Buyer entitled to a refund upon delay

The purchaser can't be made to wait endlessly just because the builder fails to fulfil his contractual obligation to obtain the Occupancy Certificate on time

Nishant Saini had booked a flat with S.S Group in a luxury residential project called The Coralwood & Almeria at Village Sihi in Gurgaon. The cost of the flat, which had a super built-up area of 2,000 sq. ft., was Rs 1,26,72,000, which included preferential location charges, external development charges, and infrastructure development charges. Once Saini had paid the booking amount of Rs 13,09,684, he was issued an allotment letter on May 17, 2012. Later, an agreement was executed on June 5, 2012, for the sale of the flat. The agreement provided that possession would be given within 36 months, with a grace period of 90 days.

Saini availed of a housing loan from India Bulls, and a total amount of Rs 1,11,32,379 was paid to the builder. Since the project was delayed, possession was not given by September 5, 2015, even after the grace period of 90 days had expired. On visiting the site, Saini found that construction work had stopped and the project was unlikely to be completed even in the near future. He also found that the rear courtyard area had been considerably reduced. So, he demanded a refund of the amount paid along with 18 per cent interest.

Since the builder failed to refund the amount, Saini approached the National Commission with a complaint against the developer and its director. Saini pointed out that the builder had executed an unfair and one-sided agreement by which the developer was enjoying the use of his money while he had to live in rental accommodation and pay Rs 28,000 per month, besides bearing the housing loan EMI of Rs 75,006. The builder challenged the maintainability of the complaint, by terming Saini an investor and not a consumer. The builder also claimed that the agreement provided for any dispute to be referred to arbitration, so the matter could not be decided by the consumer commission. On merits, the builder claimed that the project was delayed due to environmental clearance, but the flat was now ready and possession could be given. Since Saini was insisting on a refund, the builder argued that the agreement provided that the money could be refunded only if another buyer could be found for the flat.

The Commission scrutinised the agreement and held that the conditions for refund were indeed one-­sided in favour of the builder. The Commission pointed out that the builder was aware that environmental clearance was required and should have taken suitable steps to get the approval. So, it would be wrong to penalise the flat purchaser for the delay.

The Commission relied on a Supreme Court judgement and observed that the purchaser cannot be made to wait endlessly merely because the builder fails to fulfil his contractual obligation to obtain the Occupancy Certificate within the stipulated period. It held that if the purchaser was unwilling to wait and insisted on a refund due to delay in possession, the builder was legally obliged to refund the entire amount along with interest.

Accordingly, by an order dated March 18, 2021, delivered by Justice R.K. Agrawal presiding on the Bench along with S.M. Kantikar, the National Commission ordered the builder to refund the entire amount of Rs 1,11,32,379 along with 9 per cent interest from the date of payment of each instalment till the date of refund. In addition, Rs 25,000 was awarded as cost. A period of eight weeks was given for compliance, after which the interest was to be hiked to 11 per cent for the period of delay.

The writer is a consumer activist