NCDRC Orders Developers To Refund Amount Due To Misrepresentation Of "One Of The Tallest Buildings In The World"

Brief Facts:

Complainant 1 is an officially registered consumer association offering legal assistance and Complainant 2 is an individual consumer. SCML (now Macrotech Developers Limited) and Lodha Group are companies involved in the development and construction of a group housing project. In 2010, SCML launched a group housing project in Mumbai called "World One” and extensively promoted the project, highlighting its various amenities and facilities, and advertised it as "The World's Tallest Residential Tower" in their luxury brochure.

SCML’s agent approached Complainant 2 with the "World One" project in 2014, highlighting it as the tallest residential building in the world and showcasing various amenities. Believing these representations, Complainant 2 booked to be given possession in 2016.

SCML stopped construction post the 89^th floor but continued to demand installment payments. After which Complainant 2 ceased making payments and asked to provide proof of permission to construct 117 floors. Lodha Group informed that the application for permission was pending with the Civil Aviation Department. In June 2017, Lodha Group informed Complainant 2 about an increase in SGST and CGST, urging them to deposit the remaining balance by June 2017, to avoid the increased tax. Complainant 2 agreed to deposit the balance amount if SCML agreed to pay pre-EMI interest until receiving permission from the Civil Aviation Department.

In July 2017, Lodha Group informed Complainant 2 that the Delhi High Court had directed a survey report regarding permission from the Civil Aviation Department, expressing positive hope. In November 2018, Lodha Group offered possession and demanded further balance amount to which Complainant 2 filed the compliance with the assistance of Complainant 1 in April 2019.

Contentions of the Parties:

SCML without disputing the booking, allotment, agreement execution, or deposits made by Complainant 2 contended that the current complaint was filed without rectifying previous defects and that Complainant 1 and Lodha Group were misjoined parties. SCML claimed that "World One" had obtained the necessary approvals but faced height restrictions imposed by the Airport Authority of India, which were later increased. They emphasized that this information was widely reported in the media, and pursued an appeal with the Appellate Committee.

Complainant 2 argued that the flat was booked on the Agent’s representation of the building to be the tallest in the world. However, construction was stopped at the 89th floor, despite permission being granted for construction up to that level by the Airport Authority of India. Thereby, constituting misrepresentation and arguing to seek a refund with interest, as completing the building to 117 floors is not feasible.

SCML and Lodha Group asserted that the AAI’s sanctioned construction limit was widely circulated by the media at the time of booking to which the Complainant should have exercised due diligence, and thus, cannot be a valid reason for cancellation of booking and to seek refund. Moreover, as per the agreement, the construction was to be completed by September 30, 2016, with a grace period of one year, and claimed that the construction was indeed completed, and a partial occupancy certificate was issued in July 2017. Therefore, as per the terms of the agreement, the issuance of the partial occupancy certificate should be considered as the date of the offer of possession. Further, no relief should be granted to the Complainants as Complainant 2 had stopped making payments from December 2016.

Observations of the Commission:

The Apex Commission consisting of Presiding Member Justice Ram Surat Ram Maurya and Member Dr. Inder Jit Singh observed that the misjoinder objection does not stand as the inclusion of Complainant 1, a registered voluntary consumer association under the Societies Registration Act, 1860, in the complaint does not cause any prejudice to SCML and Lodha Group. Additionally, Lodha Group is identified as the developer in the brochure and had subsequent communications with Complainant 2 which causes no prejudice to SCML in the instant case.

The representation made to Complainant 2 about the building being the “World's tallest” has been evidenced through the brochure and other documents which was the main reason for the complainants to book an expensive flat in the project. Further, no evidence has been provided to show that the order of the Airport Authority of India granting sanctions for construction up to 284.29 meters in 2013 was publicly known at that time which refutes the argument made by SCML and Lodha Group sanctions were granted for construction up to 285.06 meters in September 2015 and has not been obtained. This concludes that there was misrepresentation regarding the height of the building on the part of SCML and Lodha Group.

Moreover, SCML did not exercise its right to cancel the allotment for the default in payment after December 2016 until the complaint was filed.

The Commission has ordered the refund of the full amount to the complainants, along with an interest rate of 9% per year from the date of their respective deposits until the date of refund. This refund must be completed within two months from the date of the judgment.

Case: Jagruk Nagrik & Anr. v. Shreeniwas Cotton Mills Ltd. & Anr.

Counsel for Complainant: Mr. P.V. Moorjani

Counsel for Opposite Parties: Mr. Rahul Kripalani

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