Failure To Deliver Documents And Cancellation Of Allotment: Delhi State Commission Holds Essel Housing Liable For Deficiency In Service

Brief Facts of the Case

The complainants booked a flat with Essel Housing Projects/builder and later changed the payment plan to a “Dream Scheme.” Despite making initial payments, they faced delays in receiving essential documents from the builder required for securing a bank loan. The builder demanded installment payments before offering possession, leading to disputes. The builder eventually canceled the allotment, citing non-payment, and refunded the earnest money, which the complainants accepted under protest. The complainants filed a complaint before the District Commission, which dismissed the complaint. Aggrieved, the complainant appealed before the State Commission of Delhi.

Contentions of the builder

The builder argued that the complainants failed to adhere to the agreed payment schedule, despite having sufficient time to arrange funds. They contended that providing documents for obtaining a loan was not part of the contract. The builder maintained that the cancellation of the allotment was justified due to non-payment and that they acted in accordance with the terms of the agreement. They also stated that the flat had been sold to a third party after cancellation.

Observations by the State Commission

The State Commission observed the builder failed to provide necessary documents promptly, delaying the complainants' ability to secure a loan. It was noted that the complainants were not given adequate time to arrange funds after receiving the documents, violating the stipulated 30-day notice period for cancellation in the agreement. Relying on principles established in Modern Insulators Ltd. vs. Oriental Insurance Co. and other cases, the commission emphasized the builder's duty of care and responsibility to assist buyers. It ruled that the builder's failure to deliver documents and the hasty cancellation of the allotment constituted a clear deficiency in service. The commission held that the builder's actions constituted a deficiency in service, causing unnecessary delays and harassment. It directed the builder to pay compensation of Rs. 30,000 for mental agony and Rs. 20,000 as litigation costs while noting the refund of earnest money to the complainants.

Case Title: Mr. Rakesh Prasad Singh & Anr. Vs. M/S Essel Projects Pvt. Ltd.

Case Number: F.A. No. 992/2014

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