NCDRC Allows Appeal In Part By Jaypee Greens: Reduces The Interest, Allows Forfeiture Of Rs.7,00.000/- From Home Buyer

Consequently, Jaypee Greens filed an appeal challenging this decision. The National Commission partially accepted the appeal. It directed the company to refund all the money the homebuyer paid with 9% interest rate instead of 18%. However, the company was allowed to keep Rs. 7,00,000/- as a penalty for canceling the home allotment.

Brief Facts

Yogesh Kumar Garg (Respondent) had bought a flat from a company called Jaypee Greens (Appellant) in one of their housing projects. According to the complaint, he initially deposited Rs. 7,00,000/- in July 2009 and was allotted a flat with a super area of 1,461 sq.ft. for a specific consideration. Over time, the terms and consideration were revised. The possession date, including a grace period, was set for 4^th April 2011, but the construction faced significant delays, leading Yogesh to inquire about the possession date in June 2010. Jaypee Greens offered possession in January 2012 but demanded additional charges without providing “delay compensation”. When the complainant raised objections and sought delay compensation, Jaypee Greens issued a cancellation notice in January 2013, prompting him to file a consumer complaint with the State Consumer Disputes Redressal Commission in Delhi.

The State Commission allowed his consumer complaint and ordered Jaypee Greens to refund the money at 18% interest along with compensation of Rs. 5,00,000/-. Aggrieved and unsatisfied by this order, Jaypee Greens (Appellant) filed an appeal with the National Commission.

Observations of the National Commission

The National Commission examined the appeal and made several observations. It concluded that the homebuyer's demand for compensation was not justified, and the delay in the possession of the flat was reasonable. Additionally, the appellant's request for extra charges related to an increase in the 'super area' was deemed acceptable because the booking documents explicitly stated the 'super area' as tentative and subject to change. This aligned with a previous Supreme Court ruling in DLF Home Developers Ltd. Vs. Capital Greens Flat Buyers Association, (2021) 5 SCC 537.

Regarding the forfeiture of earnest money, the National Commission referred to its previous decisions in cases like Ramesh Malhotra Vs. EMAAR MGF Land Ltd. (2020) and Mrs. Prerana Banerjee Vs. Puri Construction Ltd. (2022), which upheld that forfeiting 10% of the basic sale price was a reasonable amount to be forfeited as 'earnest money.' Consequently, in the present case, the Commission found that 10% of the basic sale price was an appropriate forfeiture. While the State Commission had granted 18% interest, the National Commission cited the Supreme Court's decision in Experion Developers (private Limited) Vs. Sushma Ashok Shiroor, 2022 SCC OnLine SC 416, and ruled that 9% interest was more just in case of a refund. This interest rate served both as a means of restitution and compensation.

In light of these considerations, the National Commission partially allowed the appeal. It directed Jaypee Greens (Appellant) to refund the entire amount deposited by the complainant, along with 9% interest per annum, while also retaining Rs. 7,00,000/- as a penalty upon the cancellation of the allotment. If any excess amount had been paid to the complainant in compliance with the State Commission's order, the appellant could reclaim it from the complainant, provided a calculation sheet was furnished.

Case Title: Jaypee Greens vs. Yogesh Kumar Garg

Counsel for the Appellant: Mr. Sumeet sharma and Mr. Paras choudhary, Advocates

Counsel for the Respondent: Mr. Saurabh Gupta, Advocate

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