"One-Sided" Liability Clause Inserted By Developers For Compensating Failure To Deliver Flat Not Bar To Order Refund: Delhi SCDRC

The Delhi State Consumer Disputes Redressal Commission recently directed Parsvnath Developers to refund the entire amount deposited by a homebuyer in lieu of a Flat Purchase Agreement executed back in 2007, awaiting possession till date.

The Commission rejected the developer's contention that the complaint is not maintainable in view of Clause 10(c) of the Flat Buyer Agreement which prescribes the extent of liability on account of delay.

A bench comprising Commission's President Justice Sangeeta Dhingra Sehgal and Judicial Member Justice Rajan Sharma was of the view that said clause is "wholly one sided" and "unfair" to the Complainant.

Reference was made to the National Commission's remarks that no reasonable person would volunteer to accept compensation constituting about 2-3% of his investment in case of delay on the part of the builder, when he is made to pay compound interest @18% p.a. for delay on his part in making payment.

The NCDRC had condemned the practice of developers inserting one-sided clauses in the agreements, leaving the flat buyers with no option but to sign on the "dotted lines".

The developer in this case had also challenged the maintainability of the complaint on the ground that the complainant was not an ordinary homebuyer but had invested in the flat for 'commercial purposes'.

However, the Commission held that in the absence of any material to substantiate this claim, the complainant is entitled to relief under the Consumer Protection Act.

"It is for the Opposite Party to prove that the flat purchased was for commercial purpose, by way of some documentary proof and a mere bald statement is not sufficient to raise adverse inference against the Complainant."

In conclusion, the Commission directed the developer to refund the entire amount of Rs.37 lakhs paid by the Complainant along with 6% interest along with Rs. 2 lakhs cost for mental agony and harassment due to deficiency in providing services, giving false assurances with respect to the time for completing the construction and keeping "hard-earned" money of the Complainant. 

"Failure to give possession of flat is continuous wrong and constitutes a recurrent cause of action," the Commission reiterated.

It also awarded litigation cost to the extent of Rs. 50,000/-.

CASE TITLE: SHRI NEERAJ KAKKAR v. M/S PARSVANATH DEVELOPERS LTD.

Click Here To Read Order