1. The Complainant is not a consumer as defined under the Consumer Protection Act, 1986
(A) Indrajit Dutta v. Samriddhi Developer First Appeal No. 1219 of 2014
Dated 5th February 2015 [NCDRC]
Facts: Indrajit Dutta (hereinafter referred to as the ‘Complainant’) purchased two flats from Samriddhi Developers (hereinafter referred to as the ‘Builder’). Possession of the flats was to be handed over by 7.02.2010. However, construction was not completed and possession not granted to the Complainant on the said agreed date and therefore this complaint was filed before the National Consumer Disputes Redressal Commission (“NCDRC”).
The Builder argued that the complaint was not maintainable as the purchase of two flats amounted to “commercial purpose” and therefore the Complainant was not a “consumer” under the Consumer Protection Act, 1986.
Holding: The NCDRC held that when a person purchases two flats, it cannot be said that both are for his residential purpose and such purchase amounts to an investment for commercial purpose. Therefore, the Complainant does not fall within the purview of a “consumer” in terms of the Consumer Protection Act, 1986. Accordingly, the NCDRC rejected to grant any compensation to the Complainant.
2. The Agreement executed between the parties specifies that no interest will be due to the complainant in the event of delay by the Builder in the delivery of the flat
A. DLF Universal v. Vijay Chopra First Appeal No. 603 of 2007
Dated 23rd May 2014 [NCDRC]
Facts: Vijay Chopra (hereinafter referred to as the ‘Complainant’) booked a flat with DLF Universal (hereinafter referred to as the ‘Builder’) on 18.8.1990, the possession of which was to be handed over in 3.5 years i.e. by 18.2.1994. An agreement to sell (hereinafter referred to as ‘Agreement’) was entered into by the parties on 16.10.1990.
According to the Agreement, the consideration of the flat was to be paid by the Complainant to the Builder in 13 installments. The Complainant made payments as per the Agreement and also paid other sums demanded by the Builder as escalation costs and other expenses. On 30.8.1995 the Builder wrote a letter to the Complainant conveying that they were ready to deliver possession. However, when the Complainant attempted to take possession, they found that the flat was not ready. Thereafter, possession of the flat was eventually handed over to the Complainant on 17.3.1997. Given this, the Complainant filed a complaint before the appropriate consumer forum for rectification of defects, refund of escalation charges and interest on paid up installments for the period of delay along with compensation.
Holding: The National Consumer Disputes Redressal Commission (NCDRC) found that there had been a total delay of 3.5 years in the handing over of possession by the Builder. However, because the Complainant had unconditionally accepted possession on 17.3.1990 and as per Clause 19 of the Agreement the Complainants were not entitled to any interest in case there was a delay by the Builder, the NCDRC concluded that the Complainant was not entitled to any interest or compensation by the Builder.
3. Where the Consumer fails to pay instalment(s) of the consideration amount
A. J.L Sharma v. Krishna Continental First Appeal No. 167 of 2011
Dated 8th January 2015 [NCDRC]
Facts: J.L Sharma (hereinafter referred to as the ‘Complainant’) applied for allotment of a flat with Krishna Continental (hereinafter referred to as the ‘Builder’). Allegedly, a flat was allotted to him on 24.12.1999, however, no letter of allotment was issued. As per an agreement entered into between the parties, the total consideration of the flat, payable by the Complainant was Rs. 10 lakhs.
By 9.3.2000, a total of Rs. 7.25 Lakhs was paid by the Complainant to the Builder in respect of the flat. Thereafter, on 29.9.2000, the Complainant issued a legal notice to the Builder stating that he would pay the remaining sum of Rs. 2.75 Lakhs, subject to an allotment and possession letter being issued to him. On 24.1.2001 the Complainant filed a consumer complaint with the State Commission, praying for either possession of the flat or refund of the money paid along with interest and compensation and costs.
The State Commission did not grant him interest, but only allowed a set off against the amount of earnest money deposited by the Builder that had been forfeited by the Complainant. This order of the State Commission was challenged by the Complainant before the National Consumer Disputes Redressal Commission (NCDRC).
Held: The NCDRC found that under the agreement executed by the parties, though the obligations of the Complainant were time bound, no time limits were contemplated for the Builder. Therefore, the NCDRC felt the need to balance the equities of the situation and award interest for the delay.
Compensation: The NCDRC awarded 9% interest per annum and a lump sum compensation of Rs.75,000/- to the Complainant, however, the Builder was allowed to deduct the earnest money from the amount of compensation payable.
B. DLF Southern Towers v. Dipu Seminlal Revision Petition No. 1973 of 2014
Dated 7th Janurary 2015 [NCDRC]
Facts: Dipu Seminlal (hereinafter referred to as the ‘Complainant’) applied for allotment of a flat with DLF Southern Towers (hereinafter referred to as the ‘Builder’) on 30.9.2008, by means of an application form along with cheque of Rs. 4,00,000. The Builder had promised to handover possession of the flat within a period of 36 months, but the construction was delayed and so the Complainant refused to pay the subsequent installments, which were due under the contract. When the Builder resumed construction, the Complainant offered to pay the remaining installments, but the Builder demanded an additional amount of Rs. 1,70,000. Alleging deficiency on part of the Builder, the Complainant filed a consumer complaint.
The Builder argued that due to the failure of the Complainant to pay the outstanding installments, the Builder was entitled to forfeit Rs. 4,00,000 paid by the Complainant towards earnest money.
Holding: The National Consumer Disputes Redressal Commission (NCDRC) found that the Complainant had failed to sign the Apartment Buyers’ Agreement, and pay any of the installments, which were due under the Agreement. Therefore, the Builder had every right to forfeit the earnest money. The NCDRC further distinguished the case from that of Kushal K. Rana v. DLF Commercial Complexes Ltd., Consumer Complaint No. 88 of 2012 dated 9th September, 2014, wherein the complainant was allowed a refund on entire deposited amount along with interest on the ground that in Kushal Rana’s case, the builder had unilaterally changed position of flat and area and delayed construction by a year whereas in this case the Complainant had applied for relief before expiry of the 36 month deadline.
4. Possession has been handed over
A. Ambica Construction v. Martin J. Pinto First Appeal No. 224 of 2005
Dated 17th September 2010 [NCDRC]
Facts: Martin Pinto (hereinafter referred to as ‘Complainant’) executed an agreement (hereinafter referred to as ‘Agreement’) with Ambica Construction (hereinafter referred to as ‘Builder’) on 31.1.1996 for the purchase of two flats. As per the agreement, the possession of the flats was to be given within 18 months of the date of the Agreement, i.e. by July 1997. Being aggrieved by the failure of the Builder to hand over possession within the timeline set in the Agreement, the Complainant filed a complaint in the relevant forum.
Holding: The National Consumer Disputes Redressal Commission (NCDRC) found that possession was handed over to the Complainants during the pendency of the case i.e. on 30.1.2008. Given that possession had been handed over and in light of the decision of the Supreme Court in Bangalore Development Authority Vs. Syndicate Bank (2007) 6 SCC 711, the NCDRC held that the Complainants were not entitled to any interest.
B. Bangalore Development Authority (BDA) v. Syndicate Bank (2007) 6 SCC 711) [Supreme Court]
Facts: The Bangalore Development Authority (hereinafter referred to as the ‘Builder’) introduced a “self-financing housing scheme” for construction of flats, etc. in 1982. Syndicate Bank (hereinafter referred to as the ‘Allottee’) made an application for the allotment of 250 flats under the scheme. As per the scheme, the flats were to be handed over by December 1986. However, handing over of possession of 11 of the flats booked by the Allottee was delayed because of a dispute with the contractor due to which, the construction was halted. Thus, the Builder failed in providing the delivery of possession, pursuant to which, the Allottee filed in 1995, a complaint with the National Consumer Disputes Redressal Commission (NCDRC). The price of the undelivered flats was Rs. 53 lakhs, which was paid in full by the Allottee.
The Allottee was given the possession of the house during the pendency of the suit. However, NCDRC allowed for compensation as well as interest on the price of the property. Aggrieved by the Order of the NCDRC, and the High Court of Karnataka, the Builder appealed to the Supreme Court.
Holding: The NCDRC held that the Allottee had accepted the delivery of the flats during the pendency of the suit, at the price mentioned under the scheme, therefore they weren’t entitled to interest, since there was no breach of contract. Further, they observed that the Allottee was enjoying the benefit of the possession of the property, the value of which had increased ten-fold during the period of construction, but had paid only the amount decided upon by the Scheme. The acceptance of possession was regarded as acquiescence to the terms of the existing scheme, despite having filed the suit. Since this acquiescence by the Allottee showed that the contract had not been breached, no damages were liable to be paid. Additionally, both the parties, through their conduct, had implicitly agreed that time was not of the essence to this contract, so no compensation could be granted for the same.
The Supreme Court also laid down some general principle that would govern the allotment of apartments by a local authority. Though the judgment seems to limit these principles to cases where a local authority makes the allotment as seen in the case of Ambica Construction v. Martin J. Pinto, the NCDRC has applied these principles to cases where the builder/developer is a private party.
I. Where no time period is mentioned for the delivery of the possession of the flats for the performance of the contract, or where time is not of the essence for the contract, if the buyer, instead of rescinding the contract on grounds on non-performance, accepts the belated delayed delivery of possession in based on the terms of the existing contract, there is no breach of contract. Hence, there is no need for payment of any compensation under the law of contracts. However, if any other statute provides for compensation, it will be provided.
II. Where the authority offers to deliver another property instead of the one allotted/promised at the agreed price, due to inability of providing the allotted property, or where the delay is for justifiable reasons, the allottee will not ordinarily be entitled to compensation or interest
III. While deciding whether the allottee is entitled to any relief and in molding the relief, the following among other relevant factors should be considered:
(i). Whether there is commitment as to the date of delivery of possession;
(ii). Whether there are any justifiable reasons for the delay or failure to deliver possession;
(iii). Whether the allottee has been subjected to avoidable harassment and mental agony.