NCDRC | Can a consumer claim refund of principal amount if flat not delivered on time? Commission untangles two fundamentals for Buyer — Consumer

National Consumer Disputes Redressal Commission (NCDRC): A Division Bench of Justice R.K. Agarwal (President) and Dr S.M. Kantikar (Member) decided three complaints in a combined order as the facts were similar.

The complainant had booked three residential flats floated by Opposite Party — Builder Co. Possession of these flats was to be given by the end of the year 2018, however, the builder Co. unilaterally enhanced the period to 42 months.

In the year 2016 itself, the entire loan amount with respect to each flat was disbursed by the Financial Institution concerned to the builder co. Till 2018, the complainant paid about 90% of the total price of the respective flats.

Complainant was aggrieved that the builder Co. failed to fulfil the contractual obligation as there was no remarkable progress at the site in question.

Even though the construction was not completed, Builder Co. was demanding full payment.

Being aggrieved with the above-stated of affairs and attitude and deficiency ins service by the Builder Co., the complainant filed complaints under Section 21(a)(i) of the Consumer Protection Act, 1986 seeking a refund of the entire amount paid to the Builder Co. with 24% per annum interest.

Builder Company also failed to file its written version with the statutory period of 30 days and the extended period of 15 days thereafter as prescribed under Section 13(1)(a) of the Act which expired on 01-01-2020, 04-01-2020 and 16-01-2020 respectively.

Constitution Bench of the Supreme Court in New India Assurance Co. Ltd. v. Hilli Multipurpose Cold Storage (P) Ltd., (2015) 16 SCC 20, held that the Consumer Fora, including this Commission, has no power to condone the delay beyond the period of 45 days from the date of receipt of the notice.

Commission’s Decision

1. Commission firstly addressed whether the purchase of three flats by the complainant would constitute the “COMMERCIAL PURPOSE” within the meaning of Section 2(1)(d) of the Act, 1986?

Bench relied on the decision of Supreme Court in Laxmi Engineering Works v. P.S.G Industrial Institute, (1995) 3 SCC 583, wherein it was held that the,

‘commercial purpose’ is a question of fact to be decided in the facts of each case and it is not the value of the goods that matters but the purpose for which the goods brought are put to. The same would be equally applicable to for hiring or availing service.

In the instant case, Builder Co. failed to show any evidence indicating that the complainant indulged in sale purchase of the properties in question for further sale or for earning benefits, hence the Complainant came under the ambit of Section 2(1)(d) of the Act, 1986 which defines “Consumer”.

2. Were the complaints filed prematurely?

The anxiety and apprehension of the Complainant about the impossibility of the completion of the Project before the agreed date was justified.

Any aggrieved Consumer has a right to approach at any stage the Forum or Commission for the redressal.

3. The refund of the deposited amount with the Builder Co.

Bench stated that for an ordinary common Buyer – Consumer, the two fundamentals, which are significant and material the ‘Cost’ i.e. the total cost, read with the schedule of making payment and the ‘Time’ that the total time period in which possession would be delivered.

Therefore, in the instant case two natural corollaries flow therefrom:

  • Consumer-Complainant has the fundamental option to obtain the possession of the Unit as and when it is offered by the Builder Co. and in addition, seek just and equitable compensation under the Act, 1986 for the delay in offering possession beyond the conveyed and understood period of 42 months if the delay was unreasonable.
  • Consumer-Complainant has the other option to claim a refund of the principal amount; interest thereon; and compensation, if the offer of possession of the Unit is unreasonably delayed beyond 42 months.

In the present matter, the complainant was not interested in taking possession, hence the builder Co. has to refund the entire amount received from the Complainant. 

4. Quantum of Compensation the complainant is entitled to.

Bench stated that indefinite or unreasonable delay with token compensation for delay cannot continue ad nauseam, ad infinitum (such a situation would be absurd).

In view of the line of facts, Bench held that the Complainant availed loan from the Financial Institutions and paid the interest as levied.

Thus, the Complainant is entitled to get a refund of the amount along with the interest which he has deposited with the Bank. The Complainant is also entitled to receive certain interest on the booking amount which he has paid to the Builder Co.

For the above-stated position, Bench relied on the decision of Wg. Cdr. Arifur Rahman Khan and Aleya Sultana v. DLF Southern Homes (P) Ltd., 2020 SCC OnLine SC 667.

While reasoning out it’s decision, Commission stated that any impediments or problems that arise in Planning, Execution and Completion are builder’s responsibility, and not of the Consumer.

Hence, OP is liable to refund the amount which the Complainant paid to them for purchase of the flats in questions, along with appropriate interest on that amount.

However, Commission added that the rate of interest also cannot be arbitrary or whimsical, some reasonable and acceptable rationale has to be evident, subjectivity has to be minimised, a logical correlation has to be established.

Decision Summarised:

  • Refund to the Complainant the entire booking amount deposited by the Complainant till December 2018 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 shall be refunded by the Builder Co. with the amount of interest actually paid to the Financial Institutions to the Complainant.
  • Builder Co. shall pay the entire balance loan amount disbursed to it alongwith the agreed rate of interest (Home Loan), as mentioned in the Tripartite Agreement to the Financial Institutions.

[Ankur Goyal v. Rise Project (P) Ltd., 2020 SCC OnLine NCDRC 465, decided on 14-10-2020]

Join the discussion

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.