Developer's Failure To Fulfill The Contractual Obligation Within The Agreed Timeframe Constitutes A Deficiency Of Service: Delhi State Commission

Delhi State Consumer Disputes Redressal Commission, headed by Justice Sangita Dhingra Sehgal alongside member Ms. Pinaki, held Belgravia Projects liable for deficiency in service over delay in possession of the purchased property.

Brief Facts of the Case

The complainant booked a flat in the ' Brave Hearts' project by the Belgravia Projects/developer, located in Ghaziabad, Uttar Pradesh. The developer allocated a flat to the complainant through an allotment letter, and a buyer-seller agreement was signed on the same day. According to clause 9.1 of the agreement, the developer was obligated to hand over possession of the flat within 2 years plus 2 months. However, to date, the developer has failed to fulfill this obligation. The complainant paid a total amount of Rs. 26,34,213, which exceeded the basic cost of the flat, as demanded by the developer. Additionally, the complainant discovered that the construction of the project was incomplete, and no occupation certificate had been obtained from the relevant authority. Moreover, the complainant received a demand letter from the developer requesting an unlawful sum of Rs. 1,15,000 for holding charges, Rs. 44,184 for maintenance charges, and meter charges totaling Rs. 56,252. However, the complainant had already paid the meter charges. Consequently, the complainant has approached this commission, alleging deficiency on the part of the developer.

Contentions of the Opposite Party

The developer argued that the complaint was time-barred under Section 24A of the Consumer Protection Act, 1986, and asserted that there was no cause of action for the complainant to file the complaint. Additionally, it was claimed that the commission lacked pecuniary jurisdiction to adjudicate the matter and lacked territorial jurisdiction as the property in question was situated outside its jurisdiction.

Observations by the Commission

The commission referred to Section 24A of the Consumer Protection Act, 1986, which outlines a two-year limitation period for filing complaints. It was further observed that that failure to deliver possession of a flat constitutes a continuous wrong, providing a recurrent cause of action for the buyer. Citing Mehnga Singh Khera and Ors. vs. Unitech Ltd., the commission emphasized that buyers have the right to approach consumer courts as long as possession is not delivered. Thus, the complaint in this case was deemed not barred by limitation under Section 24A of the Act.

Regarding the issue of pecuniary jurisdiction, the commission referred to Section 17 of the Consumer Protection Act, 1986, which grants the State Commission jurisdiction over complaints where the value of goods or services and claimed compensation exceeds twenty lakhs but does not exceed one crore rupees. The commission noted that it has the pecuniary jurisdiction to handle complaints falling within this range. Furthermore, regarding deficiency in service, the commission referred to the case of Arifur Rahman Khan and Ors. vs. DLF Southern Homes Pvt. Ltd. and Ors., wherein the concept of “deficiency of services” under Section 2(1)(g) of the Consumer Protection Act, 1986, was discussed. It has been stated that a developer's failure to fulfill the contractual obligation to provide a flat to a buyer within the agreed timeframe constitutes a deficiency of service. This failure represents a fault or inadequacy in the manner of performance as per the contract. The commission emphasized that its jurisdiction, under Section 14(1)(e), includes directing the developer to rectify such deficiencies. Consequently, compensation is considered necessary to restore the buyer for the delay caused by the developer beyond the agreed possession period. The delay not only causes inconvenience but also affects the legitimate expectations of the buyers, impacting their future plans based on the purchased property being available for use and occupation.

The commission directed the builder to refund the entire amount paid by the Complainant, i.e., Rs. 26,34,213, along with Rs. 2,00,000 as cost for mental agony and the litigation cost to the extent of Rs. 20,000.

Case Title: Mr. D.P. Dhankar Vs. MS Belgravia Projects Pvt Ltd.

Case Number: C.C. No. 1299/2017