NCDRC Holds Real Estate Developer, Shreeniwas Cotton Mills Ltd. (“World One” Project) Liable For Unfair Trade Practices And Deficiency In Services

The residential building project “World One” was promoted without obtaining the necessary statutory approval from the Airport Authority of India (AAI). Despite the considerable passage of time, the developer failed to deliver possession of the flat to the complainant. Consequently, the Commission ruled in favour of the complainant, directing the developer to refund the complainant's payment of Rs 13,06,59,748/-, along with compensation in the form of simple interest at a rate of 12% per annum and litigation cost of Rs 50,000/-.

Brief Facts

This consumer case involves complainants who raised concerns about unfair trade practices and inadequate service provided by a property developer "Shreeniwas Cotton Mills Ltd". The main issue was related to the delay in the completion and handover of a residential flat in a project known as "World One." This project was promoted as an iconic residential building with 117 floors. As per the complainants, they were attracted to the project "World One" because it was marketed as the world's tallest residential building. However, later it became evident that there was no clearance from the Airport Authority of India (AAI) for the promised 117 floors.

According to the complaint, the developer had not given the possession of the property as promised in the Agreement to Sell (ATS). As per the ATS, the complainants should have gotten the property by December 31, 2015, with an option to extend by a year. But this extra time passed, and they still did not get the property. They contended that getting the full Occupation Certificate (OC), which they needed to occupy the property, was doubtful because the Airport Authority of India (AAI) had not given clearance. As a result, the complainants primarily sought a refund of the money they paid for the flat along with compensation, and other related expenses.

Arguments of Shreeniwas Cotton Mills Ltd.

• The developer (Shreeniwas Cotton Mills) contested the complaint and argued that the complainant was not a 'consumer' under the law because the flat was booked not just for personal use but also for commercial purposes. It was pointed out that the complainant had booked multiple flats, which suggested an investment or commercial intent, making them ineligible for consumer protection.
• They claimed that the complainant did not disclose certain important facts, particularly related to the grace period for possession and the reasons for the delay, which they believed was caused by factors beyond their control, such as government notifications and the Airport Authority of India's clearance process.
• They also contended that the complainant did not follow the contract's terms by not terminating the agreement within 90 days after the grace period ended. This, according to them, meant the complainant accepted the revised possession dates.
• Further, they emphasized that it was acceptable to offer possession based on a partial Occupancy Certificate, especially in Mumbai's residential buildings. Accordingly, it was argued that the offer of possession for fit-outs was also for the purpose of residing and there was no requirement for another OC. Therefore, the complainant could not be permitted to seek compensation for the amount deposited after not taking possession of the apartment offered to them.

Observations and Decision of the Commission

After examining the preliminary objection raised by the opposite party, the commission ruled that the burden of proving that the complainants were engaged in the business of real estate was on the developer itself. Since the developer failed to provide evidence supporting this claim, the objection was not considered.

The commission then ruled that the complainants were justified in NOT taking possession of fit-outs due to the absence of AAI approval. As per the Agreement To Sell, the offer of possession for fit-outs was distinct from a final offer for residential occupation. Therefore, the complainants were not obligated to accept possession based on the part OC (Occupancy Certificate) issued for fit-outs.

It was also found that the project was promoted based on approvals from the Municipal Corporation of Greater Mumbai (MCGM), but the AAI, a competent authority for height clearance, had clearly not granted the necessary NOC for the proposed building height. Furthermore, the attempt of Shreeniwas Cotton Mills (the developer) to invoke the "force majeure" clause to claim that the delay was beyond its control was not accepted by the commission since the absence of AAI clearance was a known issue from the very beginning of the project.

As a result of these observations, the commission ruled in favour of the complainants, finding “Shreeniwas Cotton Mills Ltd.” liable for unfair trade practices and deficiency in services, thereby directing them to refund the complainant's payment of Rs 13,06,59,748/- along with compensation in the form of simple interest @ 12% p.a. and an additional sum of Rs. 50,000/- as litigation costs. The developer was directed to comply with this decision within 8 weeks from the date of passing the order, failing which they would be subject to an annual interest rate of 15%.

Case Title: Anshul Aggarwal vs. Shreeniwas Cotton Mills Ltd.

Counsel for the Complainant: Mr Vimal Kirti Singh, Advocate (Along with others)

Counsel for the Opposite Parties: Mr Rahul Kriplani, Advocate (Along with others)

Case No. 3582 of 2017

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