Multiple Compensations For A Single Default Is Unjustified: NCDRC

Brief Facts of the Case

The complainants booked a commercial unit from Exact Developers/developer to run a canteen for their livelihood. They paid ₹29,67,187 to the developer who promised to hand over possession of the unit within three years. If the developer failed to do so, the complainants were entitled to refund the deposited amount with 18% interest per annum from the payment dates until realization. Since the developer did not offer possession, the complainants requested a refund with interest, but the developer did not comply. Consequently, the complainants filed a complaint before the State Commission, requesting a refund of ₹29,67,187 with 18% interest per annum from the deposit date until realization, along with ₹10,000 for mental and physical agony and ₹33,000 for litigation expenses.

Contentions of the Developer

The developer argued that the unit was not booked for running a canteen and that the complainants were not “consumers” under the Act, as the unit was booked for commercial purposes. The developer contended that the complainants were defaulters in making payments and had deliberately and intentionally not signed the agreement. Furthermore, the developer claimed they had offered possession and asked the complainants to complete the formalities, which they failed to do. The developer maintained that there was no deficiency in their services and requested that the complaint be dismissed.

Observations by the Commission

The Commission observed that the issue is whether the complainants are entitled to seek relief under the Consumer Protection Act and whether the State Commission was justified in awarding the reliefs provided by the impugned order. The Supreme Court in Laxmi Engineering Works Vs. P.S.G. Industrial Institute (1995) established that the 'commercial purpose' issue needs to be determined case-by-case. The developer did not provide evidence to show that the complainants booked the unit for their livelihood, so the complainants are considered 'consumers' under the Act and are entitled to relief. Furthermore, the unit was allotted with possession assured within three years. The complainants paid ₹29,67,187 as per the payment plan. Although the developer claimed possession was offered later, the legally valid possession date is when the Occupation Certificate was obtained. The commission highlighted that the delay in possession was evident, and the developer was obligated to offer possession by the original deadline, failing which a penalty of 18% per annum was to be paid. However, the Supreme Court in DLF Homes Panchkula Pvt. Ltd. Vs. D.S. Dhanda (2019) held that multiple compensations for a single default is unjustified, so additional compensation for mental agony cannot be upheld. Regarding the interest awarded, the Supreme Court in Experion Developers Pvt. Ltd. Vs. Sushma Ashok Shiroor ruled that compensation at 9% simple interest is just and equitable.

Based on this discussion, the commission party allowed the appeal and upheld the State Commission's order with specific directions. The Commission directed the developer to refund Rs. 29,67,187 with interest @ 9% p.a and litigation costs of Rs. 33,000 but set aside the order for compensation for mental agony.

Case Title: M/S. Exact Developers & Promoters Pvt. Ltd Vs. Rajesh Sethi

Case Number: F.A. No. 07/2018