Buyers Have Rights To Refund In Cases Of Delay And Cancellation Of Allotment: NCDRC

Brief Facts of the Case

The complainant purchased an apartment with an undivided share in the property and entered into a sale and construction agreement with Big Banyan Roots/builder, agreeing to purchase the land for Rs. 80 lakhs. The builder promised possession of the flat by a certain date, with a six-month grace period. The complainant paid a total of Rs. 75,58,000 by cheque, which the builder acknowledged. However, the builder failed to deliver the flat, giving various excuses and repeatedly deferring the possession date, intentionally delaying the project. When seeking a refund, the builder gave false assurances and failed to repay the amount. Feeling aggrieved, the complainant filed a consumer case before the State Commission of Karnataka. The State Commission partly allowed the complaint and directed the builder to refund the sum of Rs.75,58,000 to the complainant, along with interest at 18%. Consequently, the builder appealed to the National Commission.

Contentions of the Builder

The builder argued that the State Commission's order violated principles of natural justice. It was argued that the complainant had deliberately listed an outdated address in the complaint, even though the builder had updated their address two years before the complaint was filed. On the merits, the builder had terminated the contract at the complainant's request via email and had asked the complainant to settle the accounts, which was not done. It was contended that the builder was willing to refund Rs. 40,79,000 but noted that the complainant had already withdrawn Rs. 61,57,876, exceeding what was entitled.

Observations by the National Commission

The National Commission observed that there was an undisputed delay in handing over possession of the flat as per the agreement, and the builder had canceled the allotment to the complainant. In such circumstances, the builder is required to refund the amount paid by the complainant for the flat. In Emmar MGF Land Ltd. & Ors. Vs. Amit Puri, the commission held that after the promised delivery date, the complainant has the right to either accept the possession offered or seek a refund of the amounts paid along with reasonable compensation. Furthermore, regarding the rate of interest, the Supreme Court in Experion Developers Pvt. Ltd. Vs. Sushma Ashok Shiroor ruled that interest on refunds should be compensatory and payable from the date of deposit. The commission had previously granted interest from the date of the last deposit, which the court found inadequate for restitution. The interest should be calculated from the dates of the deposits, and the 9% interest rate granted by the commission was deemed fair and just.

The commission modfied the State Commission's order and directed the builder to refund Rs.75,58,000 with interest @9% p.a., along with Rs.30,000 as litigation costs.

Case Title: M/S Big Banyan Roots Vs. Manu Sharma

Case Number: F.A. No. 710/2018