Delay In Delivering Possession After Receiving Deposits Constitutes “Deficiency In Service”: NCDRC

Brief Facts of the Case

The complainant booked a residential unit in the “Urban Woods” project by M/s Vatika Limited/builder, paying a booking amount and signing an agreement with the expectation of receiving possession within three years. The arrangement included a modular kitchen and car parking space, with a housing loan managed by M/s HDFC Limited. The builder, M/s Vatika Limited, failed to complete the construction on time and did not meet the agreed terms, including issuing a Certificate of Occupancy. The complainant was later informed of additional demands and a lack of development of promised project features, including the car parking space and entry from the Ajmer Express Highway. Aggrieved, the complainant filed a complaint before the State Commission of Rajasthan, which allowed the complaint. The State Commission directed the builder to refund the complainant's booking amount of ₹5,71,245 with 9% interest.

Additionally, the builder was required to pay the housing loan of ₹30,46,643 to M/s HDFC Limited within one month, which had been sanctioned and disbursed to M/s Vatika Limited. A cost of ₹5,100 was awarded, but no compensation for mental agony was granted. Dissatisfied by the State Commission's order, both parties appealed to the National Commission.

Contentions of the Builder

The builder raised preliminary objections, arguing that the complaint was filed after the limitation period had expired and that the complaint's valuation was intentionally inflated to secure a refund of the booking amount. They contended that the dispute should have been referred to arbitration and claimed that the complainant defaulted on payments and showed no interest in the possession despite being informed. They asserted that the project and flats had been completed and requested that the complaint be dismissed.

Observations by the National Commission

The National Commission cited the ruling in Kolkata West International City Pvt. Ltd. vs. Devasis Rudra, wherein it was held that an indefinite wait for possession is unreasonable and a seven-year delay is excessive. Similarly, Pioneer Urban Land & Infrastructure Ltd. vs. Govindan Raghavan held that buyers are entitled to a refund if the builder fails to provide possession within a reasonable time. The Supreme Court has also affirmed that buyers should not be expected to wait indefinitely and are entitled to refunds for significant delays. Regarding interest rates, the Supreme Court in Experion Developers Pvt. Ltd. vs. Sushma Ashok Shiroor deemed 9% interest fair compensation. It also established that multiple compensations for a single deficiency are unjustifiable, as reiterated in DLF Homes Panchkula Limited vs. D. S. Dhanda. In this case, the builder argued that no Certificate of Occupation was needed under local regulations; however, a certificate was still necessary to provide a clear title.

The National Commission allowed the appeal and directed the builder to refund the booking amount of ₹5,71,245 to the complainant, along with 9% annual interest from the deposit dates until payment. Additionally, The builder was directed to settle the housing loan of ₹30,46,643 with HDFC Limited within one month. The company was also required to pay ₹50,000 in litigation costs to the complainant.

Case Title: M/S. Vatika Limited Vs. Dr. Khozem A Divan & Anr.

Case Number: F.A. No. 1581/2017