NCDRC Holds Vatika Limited Liable For Delay In Construction Of Residential Project

Contentions of the Complainant

The complainant booked a plot with Vatika Ltd, a real estate company, and paid a part of the due consideration per the builder-buyer agreement. The agreement promised possession of the plot within 48 months from the agreement date. When the complainant inquired about the site's status, the company misleadingly shared photos of another sector to indicate progress falsely. Upon personal investigation, the complainants discovered no development on their plot's site. The company then demanded outstanding dues for electrification, threatening allotment cancellation and deposit forfeiture if not paid on time. Upon finding their sector designated as commercial, the complainants sought a refund with interest, leading the company to issue a termination-cum-recovery notice. Alleging deficiency in service and unfair trade practices, the complainants filed the current complaint against the company.

Contentions of the Opposite Party

The company contested the complaint through a written statement, asserting that the allotment of the plot and the deposits made by the complainants were not disputed. Through a broker, the complainants approached the company for plot booking and opted for a construction-linked plan. They were allotted a plot but failed to disclose the company's revision of plot numbering and area changes, resulting in the complainants being required to pay the difference. A builder-buyer agreement was executed, specifying possession within 48 months, with payment reminders sent to the complainants. The company issued a termination notice and attached a statement of account indicating a due amount. The company forfeited the earnest money and offered the complainants another plot, which was denied. The complainants were deemed non-consumers, lacking evidence of personal use intentions. The company argued that the Special Power of Attorney(SPA) filed by the complainants had been stamped by Singapore authorities, not Indian authorities, as required as per the required provisions. On these allegations, the company prayed that the complaint is misconceived and is liable to be dismissed,

Observations by the Commission

The commission observed that the complainants failed to provide evidence supporting their claim that possession of the plot was supposed to be delivered within 24 months. Subsequently, upon the complainants' cancellation request, the company was obligated to refund the amount deposited after forfeiting the earnest money. Instead of facilitating the refund, the company sent an unwarranted recovery letter, demanding interest and other charges. According to the Supreme Court rulings in Fateh Chand Vs. Balkishan Das and Maula Bux Vs. Union of India, the forfeiture of earnest money should be reasonable and based on actual damage. In this case, after the allotment cancellation, the plot remained with the company, causing minimal actual damage. The commission, in line with its previous judgments in Ramesh Malhotra Vs. EMAAR MGF Land Ltd and Mr. Saurav Sanyal Vs. M/s. Ireao Grace Pvt. Ltd., emphasized that forfeiting 10% of the basic sale price as "earnest money" is a reasonable amount. Therefore, the company is obligated to refund the amount deposited by the complainants with interest after earnest money forfeiture. In conclusion, the commission observed that since the complainants are seeking a refund of money and not possession of the plot, the complaint is not considered premature. The agreement clearly mentions that the company is developing a residential plotted colony, and the complainants have affirmed their intention to book the plot for residential purposes. Hence, they fall under the definition of consumers according to Section 2(1)(d) of the Consumer Protection Act, 1986. Regarding the Special Power of Attorney(SPA), the complainants cannot be denied their legal right due to technical reasons, especially when it is explicitly stated in the rejoinder that they can submit the appropriate SPA.

The commission directed the company to refund the entire amount deposited by the complainants with interest @9% per annum from the date of cancellation of the allotment till the date of refund, after forfeiting 10% of the basic sale price, within a period of two months from the date of this judgment.

Counsel for the Complainant: Adv. Shreyans Singhvi

Counsel for the Opposite Party: Adv. Anukriti Kudeshia

Case Title: Madhu Gupta & Anr. Vs. Vatika Ltd.

Case Number: C.C. No. 2552 of 2018