Non-Appearance In The Proceedings, Despite Acknowledging The Legal Notice, Is An Admission Of The Allegations: Ernakulam District Commission

Brief Facts of the Case

This complaint, filed under Section 35 of the Consumer Protection Act 2019, involves a retired captain from the Indian Navy and his wife, who purchased an apartment built by the first opposite party. They secured a housing loan from the second opposite party based on misleading information about the legality of the construction. Subsequently, a Supreme Court judgment revealed the preceding illegality, leading to the complex's demolition and causing the complainants to lose their shelter and invested funds. It was contended that the first and second opposite parties engaged in unfair trade practices by providing false assurances and neglecting to verify the project's legal status before approving the loan. The complaint details the second opposite party's unjust attempts to recover the loan post-demolition.

Contentions of the opposition( Second party; first party is set ex-parte)

The Counsel for the second party rejected accountability for the demolition and incorrect loan approval, stating that they depended on officially approved construction plans and title documents from authorities when granting the loan. While acknowledging partial loan repayment, it was argued that the outstanding balance must still be repaid despite the absence of the subject matter of the Contract (the apartment) resulting from circumstances beyond their control. The Counsel disputed allegations of unauthorized withdrawals and mental distress as inaccuracies and requested the dismissal of the complaint with costs awarded, asserting that there was no deficiency in service on their part.

Observations by the Commission

The bench brought to attention that an amicable settlement was reached between the complainants and the 2nd opposite party bank during the pendency of the case, and the Commission duly recognizes and acknowledges the settlement as mentioned above. However, the first opposite party, a builder, received and acknowledged a notice from the Commission regarding the case and did not appear before the Commission or provide any opposing arguments. The Commission further affirmed that the builder's construction of the apartment complex was determined to be in violation of the law by the Hon'ble Supreme Court's judgment, conclusively establishing that the builder's actions constitute a deficiency in service and unfair trade practices. Furthermore, the first opposite party received a notice but did not submit a response or challenge the complainants' claims, and their failure to participate in the proceedings, despite acknowledging the Commission's notice, is considered an acknowledgment of the allegations made against them.

The bench found the first opposite party liable and directed it to refund Rs. 17,87,437 as the balance consideration for the apartment to the complainants. Furthermore, a compensation of Rs. 5,00,000 is to be awarded due to deficiency in service and Unfair trade practices, along with Rs. 25,000 towards the cost of the proceedings.

Counsel for the Complainant: Advocate T.J.Lakshmanan

Counsel for the Opposite party: Adv. P. Gopalakrishnan Menon, Adv. M.Jithesh Menon, Adv. Indu K., Adv. Mahesh Kumar P.G., Adv. Brijesh R.

Case Title: Captain [Indian Navy] K.K Nair & Anr. V. M/s Holy Faith Builders & Developers Pvt Ltd & Ors.

Case Number: C.C. No. 421/2020