6% Interest Appropriate Compensation For Delay In Handover Of Property: NCDRC

Brief Facts of the Case

The complainants entered into an agreement with the Shree Sainath Constructions/ developer to purchase a flat, including two parking spaces, for Rs. 9,202,716, to be paid in installments. They secured a housing loan from the State Bank of India and paid the full consideration along with other charges, even facing excess charges from the developer. According to the agreement, possession would be handed over with a six-month grace period. In case of delay, the developer was to compensate with 12% annual interest on the paid amount. After paying the service tax, the complainants inquired about the construction progress and possession date. Subsequent payments were made along with a request for delay compensation. The developer replied, indicating a delay and stating that interest liability would be calculated at possession. The complainants sought payment details, resulting in the developer reducing the amount. They questioned this recalculation and paid the revised amount under protest. Despite further demands and no clarity on possession, the complainants requested compensation for the delay. The developer demanded additional payments with threats of cancellation. Despite making further payments, the developer denied delay compensation, even after providing an occupancy certificate. The complainants continued to request possession and clarification of payments, but the developer demanded additional amounts without clear breakdowns and refused a site visit. The complainants then approached the National Commission with an original petition.

Contentions of the Opposite Party

The developer contested the complaint, stating that the flat was ready for possession and that an occupation certificate had been obtained. They offered possession to the complainants, who refused it for various reasons. The developer also offered rent or alternative accommodation, which the complainants declined, along with the offered compensation. They argued that time was not of the essence due to force majeure conditions in the agreement. Delays were attributed to issues with the electricity department, a civil suit causing an injunction, demolition of illegal structures, defective materials from a supplier, and non-availability of building materials. The developer claimed these delays were beyond their control; thus, no compensation was given to the complainants, who failed to show evidence of loss. The developer also denied charging excess amounts, stating all charges were as per agreement, including taxes. They raised the issue of maintainability, arguing the complainants were not consumers as the flat was for commercial purposes.

Observations by the Commission

The Commission observed that after considering the arguments and examining the records, it was clear that, as per clause 22 of the agreement, possession of the flat was to be handed over by January 2011. This clause also allowed a six-month extension in case of force majeure, making the new deadline July 2011. The developer admitted that the occupation certificate was obtained in June 2015, invalidating the possession offer in March 2015. The commission highlighted that the developer expressed willingness to hand over possession in August 2015, so their liability for delay ends on that date. The commission cited the Supreme Court cases of Wg. Cdr. Arifur Rahman Khan Vs. DLF Southern Homes Pvt. Ltd. (2020) and DLF Home Developers Pvt. Ltd. Vs. Capital Greens Flat Buyers Association (2021) which determined that 6% interest on the deposit for the delayed period is appropriate compensation. Regarding the issue of excess payment, the developer stated that several cheques dated April 2015, totaling Rs. 680,453, lapsed and were not encashed. The commission observed that the complainants failed to provide evidence of these cheques being encashed, so no refund of the excess amount is warranted. The complainants also sought a refund of MVAT, but since MVAT is a statutory amount, it cannot be refunded. Concerning maintainability, the developer alleged that the complainants booked the flat for commercial purposes but provided no evidence. They also claimed that the contract enforcement complaint was unsuitable for the consumer forum and should be in civil court. However, the commission cited the Supreme Court ruling in CCI Chambers Coop. HSG. Society Ltd. v. Development Credit Bank Ltd., which held that the need for evidence or investigation of facts and law does not preclude a forum under the Act from hearing a grievance.

The commission partly allowed the complaint with a cost of Rs. 50,000. It directed the developer to hand over possession of the flat to the complainants within a period of two months, along with compensation in the form of @6% interest.

Case Title: Parth M. Soneji Vs. Shree Sainath Enterprises Construction And Developers Pvt. Ltd

Case Number: C.C. No. 740/2016