Unreasonable To Force Buyer To Wait For Possession After Delay Of 7 Years: NCDRC

Brief Facts of the Case

The Purab Premium Apartment project (Group Housing) with 4500 flats was launched by the Greater Mohali Area Development Authority/developer, a government authority in Punjab. The complainant applied for the flat and was successful in draw of lots and was allotted type II residential unit. According to the terms & conditions complainant deposited 95% cost of the flat and Letter of Intent was issued. Subsequently, the developer raised the possession letter demanding payment of balance 5% cost but complainant requested for the refund of the deposited amount of Rs.59,75,752. In response, the developer, citing a revised law, offered only Rs. 53,31,245 as a refund. Dissatisfied, the complainant filed a case with the State Commission of Punjab, seeking the deducted amount of Rs. 6,27,510, along with interest at 12% per annum, compensation for mental agony, and litigation costs. The State Commission allowed the complaint, directing the developer to refund the Rs. 6,27,510 deducted arbitrarily, pay interest at 8% per annum on the full amount of Rs. 59,75,752 from the date of payment until the partial refund was made, and continue paying 8% interest on the remaining Rs. 6,27,510 until realization. Additionally, the developer was ordered to pay Rs. 20,000 in litigation costs. Aggrieved, the developer appealed before the National Commission.

Contentions of the Developer

The developer argued that the State Commission's order failed to consider the facts and did not properly determine any deficiency in service. It contended that a refund request could only be made after the Letter of Intent was issued but before the Allotment Letter, as per the agreed terms. While other allottees had applied for refunds and received them with 8% interest after 36 months, the complainant applied for a refund two months after the Allotment Letter, making them ineligible. The developer further argued that, under the Indian Contract Act, time was not the essence of the contract, and the State Commission wrongly concluded there was a deficiency in service. It claimed the complainant was negligent for not taking possession of the flat within 30 days of the Allotment Letter and that actions taken were within the contract's terms. According to the Letter of Intent, the developer was entitled to forfeit 10% of the consideration with interest and penalties. The developer also argued that the 8% compounded interest was excessive, citing various Supreme Court judgments, and pointed out that the complainant's case was an afterthought, filed 131 days after the refund was issued, and should be dismissed.

Observations by the National Commission

The National Commission held that the case was directly covered by the judgment rendered in Chief Administrator, GMADA & Anr. Vs. Sandeep Bansal & Anr. (2021) that concerned nearly the same grounds related to refund and rate of interest. The commission observed that in case the development work was not completed within a certain period, the complainant has an option to withdraw from with full refund along with a compound interest of 8%. Additionally the Supreme Court in olkata West International City Pvt. Ltd. vs. Devasis Rudra held that after a delay of seven years, it would be unreasonable to force a buyer to wait, and a refund with interest was justified. The National Commission directed the developer to refund the balance amount of Rs. 6,27,510 with 9% interest from the date of deduction until realization, pay 9% interest on the previously refunded amount of Rs. 53,31,245 from the deposit dates until the refund, and provide ₹20,000 towards litigation costs.

Case Title: Greater Mohali Area Development Authority (GMADA) Vs. Sunil Kumar Dahiya

Case Number: F.A. No. 490/2020

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