Lack Of Valid Building Permit: Ernakulam Consumer Forum Orders Refund Of Sale Consideration And Compensation To Flat Buyer

The Commission held that the flat construction company were liable for deficiency in service and unfair trade practices. It held thus:

“The opposite parties 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 opposite parties in failing to provide the Complainant desired service which in turn has caused mental agony and hardship, and financial loss, to the Complainant.”

Jeko Antony (complainant) had booked a two-bedroom apartment with a private flat construction company (Galaxy Homes Private Limited) by paying an advance amount of twenty-five thousand rupees. Later, he also paid a sale consideration of rupees seven lakhs. The Construction company had assured that they had all the valid permits for constructing nine floors. However, the loan application of the complainant’s son was rejected by the bank stating that the construction company did not have the requisite permits for constructing the eighth floor. Thereafter, the construction company refunded rupees five lakhs to the complainant and rupees two lakhs twenty-five thousand was pending.

The complainant approached the District Consumer Disputes Redressal Commission for return of the balance amount under Section 35 of the Consumer Protection Act, 2019.

The Counsel for the complainant contended that the flat construction company cheated him by falsely claiming to have valid permits and agreements for construction of nine floors. It was averred that after his loan application was rejected, they had agreed to refund the full amount paid by the complainant. It was submitted that despite several requests, the flat construction company has not refunded the full amount and rupees two lakhs twenty-five thousand was pending.

There was no appearance from the side of the flat construction company, and the order was passed ex parte.

The Commission referred to the decision of the Apex Court in Wg. Cdr. Arifur Rahman Khan and Aleya Sultana & Ors. Vs. DLF Southern Homes Pvt. Ltd. (2019) in which the Court held that flat buyers are entitled to compensation for delayed handing over of possession and for the failure of the developer to fulfil the amenities promised to the flat buyers.

The Commission found that the flat construction company were liable for deficiency in service and unfair trade practices. It found that the complainant had paid the sale consideration believing that the flat construction company had valid building permits. The Commission noted that despite rejection of the loan application of the complainant due to lack of valid building permit, they have not refunded the amount owed to the complainant. It found that this has caused inconvenience, mental agony, and financial losses to the complainant.

The Commission observed that home buyers were defrauded by dishonest builders. It further noted that many flat buyers were unaware of their legal remedies and that the Commission cannot remain as mute spectators against such dishonest builders. It held thus:

“In today's world, home buyers are increasingly concerned about falling victim to dishonest builders, leading to a rising number of cheating and fraud cases. The uncertainty faced by less fortunate home buyers after making payments to builders extends to both timely property allocation and its quality. Smart buyers should be aware of available remedies to assist them in times of difficulty. The Government has recognized the challenges faced by home buyers and implemented appropriate measures for their protection. However, some buyers, especially those with limited means, may not be fully aware of their legal rights. Owning a beautiful home is a cherished dream for many, but it can be shattered by unscrupulous builders. The commission cannot remain passive spectators against such builders any longer.”

Finding that the flat construction company has exhibited deficiency in service, the Commission ordered refund of the balance amount along with interest to the complainant. An amount of rupees fifty thousand rupees was ordered to be paid as compensation to the complainant by the flat construction company on failure to provide services and for causing mental agony. The Commission also ordered rupees ten thousand as cost of the proceedings.

Case Title: Jeko Antony v Galaxy Homes Private Limited

Case Number: CC/21/419

Counsel for the complainant: Advocate Meera Rajan