NCDRC Holds K. Soni Builders Liable For Failure To Deliver Possession Of Flat Within Stipulated Time

Brief Facts:

The complainants booked a 3 BHK flat, No. 601, on the 6th floor of Tower T-01, with an approximate area of 1630 sq ft, from K. Soni Builders for a total consideration of Rs. 41,00,000/-. They entered into an agreement with K. Soni Builders on 25.05.2016, requiring them to pay Rs. 10 lakh as a booking amount, another Rs. 10 lakh after 30 days, and the balance amount at the time of possession, which was scheduled for September 2016. The complainants paid Rs. 2 lakh to K. Soni Builders on 17.04.2016 and Rs. 8 lakh on 15.05.2016, followed by a further payment of Rs. 10 lakh on 25.05.2016. According to the agreement, K. Soni Builders was obligated to deliver possession of the flat by the stipulated date, and in case of any delay, refund the amount with interest.

In September 2016, the complainants visited the project site and discovered that construction work had ceased. They then approached K. Soni Builders, requesting a refund of the deposited amount with interest due to the non-completion of the project and the failure to deliver possession. Despite multiple visits to K. Soni Builders' office, the complainants received no satisfactory response. Feeling aggrieved, the complainants filed a consumer complaint in the State Consumer Disputes Redressal Commission, Punjab (“State Commission”). They accused K. Soni Builders of being habitual offenders involved in fraudulent activities in numerous cases, alleging deficiency in service and unfair trade practices.

In response, K. Soni Builders contended that the complainants had presented false and misconceived facts and that the State Commission lacked jurisdiction over the dispute. Further, the complainants were investors aiming to resell the flat and thus were not 'consumers' under the relevant law. They also alleged that the complainants had failed to comply with the agreement's terms and conditions after initially depositing the booking amount. It also denied the complainants' claim of paying Rs. 20 lakh, asserting that only Rs. 10 lakh had been paid.

The State Commission issued its order, directing the complainants to pay the remaining balance of the sale consideration to K. Soni Builders with interest at 18% per annum, as per clause 2 of the buyers' agreement. This payment was to be made within three months of receiving the certified copy of the order. K. Soni Builders was to deliver the complete possession of the flat/unit within one month after receiving the balance amount.

Dissatisfied with this order, the complainants filed an appeal before the NCDRC.

Observations of the NCDRC:

The NCDRC observed that K. Soni Builders had undertaken to hand over possession of the flat booked by the complainants by September 2016 as per Clause 10 of the agreement dated 25.05.2016. The complainants were to make the necessary payments as per the schedule provided in the agreement, including any other charges demanded by K. Soni Builders. The complainants, as per their submissions, had paid Rs. 20,00,000/- by 25.05.2016 out of the total sale consideration of Rs. 41,00,000/-.

Relying on the Supreme Court's ruling in Kolkata West International City Pvt. Ltd. vs. Devasis Rudra [(2020) 18 SCC 613], the NCDRC highlighted that a buyer cannot be expected to wait indefinitely for possession and is justified in terminating the agreement if possession is significantly delayed. Additionally, in Pioneer Urban Land and Infrastructure Ltd. vs. Govindan Raghavan [(2019) 5 SCC 725], it was established that a purchaser cannot be compelled to accept possession after an unreasonable delay and is entitled to a refund.

The NCDRC also referred to Experion Developers Pvt. Ltd. vs. Sushma Ashok Shiroor [CA No. 6044 of 2019], which emphasized that compensation by way of interest should be both compensatory and restitutionary. The Complainants' claim for mental harassment was not justified due to their failure to make timely payments. Moreover, the Supreme Court's ruling in DLF Homes Panchkula Pvt. Ltd. vs. D.S. Dhanda [(2020) 16 SCC 318] stated that awarding compensation under multiple heads for a singular act of deficiency is not justified.

The NCDRC found that while K. Soni Builders were liable for the delay in offering possession of the flat, the complainants were also at fault for not making timely payments. However, K. Soni Builders did not provide evidence of any action taken to cancel the allotment for default or to notify the complainants regarding penal interest.

The NCDRC determined that the complainants were not proven to be engaged in real estate or the purchase and sale of flats as required per the judgment in Kavita Ahuja vs. Shipra Estate Ltd. & Jai Krishna Estate Developers Pvt. Ltd. [CC 137 of 2010]. Therefore, they were considered 'consumers' under section 2(1)(d) of the Consumer Protection Act, 1986.

Conclusively, the NCDRC allowed the appeal and set aside the State Commission's order. K. Soni Builders was directed to refund Rs. 20,00,000/- with 9% interest per annum. Additionally, it was ordered to pay Rs. 25,000/- as litigation costs.

Case Title: Shashi Bansal and Anr. vs K Soni Builders

Case No.: First Appeal No. 1371 of 2018

Advocate for the Complainant/Appellant: Mr Sanjeev Nirwani

Advocate for the Respondent: None (ex-parte)

Date of Pronouncement: 29th July 2024