Failure To Pay Portion Of Sale Price Does Not Nullify Title Transfer: NCDRC

Brief Facts of the Case

The complainants booked a flat with T.C. Enterprise/developer and executed an agreement of sale for the same. They took possession of the flat after the conveyance deed was executed. The complainants claimed that the developer had received the full payment of Rs. 35 lakhs at that time. They alleged that they repeatedly requested the developer to complete the construction and hand over the flat, but these requests went unanswered. The complainants asserted that it was agreed that the service tax liability would remain with the developer and that the total consideration included all costs, including service tax, for the flat. Aggrieved, the complainant filed a complaint before the State Commission of West Bengal, which allowed the complaint. It directed the developer to handover the possession of the flat as mentioned in the Deed of Conveyance, pay compensation of Rs.1,00,000 and Rs. 10,000 as costs of litigation. Consequently, the developer appealed to the National Commission.

Contentions of the Developer

The developer stated that they received a payment of Rs. 16,00,000 through three cheques, with the last payment of Rs. 1,12,000 and an outstanding amount of Rs. 87,500 from a total consideration of Rs. 35 lakhs. The developer issued a legal notice to the complainant. The developer argued that the dispute is purely civil, as possession had already been delivered. They claimed to have completed the flat's construction on time, but due to non-payment of the total consideration, costs for extra decoration, and service tax, the possession could not be delivered. Additionally, the developer mentioned that the complainant borrowed extra funds to manage financial difficulties caused by demonetization and to complete the registration of the Sale Deed, which remains unpaid.

Observations by the National Commission

The National Commission observed that the conveyance deed confirms that the full consideration was received, establishing the sale. Although the developer obtained the Occupancy Certificate, they claimed that they could not deliver possession due to the complainants' non-payment of Rs. 87,500 and service tax. However, the complainants qualify as “Consumers” since possession was not handed over. The commission highlighted that the memo of consideration indicates the Rs.87,500 was paid in cash, which the developer acknowledged. According to Bharathi Knitting Company vs. DHL Worldwide Express CourierDivision, AIR 1996 SC 2508, a signer of a document is bound by its terms, and in the absence of evidence to the contrary, it cannot be asserted that the developer did not receive this payment. The Supreme Court in Dahiben v. Arvindbhai Kalyanji Bhanushali held that non-payment of part of the sale price does not invalidate the sale once the title is transferred. The developer also alleged that the complainants failed to pay service tax, citing Clause 40 of the agreement, which requires payment prior to registration. However, the commission observed that there was no evidence of a demand for the said payment before registration, meaning the developer cannot claim it after execution.

The National Commission dismissed the appeal, which was dismissed, upholding the State Commission's order.

Case Title: M/S. T.C. Enterprise & Anr. Vs. Haridas Chakraborty

Case Number: F.A. No. 1954/2019

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