'Deficiency In Service': Kerala Consumer Court Orders Builder To Compensate Naval Captain Who Lost Home Following Maradu Flat Demolition

The District Consumer Disputes Redressal Commission at Ernakulam on Monday ordered the construction company, M/S Holyfaith Builders & Developers Pvt. Ltd., to pay compensation to a Naval Captain who lost his housing following the demolition of Holyfaith H2O apartments in Maradu, in pursuance of the Apex Court decision.

The Bench comprising President D.B. Binu and Members V. Ramachandran and Sreevidhia T.N. has directed the company to pay an amount of Rs. 23,12,000/- to the complainant, apart from the compensation ordered by the Supreme Court at the time of demolition.

The figure includes refund of Rs. 17,87,437 as the apartment's balance consideration, Rs. 5 lakh compensation for service deficiency, unfair trade practices and causing mental distress, and Rs. 25,000 as the legal costs.

"In the contemporary context, the concerns of home buyers have intensified due to the growing instances of deceitful practices by builders. This unfortunate trend has resulted in an uptick in cases involving cheating and fraud. Home buyers often grapple with uncertainty, not only concernng the timely allocation of their properties but also the quality of construction. The builder misrepresented the home buyer as an approved project. It is imperative for savvy buyers to acquaint themselves with available redressal to navigate such challenging situations," the Commission observed. 

Noting that while the government had taken certain measures to safeguard the interests of homebuyers, the Commission however, took note that not all homebuyers were aware of their legal rights in this regard. 

"For many, the dream of owning a beautiful home is a cherished aspiration, but this dream can be shattered by unscrupulous builders....In this context, it is incumbent upon the Commission to assume an active role rather than being passive spectators when confronted with builders who undermine the trust and dreams of innocent homebuyers," it added. 

The Supreme Court had ordered the demolition of four high rise apartment buildings in Maradu - Golden Kayaloram, Jain Coral Cove, H2O Holy Faith and Alfa Serene - in January 2020, on finding that the flats built in violation of the relevant Coastal Regulation Zone norms.

The complainants herein had purchased an apartment in the Holyfaith H2O Apartment complex, upon availing a housing loan from the 2nd opposite party mentioned herein, namely, State Bank of India (SBI). 

It is the case of the complainants that the opposite parties had provided false assurances regarding the legality and approvals for the construction of the apartment complex, as a result of which the complainants had invested in the same, and eventually lost their shelter following the directions of the Apex Court. The complainants also averred that the actions taken by the opposite party Bank in recovering the loan amount even after the demolition is unfair. 

The present complaint was thus filed seeking the halting of the recovery of housing loan amount by the Bank, the refunding of all amounts taken post the demolition of the  apartment, compensation amounting to Rs. 25,00,000/- for the deficiencies in service and mental distress caused,

The Opposite Parties argued that the complainants were obliged to pay the housing loan as per the loan agreement, and that the demolition of the building had occurred only due to the fault of the local authority. 

The Bank added that the loan had been sanctioned when there was an approved plan by the local authority, which made the construction legal. It was further stated that the Bank had also conducted a title investigation before sanctioning the loan amount, and had ascertained the authenticity and marketability of the property's title, and that it could thus not be faulted with for approving the loan based on the documents available to them at the time. It was contended by the Bank that although a portion of the loan had been repaid by the complainants, they also had to repay the balance amount, even if the subject matter of the contract between them, ie, the apartment no longer exists. 

The Commission took note that the as per the tripartite agreement, it has been specifically stipulated that 1st opposite party builder shall indemnify the purchase (complainants) in the event of any wrongdoing associated with the construction of the apartment. 

Since the Apex Court had unequivocally held that the Apartments had been constructed in violation of the law, it was found by the Commission that the actions of the 1st opposite party-builder clearly amounted to deficiency in service. 

The Commission further took note that the complainants and the 2nd opposite party-Bank had been able to reach an amicable settlement during the pendency of the dispute. 

It thus held the 1st Opposite Party-builder liable to compensate the complainants for the inconvenience, mental agony, hardships, and financial loss, caused to them by the negligence on the part of the former. 

"In conclusion, the complainants have successfully established are that they consumers as defined under the Consumer Protection Act. 2019. and that they have suffered from a deficiency in service and unfair trade practices on  the part of the first opposite party. The Commission awards the above-mentioned reliefs in favour of the comolainants and directs the first opposite party to comply with these orders promptly. The first opposite party had inadequately performed the service as contracted with the complainant and hence there is a deficiency in service, negligence, and failure on the part of the first opposite party in failing to provide the Complainants desired service, which in turn has caused mental agony and hardship, and financial loss, to the Complainants," it was observed. 

The 1st opposite party was thus directed to pay the compensation to the complainants within 30 days of receiving a copy of the order. 

The Complainants were represented by Advocate T.J. Lakshmanan. 

Advocates P. Gopalakrishnan Menon, M. Jithesh Menon, Indu K., Mahesh Kumar P.G., and Brijesh R. appeared on behalf of the Opposite Parties.