Valuation claim must be backed by evidence

The National Commission observed that even though the builder had disputed Naik's valuation, the latter had failed to produce any evidence to support his valuation claim

Narasinha Manjanath Naik was the owner of a 230 square feet (sq. ft) flat in Building No. 15 at Shastri Nagar in Goregaon, Mumbai. The building had 32 flats. Its owners formed the Shastri Nagar Namrata Co-operative Housing Society (CHS) and transferred their rights in the flats to the society. Each owner was allotted five shares in the society.

When the building became old and uninhabitable, the society decided to opt for redevelopment. The project was entrusted to Sunil Shah, HUF (Hindu Undivided Family), as proprietor of Ayyappa Construction Co. According to the memorandum of understanding (MOU) executed between the builder and the society, the redeveloped building was to have ground plus eight floors. Construction was to be completed within 15 months of the occupants vacating their flats. The builder also agreed to pay rent for alternative accommodation at the rate of Rs 6,000 per month for 16 months along with Rs 2,500 for shifting, and Rs 60,000 as compensation. In the case of delay in construction, the builder would have to pay a penalty of 25 per cent of the monthly rental for each month of delay.

The development agreement, which was executed between the builder and the society on February 5, 2005, provided that Naik would be allotted flat no. 604 measuring 443 sq. ft. in the redeveloped building.

Even though Naik vacated his old flat on April 18, 2006, the entire building was vacated much later, in January 2008. So, the builder had to redevelop the building within 15 months and hand over possession by April 2009. As possession was not given, Naik sent a notice on May 2, 2009 in which he demanded Rs 47 lakh towards the cost of alternative accommodation of a similar size in the same locality. Since the builder failed to respond, Naik filed a complaint before the Maharashtra State Commission against the society and the builder.

The builder contested the case, stating that one of the flat purchasers had resorted to legal proceedings due to which redevelopment was delayed and he was required to bear additional expenses. Meanwhile, since the development regulations had undergone an amendment, he was required to apply for fresh permissions. The builder communicated all these facts in a letter on November 2, 2009 to all the flat owners.

The builder also disputed Naik’s quantification of Rs 47 lakh as being the market value for an alternative accommodation, and stated that the actual value was Rs 25 lakh. The builder also offered to give possession of another flat of the same size in the same locality as alternative accommodation.

The State Commission ordered that possession of the agreed flat in the redeveloped building must be given within one month, or else Rs 47 lakh along with 6 per cent interest from the date of the complaint must be paid towards the cost of an alternative accommodation. Additionally, it awarded Rs 25,000 as compensation and Rs 5,000 as litigation costs.

Naik appealed to the National Commission, claiming that the State Commission had not considered the price escalation, so now he should be awarded the present value of Rs 70 lakh for the alternative accommodation.

The National Commission, in its order of October 6, 2022, delivered by Justice Ram Surat Ram Maurya observed that even though the builder had disputed Naik’s valuation, the latter had failed to produce any evidence such as the ready reckoner, copy of a sale deed, or other document to support his claim for a valuation of Rs 70 lakh. Hence the appeal was dismissed.

The writer is a consumer activist