A Buyer Can Rightfully Seek To Cancel The Agreement And Get A Refund: NCDRC

Brief Facts of the Case

The case involved the sale of a residential flat, and the sale consideration for the flat was Rs. 42 lakh. The complainant booked the flat from RHC Ventures Limited/builder and paid an advance of Rs. 30 lakh through three cheques. As per the agreement, the construction was to be completed within 24 months with a grace period of six months. However, as the construction work was not completed and no offer of possession was made, the complainant sent a legal notice to the builder, which went unanswered. The complainant approached an Arbitrator, but the claim was returned as the builder had not agreed to the arbitral reference. Subsequently, the complainant filed a consumer complaint before the State Commission, seeking directions to the builder to complete the construction and hand over the flat after receiving the balance sale consideration, or alternatively, to refund the Rs. 30 lakh advance with interest and compensation. Despite several notices by the State Commission, the builder remained unrepresented, and the proceeding was set ex parte. The Commission allowed the claim, following which the builder appealed to the National Commission

Contentions of the Builder

The builder contended that the State Commission erroneously decided the case without acknowledging the lack of proof of service of notice upon them and erred in placing them ex parte while deciding the matter. Subsequently, the builder was directed to be served through substituted service/publication in the local newspaper 'Namasthe Telangana.' The builder claimed they had no knowledge of the complaint and thus could not participate in the proceedings, denying them the opportunity to be represented. They submitted that the State Commission's order came to their notice during proceedings in another matter.

Observations by the Commission

The commission observed that the builder, who was holding a deposit of Rs.30 lakh from the complainant, was aware of the delay in the execution of the project, based on the builder's admission. The commission highlighted the judgments in the cases of Kolkata West International City Pvt. Ltd. Vs. Devasis Rudra, Pioneer Urban Land & Infrastructure Ltd. Vs. Govindan Raghavan, and Fortune Infrastructure & Anr. Vs. Trevor D'Lima & Ors., which held that an allottee in a residential project who is a bona fide consumer cannot be expected to wait inordinately for possession of the flat, especially if they have not defaulted in payments. The commission emphasized that as laid down by the Supreme Court in the Kolkata West, Pioneer Urban Land, and Trevor D'Lima judgments, an allottee would be within their rights to seek cancellation of the agreement and refund of their money. The commission observed that the builder's contention of not being noticed could not be accepted, as they did not deny receiving the legal notice and participating in the arbitration proceedings, which did not proceed due to a lack of cooperation from the builders themselves.

The commission found no fault with the State Commission's order directing a refund of Rs.30 lakh with 12% interest and litigation costs of Rs.10,000 and stated that the order was reasoned and logical.

Case Title: M/S. RHC Ventures Limited Vs. Kitchannagari Sarveshwara Reddy

Case Number: C.C. No. 95/2020