Compensate for escalated cost if project fails to take off – NCDRC

It’s not uncommon in India to launch Group Housing projects without having clear title to the land. Developers often collect booking amount and cheat home buyers. Many such soft launch project fails to take off and buyers are left stranded. A long battle to get the refund from the developer starts. If the buyers are lucky enough, they would still need to settle with the refund of the principal amount paid only.  The cost of properties would have increased many folds in the same area and buyer may never be able to book the house with refunded amount in most cases.

The National Consumer Disputes Redressal Commission (NCDRC) have come heavily on one such developer from Pune. When the developer failed to start the projects owing to land issues, he offered the refund of money to the home buyers without any interest. They cost of surrounding property had increased and the homebuyers group refused the refund without delay compensation and moved to the Consumer Forum through Akhil Bhartiya Grahak Panchayat. The NCDRC ordered that the homebuyers be compensated for the escalated cost of property and ordered the refund of money collected from them at an interest of 18% per annum.

Case summary

KDS Infra Buildcon advertised through newspapers and booked apartments in its project. The MoU/Agreement was not signed even after much persuasion from the buyers. After much delay, the homebuyers filed an FIR with Police. Builder offered to refund the booking amount and issued cheque to some homebuyers but to refund cheques also bounced.

Buyers were taken for a rude shock when they came to know that the respondent builder sold the owned land on which the site was proposed and stopped all the activities at the site also closed his office.

Court’s observations

This is clear that the developers had led the gullible persons up the garden path. Developers admit that they have to pay back Rs.1,34,28,518/- to the home buyers.  He further submits that the interest rate claimed by the complainants, i.e. 18%, is on the higher side.

It must be borne in mind that the buyers have waited for their houses for the last six years.  It is now apparent that the buyer would not get the houses during their lifetime from the developer.  They will have to try somewhere else, which may  take a decade further.

It is well said that Justice delayed is not only Justice denied, it is also Justice  circumvented, Justice mocked and the system of Justice  undermined.

The case of the complainant is covered by one of the examples  cited by this Court in Ghaziabad Development Authority Vs. Balbir Singh, as quoted above.  In this case also, the amount was simply returned and the buyer   is suffering a loss in as much as she had  deposited  the money in the hope of getting a flat, but she is  being  deprived of  that  flat and thereby deprived of the benefit of escalation of the price of that flat.  Therefore, the compensation, in this case, should necessarily have to be higher, as per the decision of this Court.

The Order

  • The Developer is directed to pay the buyers, an interest at the rate of 18% per annum from  the date of its respective deposit till the date of realization.
  • Pay the buyers a further sum of Rs.50,000/- as compensation for deficiency in service.
  • Pay the appellant- complainant  a  sum  of  Rs.20,000/- towards the cost of the litigation incurred by her.

Order Copy: To be uploaded soon. Not available at Court’s website yet. Case No. CC/356/2012 [ Akhil Bhartiya Grahak Panchayat vs M/s KDS Infra Buildcons, Pune]

Conclusion

There are many cases around us where the developers offered to return the booking amount when projects failed to take off. In such cases, homebuyers can demand the developer to pay for escalated cost and get the refund at 18%.

Leave a Reply

This site uses Akismet to reduce spam. Learn how your comment data is processed.