Gross Negligence: NCDRC Directs Raheja Developers To Refund Entire Amount For Failure To Complete Project

The Commission reasoned that the Developer is liable for gross negligence as it failed to finish the project, obtain the occupation certificate, or provide essential amenities for habitation despite collecting over 95% of the payment from the Homebuyers.

Brief Facts:

The Complainant booked an independent floor in the Developer’s housing project named "Raheja Revanta" in Gurgaon in 2011 based on the representations and advertisements of its various amenities and facilities. The agreement specified a 36-month period from the date of execution, with an additional grace period of six months for possession delivery. The Developer started demanding installment payments without reaching the corresponding construction stages.

The 36-month period expired in May 2015, and the grace period ended in November 2015. In response to the delay, the complainant sent a legal notice, requesting possession within one month. Despite the notice being served, the Developer did not respond.

As a result, the complainant initially filed a complaint before the State Consumer Disputes Redressal Commission in Delhi. However, thE complaint was later withdrawn by order, with the option to refile it before the appropriate forum. Subsequently, the complainant filed a complaint before the National Commission, alleging a deficiency in service by the Developer and prayed for the handover of possession of the unit with delay compensation as interest of 18% per annum on his deposit, Rs.10,00,000/- as compensation for deficiency in service, mental agony and harassment and Rs.2,00,000/- as litigation costs.

Contentions of the Parties:

Developer

The Developer contended that the construction was delayed due to force majeure i.e. unforeseen circumstances beyond their control and should be condoned as per the agreement. It pointed out that Home Buyers defaulted on their installment payments, leading to a shortage of funds. The Complainant's installment payments were delayed and the Developer had waived approximately Rs. 4.5 lakhs. Additionally, the project faced challenges with a High Tension Electricity line passing through the land taking unreasonable time to be made underground. Furthermore, the acquisition of land for the Dwarka Expressway was embroiled in legal issues, and despite a decade passing, HUDA failed to provide basic infrastructure like roads, sewer lines, water supply, and electricity, even though necessary deposits were made by the Developer and other builders.

The Developer claims they informed all buyers, including the complainant, about the tentative completion date, but the slow construction progress was primarily due to the lack of basic infrastructure. Nevertheless, it asserted that it is making every effort to complete the construction promptly and assure the complainant’s interests are protected by the delay compensation clause in the agreement. The Developer believes that any dispute should be resolved through arbitration, as specified in the agreement, and deems the current complaint as not maintainable.

It also argued that under the Real Estate (Regulation and Development) Act, 2016, Haryana Real Estate Regulatory and Development Authority (HRERA) has been established as a special enactment to handle such matters. The Developer suggests that the complainant can file their grievance with HRERA, emphasizing that the complainant is not a consumer and owns another residential property and this purchase was for commercial purposes. Thus, the complaint should be dismissed.

Observations of NCDRC:

The NCDRC made an observation that the project in question lacked essential facilities required for habitation, and despite more than 8 years, there is no prospect of the project being ready for habitation soon. The Commission cited Supreme Court cases, such as Fortune Infrastructure vs. Trevor D' Limba, Pioneer Urban Land & Infrastructure Ltd. vs. Govindan Raghavan, and Kolkata West International City Pvt. Ltd. vs. Devasis Rudra and held that home buyers cannot be made to wait indefinitely for possession.

The Commission also rejected the Developer's argument that the home buyer had purchased the property for commercial purposes. The Commission found no evidence to support such a claim and emphasized that merely owning one residential house does not automatically imply a commercial intent. It clarified that the Arbitration and Conciliation Act of 1996 does not exclude the jurisdiction of the Consumer Commission, and the complainant has the right to seek redressal from either forum.

The Commission highlighted that the Developer had promoted the project in 2011 as the most iconic one, enticing home buyers to purchase a house. It is submitted that for approximately 12 years, Home Buyers have been deprived of even the most essential amenities required for living. Only in 2023, after the Developer has already collected over 95% of the payment from the buyers, did it file a writ for mandamus, compelling the government authorities to develop the necessary infrastructure. This situation goes beyond mere negligence and constitutes gross negligence.

The Commission concluded that the Developer has failed to finish the project, obtain the occupation certificate, or provide essential amenities for habitation. As a result, a refund is deemed necessary. In determining the appropriate rate of interest for the refund, the Commission referred to the Supreme Court's ruling in the case of Experion Developers Pvt. Ltd. vs. Sushma Ashok Shiroor, where it was held that incases of a refund interest rate of 9% per annum is reasonable.

Case Title: Ashish Vohra vs. Raheja Developers Limited.

Case No.: Consumer Case No. 1099 of 2017

Counsel for Complainant: Ms. Padmapriya, Advocate

Counsel for Opposite Party: Mr. Siddharth Banthia, Advocate

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