DELAYED POSSESSION: NCDRC DIRECTS BUILDER TO REFUND ENTIRE AMOUNT RECEIVED FROM THE BUYER

DELAYED POSSESSION: NCDRC DIRECTS BUILDER TO REFUND ENTIRE AMOUNT RECEIVED FROM THE BUYER

The Real Estate today is one of the biggest sectors and a driving force of the Indian economy. However it is not without any deficiencies, the foremost being unexplainable delay on the part of builders in delivering possession to the customers who invest their hard earned money in the hope of having a dream home.

It is in this context that the National Consumer Disputes Redressal Commission (NCDRC) has passed an order on 14th October 2020 which has provided much relief to home buyers facing the issue of delayed possession from the builder. The Commission in this case (Ankur Goyal Vs. Rise Projects Pvt. Ltd., 2020 SCC OnLine NCDRC 465) has decided on the following major points:

  1. Whether a buyer is a “consumer” within the meaning of section 2(1)(d) of the Consumer Protection Act, 1986:

    The Commission opined that since the builder in this case had failed to show any cogent evidence, which may indicate that the Complainant (buyer) has been indulging in sale purchase of the properties and/or that he has purchased the Unit in question for further sale or for earning benefits or indulged in sale purchase of properties Complainant is a Consumer within the meaning of Section 2(1)(d) of the Act, 1986.

  1. Whether the Complaints were filed prematurely: The Commission held that any aggrieved Consumer has a right to approach at any stage the Forum or Commission for the redressal for the reason that the anxiety and apprehension of the Complainant about impossibility of the completion of Project before the agreed date was justified. In this case, even after the lapse of 4½ years (54 months), the builder failed to produce any cogent evidence about the completion of the Project. The conduct of the builder is clearly discernible to be malafide or in violation to the terms of the Agreement.

  1. On refund of deposited amount with the builder: The Commission observed that there are two options for an ordinary common buyer:

  • to obtain the possession of the Unit as and when it is offered by the builder and in addition seek just and equitable compensation under the Consumer Protection Act, 1986 for delay in offering possession beyond the stipulated period of completion; or

  • to claim refund of the principal amount; interest thereon; and compensation, if the offer of possession of the Unit is unreasonably delayed beyond the stipulated period of completion.

In this case, the buyer was not interested to take possession and hence, the Commission held that the builder has to refund to the buyer the entire amount received from the buyer.

  1. On the quantum of compensation: The Commission held that the builder is liable to refund the amount which the Complainant had paid to them for purchase of the flats, along with appropriate interest on that amount. Since the builder committed default in performing their contractual obligation by not completing the construction within the stipulated time or even within a reasonable period thereafter, they have no legal right to forfeit any part of the money deposited by the Complainant with them, even if the Complainant is not willing to take possession of the flats. The Commission relied on judgment of the Hon’ble Supreme Court in Cdr. Arifur Rahman Khan and Aleya Sultanav. DLF Southern Homes Pvt. Ltd.

The Commission thereby directed the builder to refund to the Complainant the entire booking amount alongwith interest @ 8% per annum from the date of deposit till the date of payment. If the Complainant has paid any amount towards the loan account to the Financial Institutions, the same be refunded by the builder with the amount of interest actually paid to the Financial Institutions to the Complainant.

The Commission further directed the Financial Institutions to not demand any amount as also interest, if any due thereon, from the Complainants.

Thus, this judgment of the NCDRC gives much respite to buyers who can now choose to either obtain possession of a booked flat or claim refund along with interest from the builder. It is also expected that builders who are responsible for handing over timely possession as per agreed terms would abstain from misleading home buyers. 

Assisted by : Devahuti Tamuli, Senior Associate 

 

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