Refund Offer From Builder After Long Delay Considered Inadequate: NCDRC

Brief Facts of the Case

The builder, a Development Authority managing housing projects for the UP Government, allotted an MIG Duplex House to the complainant under a scheme. The complainant paid registration and allotment fees totalling Rs. 40,000, with the total consideration for the house set at Rs. 2,55,000, to be paid in instalments. The builder later notified the complainant that the project was nearing completion and increased the final cost to Rs. 3,76,800. The complainant paid an additional Rs. 81,800, but the house was not constructed or handed over due to alleged contractor negligence. The builder then offered to refund Rs. 2,77,564, which the complainant refused. The complainant filed a complaint before the State Commission of Uttar Pradesh, which allowed the complaint and directed the builder to pay Rs.6,82,500 with 10% interest, Rs.10 lakhs for harassment and mental agony and a litigation cost of Rs.10,000. Consequently, the builder appealed before the National Commission.

Contentions of the Builder

The builder admitted to allotting the flat to the complainant and receiving Rs. 3,76,800, including an escalation in cost. The project was delayed due to contractor negligence, leading the builder to offer a refund of Rs. 2,77,564, which the complainant refused. The builder argued that the State Commission unfairly burdened it with construction costs and excessive damages, awarding more than requested. They claimed the refund was fair based on estimated costs and contested the Commission's calculation of compensation and interest. The builder sought to overturn the Commission's order.

Observations by the National Commission

The National Commission observed that, according to the Supreme Court, in various cases, such as Fortune Infrastructure & Anr. Vs. Trevor D' Lima & Ors. and Kolkata West International City Pvt. Ltd. Vs Devasis Rudra, buyers cannot wait indefinitely for possession. The Court also affirmed that compensation should be compensatory and restitutionary, as seen in Experion Developers Pvt. Ltd. Vs Sushma Ashok Shiroor. The builder was found liable for failing to deliver possession of the house and for not promptly addressing the complainant's concerns. The builder's refund offer, made after a long delay, was deemed inadequate. Although the complainant eventually acquired the plot in 2023, the construction remained incomplete. The State Commission's valuation for compensation, based on outdated rates, was adjusted, and a higher interest rate of 7.5% was deemed appropriate due to the case's prolonged history. The compensation for monetary loss, mental agony, and harassment was adjusted, and litigation costs were increased.

The National Commission partly allowed the appeal and directed the builder to refund ₹3,76,800 with interest at 7.5% per annum and ₹1,00,000 for litigation costs. However, the State Commission's directive to award ₹10 lakhs for monetary loss, mental agony, and harassment was overturned.

Case Title: Vice Chairman, Lucknow Development Authority Vs. Alok Srivastava

Case Number: F.A. No. 618/2016