Buyer shouldn't pay for bank's mistake

Pandav Roy had entered into an agreement with Merlin Projects for the purchase of a row house in a complex called “The Terrace” at Merlin Greens in South 24 Parganas. The total consideration was Rs 14,25,000, of which Roy paid Rs 2,43,750 as earnest money.

Roy approached Union Bank of India to obtain a home loan of Rs 15 lakh. Upon sanction, a tripartite agreement was executed on January 21, 2004, which required the bank to pay the builder the balance of Rs 13,81,250 towards the row house, and the remaining amount of Rs 1,18,850 for registration of deed of conveyance.

Roy also paid an additional Rs 2 lakh as contribution towards the corpus fund and for maintenance and other charges. He received possession of the row house on April 20, 2004, along with amenities such as water supply, electricity, generator, and security services.

Roy subsequently approached the builder for execution of conveyance, but the latter refused on the ground that he had not received the entire purchase consideration as one of the cheques had bounced twice. The builder terminated the agreement, asked him to vacate the flat, and also withdrew the electric generator and security services.

Since Roy did not repay the housing loan, recovery proceedings were initiated under the SARFAESI Act. According to the court order, Roy was required to vacate the row house and hand over possession. So, he shifted to a rented place. The builder, in collusion with bank officials, sold Roy’s row house to a third party.

Aggrieved, Roy filed a complaint against the builder before the West Bengal State Commission, which ruled in his favour. The builder’s appeal to the National Commission was also dismissed. The builder then approached the Supreme Court which remanded the dispute back to the State Commission with a direction to implead the bank as a respondent.

In the second round, the State Commission held the builder liable to pay Rs 50 lakh to Roy for the loss of his property. Additionally, compensation of Rs 10 lakh was awarded along with litigation cost of Rs 1 lakh.

The builder appealed to the National Commission against this order. The case was again remanded to the State Commission. This time, while retaining the rest of the order, the State Commission increased the compensation from Rs 10 lakh to Rs 25 lakh. So, the builder appealed to the National Commission a third time.

The National Commission observed that the bank was also a culprit as it had failed to pay the balance amount required for payment of registration charges for the conveyance deed. Despite the State Commission having concluded that there was deficiency in service on the part of the bank, it had not been held liable. The National Commission observed that the builder, too, was at fault for failing to execute the conveyance deed. It noted that only security and generator facilities were discontinued, and it was wrong to allege that essential services such as water and electricity were withheld. It also observed that Roy had to vacate the flat because of the SARFAESI Court order for failure to repay the loan.

Accordingly, by its order of January 4, 2022 delivered by C. Viswanath, the National Commission held that Roy would be entitled to a refund of the purchase amount. He would also be entitled to Rs 10 lakh as compensation and Rs 1 lakh as litigation cost, to be shared equally by the builder and the bank. The National Commission gave two weeks to comply with the order after which an interest cost of 9 per cent would apply.

The writer is a consumer activist