with a third party with very little hope of return and also because of loan interest rates and monthly EMIs. The entire family goes through a traumatic experience. This judgment has given a lot of hope to all homebuyers who till date were not approaching the courts for justice," said Aditya Parolia, advocate with PSP Legal.
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