Ramachandran had booked a duplex apartment in a building to be constructed by Atul Realty at Belapur in Navi Mumbai. The total cost was Rs 13.06 lakh payable in instalments.
Ramachandran paid in instalment. The total amount paid till March 12, 1996, was Rs 12.08 lakh. On December 12, 1997, the builder said his booking would be shifted to some other project. Ramachandran objected to this. The builder promised to refund the amount with interest at 24 per cent a year, in case the project was abandoned for any reason.
Since the builder defaulted, and neither gave possession or refunded the money, Ramachandran filed a complaint before the Maharashtra State Commission against Atul Realty and its directors, Atul and Rakesh Agarwal. He claimed a refund of Rs 12.08 lakh along with interest at 24 per cent a year and Rs 2 lakh as damages for severe hardship caused to him.
Atul Realty contested and explained the building could not be constructed as the plot on which it was to be built was allotted by City and Industrial Development Corporation of Maharashtra (CIDCO), but later unilaterally cancelled. It was argued the project was abandoned due to circumstances beyond the builder's control and there was no deficiency in service.
Over-ruling this argument, the State Commission ordered the builder to refund Rs 12.08 lakh, along with interest at 24 per cent a year from March 31, 1998. In addition, compensation of Rs 50,000 and costs of Rs 10,000 were awarded. The builder was given 60 days to comply.
The builder appealed to the National Commission, claiming the problem arose as CIDCO had refused to approve the building plan. The builder had approached the high court challenging CIDCO's refusal after which the plan had been approved. Subsequently, the builder had given an option to Ramachandran to shift his booking to another project. The builder argued that the project had never been abandoned and it was incorrect to allege deficiency in service.
The builder claimed that Ramachandran had paid only Rs 1.29 lakh as advance, whereas he had claimed to have paid Rs 12.08 lakh in instalments through cheque and in cash. The Commission observed Ramachandran's claim had not been rebutted through a specific denial in the builder's reply to the complaint. Ramachandran also produced the accounts filed by the builder before the registrar of companies, which revealed that he had indeed paid Rs 12.08 lakh.
Though the builder claimed that the amount shown to have been received from Ramachandran was not for payment towards the flat, there was no counter explanation to show why this amount had been paid. The Commission construed that the absence of a specific denial would constitute an admission and acceptance of Ramachandran's statement that he had paid Rs 12.08 lakh.
The National Commission concurred with Ramachandran's advocate, Mahesh Menon, that the failure to complete the project after having received Rs 12 lakh, which was more than 90 per cent of the total consideration, would by itself be a deficiency in service.
The builder claimed that he had not abandoned the project, but it was Ramachandran who had backed out, so he was not liable to refund the amount with interest. The Commission also observed that this was contrary to the defence raised before the State Commission, where the builder had admitted that the project had to be abandoned because of CIDCO, and so Ramachandran had been offered to shift his booking to another project. Hence, the Commission concluded the builder was liable to refund the amount with 24 per cent interest, as mentioned in the pre-litigation correspondence. The Commission observed the interest of 24 per cent would be adequate to compensate for the escalation of cost for buying another duplex flat.
Accordingly, by its order of February 5, 2016, delivered by the Bench of V B Gupta and Prem Narain, the National Commission dismissed Atul Realty's appeal and upheld the order passed by the State Commission.
The Commission also passed strictures against the builder for grabbing a huge amount of money, illegally retaining it and enjoying its use for over 20 years, leaving Ramachandran empty-handed and without a roof over his head. Observing that the appeal was without merit, and that no leniency should be shown to such unscrupulous wrongdoers who attempt to derive benefit out of frivolous litigation, the Commission ordered the builder to pay a further amount of Rs 50,000 to Ramachandran towards punitive damages. This amount was to be paid within four weeks, else it would carry interest at 9 per cent a year. Frivolous litigation must be curbed to avoid judicial delays delaying genuine cases.
Ramachandran paid in instalment. The total amount paid till March 12, 1996, was Rs 12.08 lakh. On December 12, 1997, the builder said his booking would be shifted to some other project. Ramachandran objected to this. The builder promised to refund the amount with interest at 24 per cent a year, in case the project was abandoned for any reason.
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Since the builder defaulted, and neither gave possession or refunded the money, Ramachandran filed a complaint before the Maharashtra State Commission against Atul Realty and its directors, Atul and Rakesh Agarwal. He claimed a refund of Rs 12.08 lakh along with interest at 24 per cent a year and Rs 2 lakh as damages for severe hardship caused to him.
Atul Realty contested and explained the building could not be constructed as the plot on which it was to be built was allotted by City and Industrial Development Corporation of Maharashtra (CIDCO), but later unilaterally cancelled. It was argued the project was abandoned due to circumstances beyond the builder's control and there was no deficiency in service.
Over-ruling this argument, the State Commission ordered the builder to refund Rs 12.08 lakh, along with interest at 24 per cent a year from March 31, 1998. In addition, compensation of Rs 50,000 and costs of Rs 10,000 were awarded. The builder was given 60 days to comply.
The builder appealed to the National Commission, claiming the problem arose as CIDCO had refused to approve the building plan. The builder had approached the high court challenging CIDCO's refusal after which the plan had been approved. Subsequently, the builder had given an option to Ramachandran to shift his booking to another project. The builder argued that the project had never been abandoned and it was incorrect to allege deficiency in service.
The builder claimed that Ramachandran had paid only Rs 1.29 lakh as advance, whereas he had claimed to have paid Rs 12.08 lakh in instalments through cheque and in cash. The Commission observed Ramachandran's claim had not been rebutted through a specific denial in the builder's reply to the complaint. Ramachandran also produced the accounts filed by the builder before the registrar of companies, which revealed that he had indeed paid Rs 12.08 lakh.
Though the builder claimed that the amount shown to have been received from Ramachandran was not for payment towards the flat, there was no counter explanation to show why this amount had been paid. The Commission construed that the absence of a specific denial would constitute an admission and acceptance of Ramachandran's statement that he had paid Rs 12.08 lakh.
The National Commission concurred with Ramachandran's advocate, Mahesh Menon, that the failure to complete the project after having received Rs 12 lakh, which was more than 90 per cent of the total consideration, would by itself be a deficiency in service.
The builder claimed that he had not abandoned the project, but it was Ramachandran who had backed out, so he was not liable to refund the amount with interest. The Commission also observed that this was contrary to the defence raised before the State Commission, where the builder had admitted that the project had to be abandoned because of CIDCO, and so Ramachandran had been offered to shift his booking to another project. Hence, the Commission concluded the builder was liable to refund the amount with 24 per cent interest, as mentioned in the pre-litigation correspondence. The Commission observed the interest of 24 per cent would be adequate to compensate for the escalation of cost for buying another duplex flat.
Accordingly, by its order of February 5, 2016, delivered by the Bench of V B Gupta and Prem Narain, the National Commission dismissed Atul Realty's appeal and upheld the order passed by the State Commission.
The Commission also passed strictures against the builder for grabbing a huge amount of money, illegally retaining it and enjoying its use for over 20 years, leaving Ramachandran empty-handed and without a roof over his head. Observing that the appeal was without merit, and that no leniency should be shown to such unscrupulous wrongdoers who attempt to derive benefit out of frivolous litigation, the Commission ordered the builder to pay a further amount of Rs 50,000 to Ramachandran towards punitive damages. This amount was to be paid within four weeks, else it would carry interest at 9 per cent a year. Frivolous litigation must be curbed to avoid judicial delays delaying genuine cases.
The author is a consumer activist