Buyer Entitled To Refund With Reasonable Interest If Project Is Incomplete: NCDRC

The National Consumer Disputes Redressal Commission, presided by Mr. Binoy Kumar, held that the buyer is entitled to request a refund along with a reasonable rate of interest if the project is incomplete on the date of offer of possession.

Brief Facts of the Case

The complainant, Mr. Vaibhav Garg, booked a unit in the “M3M Woodshire” project by M3M India Ltd/builder in Gurgaon, Haryana, and paid 95% of the total consideration. The complainant claimed that the agreement was non-negotiable and contained unfair terms favoring the builder. Despite promises of possession within 36 months, significant delays occurred. The builder failed to deliver on multiple commitments, such as reducing green spaces, not constructing basements for parking, and concealing the presence of a gas pipeline and Najafgarh drain. The builder also revised the building plan without consent, imposed extra charges, and collected fees for parking and club membership illegally. Furthermore, the complainant alleged that the builder did not have the necessary approvals and failed to provide satisfactory updates on the project's progress, leading to significant construction delays. The complainant filed a complaint before the National Commission seeking a full refund from the builder with 18% interest from the date of payment, along with Rs. 5,00,000 for mental agony, harassment, and litigation costs.

Contentions of the Builder

The builder argued that the complainant incorrectly calculated the commitment period start date, which should be from when the first cement slab was laid, not the booking date. The builder claimed the complainant missed timely installment payments and that any delay in possession was minor, with compensation limited to Rs. 10 per square foot as per the agreement. They contended that the complaint contradicted the binding agreement, which could not be altered under the Consumer Protection Act. The builder further argued that the complainant was not a consumer under the Act, the Commission lacked jurisdiction over contractual issues, and no proof of negligence was presented to justify compensation. Lastly, the builder deemed the complainant's interest claim as excessive and unsupported.

Observations by the National Commission

The National Commission observed that The commission observed that the builder had not completed the project as per the agreement and brochure, with amenities like the clubhouse and convenience shopping still unfinished at the time of possession. Despite obtaining the Occupation Certificate, the builder was deficient in meeting its advertised commitments. The complainants, therefore, had the right to seek a refund due to the incomplete state of the project. The commission relied on the precedent set in Rajan Handa vs. M3M India Developers Limited and Anr., a case where similar issues of incomplete construction and non-fulfillment of promised amenities were raised. In Rajan Handa, the complainant had sought a refund due to the builder's failure to deliver the project with the advertised features and facilities. The National Commission ruled in favor of the complainant, granting a refund with interest, recognizing that a builder's failure to provide promised amenities constitutes a significant deficiency in service. This decision was subsequently affirmed by the Supreme Court, reinforcing the legal principle that purchasers are entitled to refunds with reasonable interest when a project is incomplete at the time of possession, even if other certifications like the Occupation Certificate have been obtained.

The National Commission allowed the complaint and directed the builder to to refund the amount deposited bythe Complainants with interest @ 9 % per annum.

Case Title: Vaibhav Garg Vs. M3M India Ltd.

Case Number: C.C. No. 269/2018

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