Kerala State Commission Holds Kerala Chamber Of Commerce and Industry Liable For Unilateral Cancellation Of Home Buyer Agreement

Brief Facts:

The Complainant booked a studio flat at the Kerala Trade Centre, a project of the Kerala Chamber of Commerce and Industry (“KCCI”), and paid Rs. 2,00,000/- as booking advance. Mr EC Jose, then Chairman of KCCI, assured completion of construction and possession before December 2009. Mr KN Marzook, then Chairman, later confirmed the allotment of Apartment No. 4 on the 11th floor. The Complainant paid Rs. 15,00,000/- towards 25% of the total cost, with assurance of a formal agreement soon. Later, the Complainant requested information on formalities for signing the agreement, but no draft was provided. The construction progress was slow. KCCI blamed the Complainant for not executing the agreement, although no draft was forwarded.

Despite requests, KCCI only sent a draft agreement which didn't align with earlier assurances. The Complainant suggested amendments but received no response. In April 2013, he was informed his allotment was cancelled, prompting a request for the return of his advance payment. KCCI acknowledged the request but repaid only a portion of the advance. The Complainant then demanded the balance with interest, which was partially repaid. However, a significant balance remained unpaid, causing the Complainant financial loss and mental anguish. Feeling aggrieved, the Complainant filed a consumer complaint in the State Consumer Disputes Redressal Commission, Kerala (“State Commission”).

KCCI and its present Chairman, Mr KN Marzook contended that the complaint was not maintainable, arguing that the booking was for commercial purposes and the Complainant was an investor, not a consumer. They claimed that the Complainant refused to sign the agreement, leading to the cancellation of the booking as per the terms agreed upon. Therefore, they asserted their right to forfeit a portion of the advance payment. Mr ES Jose, the previous chairman, also argued that the complaint is barred by limitation, and the Complainant is not a consumer but a commercial entity aware of the project under construction. He denied any deficiency in service or unfair trade practice and sought dismissal of the complaint.

Observations by the Commission:

The State Commission observed that the Complainant confirmed the payment of Rs. 17,00,000/- for a studio flat, with repayment of Rs. 15,00,000/- admitted by both parties. Various documents including letters, receipts, and a plan supported the transactions. Despite the Complainant's readiness to fulfill obligations, KCCI delayed formalizing the agreement, leading to correspondence seeking amendments and eventual cancellation of the booking.

The Manager of KCCI testified that the company had provisions to forfeit 50% of the advance if an agreement was not signed, citing brochure and registration form clauses. However, no concrete evidence was presented to support this claim, such as board meeting minutes or the actual agreement. The Complainant's requests for amendments were ignored, and the cancellation led to the studio apartment being sold to another party without evidence of financial loss to the KCCI and its chairmen.

KCCI contended that the transaction was commercial, exempting it from Consumer Protection Act jurisdiction. However, the complaint's context clarified that the claim pertained to interest rates, not the nature of the transaction, hence still falling under consumer dispute jurisdiction.

The State Commission found the KCCI, Mr Mathew Kuruvithadam, Mr ES Jose and Mr KN Marzook (previous and current Chairpersons) deficient in service for ignoring legitimate requests and unilaterally cancelling the agreement. Consequently, the Complainant was entitled to a refund of Rs. 5,00,000/- with interest, calculated at 8% per annum, as well as additional compensation of Rs. 1,00,000/- for mental anguish and Rs. 5,000/- as litigation costs, considering the inconvenience caused by the arbitrary cancellation.

Case Title: S. Rajkumar vs The Kerala Chamber of Commerce and Industry and Anr.

Case No.: Complaint Case No. CC/154

Advocate for the Complainant: G.S. Kalkura

Advocate for the Opposite Party: Ashok Kumar (For E.S. Jose) and S. Reghukumar and George Cherian (For Kerala Chamber of Commerce and Industry, Mathew Kuruvithadam and K.N. Marzook)

Click Here To Read/Download Order