NCDRC | Builder unilaterally, high-handedly cancels sale agreement on not handing over timely possession: Commission decides builder-buyer dispute, levies interest to be paid by builder

National Consumer Disputes Redressal Commission (NCDRC): Coram of C. Viswanath (Presiding Member) and Justice Ram Surat Ram Maurya (Member) decided an issue with regard to handing over of possession of flat and cancellation of sale agreement in a builder — buyer dispute.

Arun Kedia (HUF), Arun Kedia and Sabita Kedia (Husband and Wife), members of HUF filed the present complaint.

What led to the filing of the complaint?

OP 1 made advertisements from time to time, inviting applications from prospective buyers for the purchase of the flats.

In 2013, complainants approached the OP and booked a residential flat for purchase and deposited booking charges, in the office of the OP. In June, 2013, a registered sale agreement was executed between the parties. By that time the complainant had deposited an amount of Rs 73,51,426 in the office of the OP. The balance amount was to be paid in instalments.

Complainants paid the amount of instalments as mentioned in the agreement as and when it was demanded by the OP. According to the complainants, thereafter they neither received any demand letter nor possession of the allotted flat was handed to them till March, 2016. They received a demand letter but as in this letter no date of delivery of possession was mentioned as such, they did not deposit the amount demanded in it, rather wrote letters requesting to handover possession over the flat allotted to them.

It was also stated that the complainants were not allowed to go to the site and verify the progress in construction. OP assured the complainants that they would be given possession within a short time.

When the registered notice was served to the OP, they unilaterally cancelled the agreement, mentioning therein that in spite of the demand letter, they had not deposited the instalment as fixed in the agreement.

Complainants requested and sent registered notices to OP to cancel the agreement and hand over the possession, but since the notices were not complied with, the present complaint was filed.

Analysis, Law and Decision

Whether the complainants were defaulter in payment of instalments as fixed in the agreement in spite of the notice given by the OP, they failed to pay it within 7 days and hence the OP exercised its power under the agreement and revoked the agreement?

OR

OP had failed to complete the construction till March 2016 and in order to cover its default, the agreement was cancelled in a high-handed manner, to harass the complainants and divert their mind from asking possession?

Bench noted that the agreement fixed reciprocal liabilities upon both parties.

Further, it was added that if the opposite party has not abided by the terms of the agreement and committed a serious breach then it cannot blame the complainants that they have not deposited the instalments well within time or within seven days issue of the letter of demand.

Commission held that there was nothing on record to prove that the demand letters were actually issued to the complainants. Therefore, the allegation that the complainants committed default in payment on instalment for which the agreement was cancelled was not proved.

Adding to the above reasoning, Clause-14 of the agreement requires service of 30 days prior notice in writing of its intension to terminate the agreement. No such notice was issued by the opposite party to the complainants. Cancellation of agreement, of which the intimation was given through letter, was illegal. 

Coram held that there was nothing on record to show that till March, 2016, the construction was completed and a completion certificate was obtained from the competent authority.

According to Section 8 of the Maharashtra Ownership of Flats (Regulation of the Promotion of Construction, Sale, Management and Transfer) Act, 1963, if the builder is not able to hand over the possession over the building/flat within the time specified in the agreement then the builder is liable to pay interest to the purchaser of the flat for the period for which the possession has not been handed over.

Due to latches on the party of the OP, the complainants suffered a loss. The agreement for sale had been cancelled illegally and malafide, in a high handed manner and the complainants were forced into litigation.

Commission directed the OP to handover the possession to the Complainants after taking balance sale consideration within 2 months and execute the final deed of transfer. OP shall also pay simple interest @6% p.a.to the complainants on the amount deposited by them from the due date of possession to the offer of possession after obtaining the Occupancy Certificate.  [Arun Kedia (HUF) v. Runwal Homes (P) Ltd., 2021 SCC OnLine NCDRC 189, decided on 24-06-2021]


Advocates before the Commission:

For the Complainant: Mr. R.M. Kedia, Advocate

Ms. Sabita Kedia, Complainant in person

For the Opp. Party: Ms. Anita Marathe, Advocate

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