Home Buyers to Lose Only Booking Amount, if They Decide to Cancel, Rules NCDRC
The National Consumer Disputes Redressal Commission (NCDRC) has ruled that the builder or developer can forfeit only part of booking amount or earnest money deposit (EMD) taken from a buyer at the time of booking if the buyer is not ready to take possession and wants to cancel the flat without a valid reason. 
 
In an order issued earlier this week, the bench of Justice VK Jain says, "...the builder should be allowed to forfeit (Rs10 lakh from) the earnest money, which the buyer paid to it and it should refund the balance (principal) amount to the buyer, along with appropriate interest from the date on which first default in paying the unpaid instalment was committed. The senior counsel for the developer submits that the instalment which still remains unpaid was demanded by them on 25 May 2017 and should have been paid within 30 days meaning thereby that it could be paid by 24 June 2017. Therefore, the builder, in my opinion, should pay interest on the balance amount left after deducting the earnest money with effect from 25 June 2017."
 
The case is related with booking of a flat by New Delhi-based Ramesh and Renu Malhotra. In 2013, they booked residential flat worth Rs1.68 crore with Emmar MGF Land Ltd in a project namely Imperial Garden. On 26 February 2013, the senior citizens also paid a booking amount of Rs10 lakh. The builder issued them a provisional allotment letter dated 27 February 2013 followed by execution of agreement on 15 April 2013.  As per clause 14(a) of the agreement the possession was to be delivered within 42 months from the start of construction though a grace period of three months was also available to the builder. The payment was to be made in installments linked with the progress of the construction.
 
The Malhotras obtained a loan of Rs1 crore from HDFC Bank and a tri-partite agreement was executed between the buyer, builder and lender on 30 March 2015. 
 
On 30 October 2018, Emmar MGF offered possession of the flat to the Malhotras after paying and additional payment. However, the senior citizen couple told that they were no more interested in taking possession. They then approached the NCDRC seeking full refund from Emmar MGF.
 
In their plea, the Malhotras claimed that they had booked the flat for their son. However, since they did not receive the possesion in time, their son left for abroad and since he was not here, they had no need for the flat, they contended.
 
The NCDRC bench observed, "Though it has been pleaded in the consumer complaint that the flat in question was booked for their son and he having left for abroad, they do not require the flat any more and want only refund of the amount paid to the builder with interest. The ground taken by the complainants for refusing to take possession of the flat does not seem to be justified, considering that the possession as per the agreement could be delivered by 11 August 2017, whereas the son, according to the Malhotras, left India way back in the year 2014. Therefore, the ground given by them for refusing to take possession does not seem to be justified."
 
"...despite there being no justification for refusing to take possession of the allotted flat, the delay in offering possession not being unreasonable. In my opinion, in such circumstances, the builder should be allowed to forfeit the EMD... The builder, in my opinion, should deduct only a sum of Rs10 lakh out of the total amount received by it in the complainants either directly or through HDFC Bank and the balance amount be refunded along with interest with effect from 25 June 2017," the NCDRC order says.
 
Justice Jain also passed strictures on the agreement executed between Emmar MGF and the Malhotras. He says, "As regards the terms of the agreement executed between the complainants and the builder, such agreements being wholly one sided constitutes an unfair trade practice and, therefore, cannot be bind the flat buyer. It has to be kept in mind that the initial payment was made by the complainants on 26 February 2013. The buyer’s agreement came to be executed on 15 April 2013. The complainants had no option but to sign on the dotted lines they already having made initial payment to the builder even before the agreement came to be executed."
 
"The complainants have taken substantial loans from HDFC Bank. The amount with the Malhotras had raised by way of loan from HDFC Bank should be refunded by the builder along with same interest, which the Malhotras had paid to the Bank. The interest on the balance amount if any contributed by the Malhotras, considering all the facts and circumstances of the case should carry interest at the rate of 10% per annum. The bank, of course, should be paid first before making any payment to the complainants," the bench says.
 
The NCDRC asked HDFC Bank to intimate within four weeks to Emmar MGF the amount payable by the Malhotras and the amount to be paid to the Bank at the earliest and in any case within six months. 
 
It also directed HDFC Bank to give to Emmar MGF, breakup of the principal amount as well as of the interest component along with rate at which interest was charged from time to time. "Since the Malhotras have also been making payments to the bank in the interregnum, for the purpose of this order, the builder shall compute the interest on the principal amount received from the bank at the rate of interest conveyed to it by the bank. On the balance amount, which the complainants had contributed from their own funds, interest would be paid at the rate of 10% per annum from 25 June 2017," the NCDRC order says.
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    COMMENTS

    Sudhir Bhimani

    1 month ago

    1) Can this rule be applied for possession due in June / Dec 2020 where builder is going to pay PRE-EMI till Dec 2020 as per tripartite agreement with builder, buyer & HDFC but now possession will not be given by that date due to COVID-19?

    2) Will builder reimburse stamp duty, GST & registration charges also which is 25 + lakhs paid by buyer when installments were paid by HDFC?

    3) Is there any lawyer who can help me with above? I will pay his fees when I get reimbursement of GST, Stamp duty & registration charges to me. No advance payment as bank will go behind me for PRE-EMI from 1st Jan 2021 and I will still not have possession of flat. Property is located in Kandivali, Mumbai. Please send me your email address, WhatsApp number.

    tillan2k

    1 month ago

    alll delays by builders are not unreasonable but any delay by light weight purchasers would visit legal pain in any form this is tilted judgement in many property buying cases

    tillan2k

    1 month ago

    what about cash which is as much as 50/60 % that is lost as it is paid upfront .. Looks builders have captured regulators also how long institution aam admi will suffer at the hands of regulators/ builders/law makers policy tweekers, Ruling party touts ??/

    Mention of 'country of origin' may be mandatory for goods sold online
    Amid the growing push for inclination towards Indian goods and manufacturers, the government is seriously considering to make the mention of 'country of origin' mandatory for products sold on e-commerce platforms.
     
    The Department for Promotion of Industry and Internal Trade (DPIIT) on Wednesday held a discussion with representatives of e-commerce platforms, including Amazon and Flipkart, on the matter and sought their views.
     
    Speaking to IANS, DPIIT Secretary Guruprasad Mohapatra said that the matter is under consideration with the ministry because this is consistent with the 'Make in India' vision and also gives the customer more choice as he/she would know from where the product has come.
     
    He told IANS that no advisory or directive has been given yet, and the matter was only discussed with the players and a decision will be taken after due consideration.
     
    People in the know of things further said that the e-commerce portals are not the actual sellers on most instances, and vendors sell the products, who are numerous in number. During Wednesday's meeting, it was discussed how the proposed idea could be implemented with the large number of vendors.
     
    The development gains significance as the government is giving a major push to Indian goods and has called for a 'Self Reliant India'. The chorus for turning to Indian products has grown further on the back of the border tensions with China.
     
    The meeting comes just days after the Centre made it mandatory for sellers to enter the 'Country of Origin' clause while registering all new products on government e-marketplace (GeM).
     
    The e-marketplace is a special purpose vehicle (SPV) under the Ministry of Commerce and Industry, which facilitates the entry of small local sellers in public procurement, while implementing the 'Make in India' and MSE Purchase Preference Policies of the Centre.
     
    Disclaimer: Information, facts or opinions expressed in this news article are presented as sourced from IANS and do not reflect views of Moneylife and hence Moneylife is not responsible or liable for the same. As a source and news provider, IANS is responsible for accuracy, completeness, suitability and validity of any information in this article.
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    Reality Check: TINA.org Calls on FTC to Address Virtual Influencers
    Virtual influencers (also known as CGI or computer-generated imagery influencers) are like human influencers without all the baggage. Like human influencers, they promote brands and their value is measured in followers and “likes.” But compared to their human counterparts, these “carefully curated” personas are easier to control, cheaper and less regulated — at least for now.
     
    The term “virtual influencer” does not appear in the FTC’s Endorsement Guides, which the agency uses to tackle deceptive influencer marketing — ranging from undisclosed ads to the promotion of products the influencer doesn’t actually use — among other things. Last year, in a statement to the New York Times, the FTC acknowledged that it “hasn’t yet specifically addressed the use of virtual influencers.” The good news is the guides, which were first enacted in 1980 and updated in 2009, are up for review this year. As part of the review process, TINA.org has submitted a comment to the agency suggesting several updates and additions, including that the FTC confront this latest trend in social media endorsements.
     
    This comes after TINA.org conducted a review of more than two dozen virtual influencer Instagram accounts, identifying a number of potential legal issues posed by these brand-loving bots. But before we get into those, a little more on the recent rise of virtual influencers.
     
    Influencer fatigue
    For many, “influencer” has become a dirty word. It conjures up a person who takes orders blindly from multiple brands (sometimes mistakenly copy and pasting those orders in the sponsored post itself) and who may not even use the products they’re promoting (which is a violation of the FTC’s Endorsement Guides). So perhaps it’s not surprising that a 2019 study titled “Can CGI Influencers Have Real Influence?” found so little separating the perceived authenticity of a computer-generated character and that of an actual living and breathing human being. The study, conducted by the social content company Fullscreen, found that while 42 percent of those surveyed said they had never heard of CGI influencers before, 23 percent said they would describe a CGI influencer as “authentic.” Only 18 percent more — 41 percent — said they would describe a human influencer as “authentic.”
     
    Mukta Chowdhary, director of strategy and cultural forecasting at Fullscreen, who led the study, said this indicates “two major shifts.”
     
    “First, younger generations (the survey canvassed Gen Z and millennials) are open to developing relationships with bots and AI, and to some, that bot relationship can fill the need for human connection,” she said in an email. “Second, we have been ‘botting’ ourselves with filters and photo-editing and turning ourselves into avatars and some celebrities look practically like CGIs themselves, so we can understand how a CGI could feel authentic.”
     
    The Fullscreen survey also found that 42 percent of respondents followed a virtual influencer without knowing the account was a virtual influencer, which is understandable when you see how realistic some of the virtual influencers in TINA.org’s sampling look.
     
    Playing the part
    And not only do some virtual influencers look human, they act human. A handful in TINA.org’s sampling have the ability not only to move but to dance, talk, eat ice cream, decorate cookies at Christmas (even if they’re not religious) and hang out with humans. Some even have boyfriends, New Year’s resolutions and “Life Hacks.” Others have dreams and support worthy causes like cancer research. And like us, they’ve been trying to make the best of the situation when it comes to being “housebound” due to COVID-19.
     
    Skipping over the legal issue of whether these “lifestyle” posts are commercial speech or not, such posts boost the marketing value of virtual influencers by making them appear more real and popular. And for those virtual influencers created for the primary purpose of monetizing posts by promoting brands, lifestyle posts may be specifically designed to increase the monetary value of the virtual influencer.
     
    Virtual influencers also emulate human influencers — posing in fashionable clothes next to expensive cars, going to red-carpet events like the Grammys and the British Academy Film Awards and forgetting to #ad it in sponsored posts — to the point where it can be difficult to tell them apart. (See slideshow below comparing virtual influencers’ posts on the left with human influencers’ posts on the right.) It’s no wonder that numerous big-name companies — including Amazon, Puma, Lexus, Samsung, Dior, Toyota, Dr. Pepper, Porsche, Calvin Klein and KFC — have incorporated bots into their marketing campaigns.
     
    Better than the original?
    But unlike with human influencers, brands don’t have to worry about virtual influencers missing photo shoots or coming to the sudden realization that they are a Pepsi person instead of a Coke person. (Fun fact: In 2016, the most-liked Instagram post at the time with 5.5 million “likes” was an undisclosed Coke ad, which later became a disclosed ad after TINA.org contacted Coca-Cola.) Air Asia can send its homemade virtual influencer Miss Ava wherever it wants — what else does she have going on? Likewise, KFC can share its handsome, computer-generated Colonel Sanders with brands like Casper and Dr. Pepper. Would the previous human versions of the KFC spokesman played by comedians like Jim Gaffigan have agreed to be used for such purposes? Based on Gaffigan’s sunny take on “why summer vacations stink,” we’re not so sure.
     
    Virtual influencers — some created by the promoted companies themselves and others created by independent third parties — are also generally perceived as cheaper than their human counterparts. While some virtual influencers are backed by big money — and in the case of Lil Miquela, Silicon Valley money — the cost to use them isn’t likely to come close to the hundreds of thousands of dollars human influencers with large followings can charge per post.
     
    However, the rise of virtual influencers has not come without controversy. Last year, Calvin Klein apologized for “queerbaiting” after airing a 30-second online ad that showed real-life supermodel Bella Hadid, who identifies as a heterosexual, kissing “female” virtual influencer Lil Miquela. Lil Miquela was also criticized in 2019 for posting a vlog that described her being the victim of a sexual assault in a rideshare. Meanwhile, Shudu (whose posts claim in easy-to-miss hashtags that she is the world’s first digital supermodel) has been cast as a “white man’s digital projection of real-life black womanhood.”
     
    But by all accounts these public controversies have done little to dissuade brands from using virtual influencers. And the biggest benefit for brands may be that virtual influencers are not subject to the same level of scrutiny as human influencers. But that can change — and soon.
     
    The issues the FTC needs to address
    First, the FTC’s Endorsement Guides should expand the definition of “endorsement” to specifically include virtual influencers. A failure to do so could be taken as an indication that the guides don’t apply to virtual influencers (and the companies behind them).
    Second, the guides should make clear that virtual influencers that promote products or services are subject to the same “material connection” disclosure requirements that humans are. That is, if a material connection exists between the creator and/or owner of the virtual influencer and the promoted brand — which, under current guidelines, can range from the gift of a free product to a lucrative endorsement deal — that must be clearly and conspicuously disclosed.
     
    Third, because virtual influencers do not have opinions, beliefs or real-life experiences and cannot generally be genuine users of the products and services they promote, the guides should address the type of disclosure(s) necessary for these virtual influencers if they are permitted to ignore the principles established in the guides — which require that the endorsement reflect the honest opinions of the influencer and that the influencer be a “bona fide” or genuine user of the product at the time the endorsement was made. This issue arises frequently when virtual influencers promote products that are meant to impact or change a human’s appearance such as the application of makeup.
     
    Finally, to avoid consumer confusion and the risk of deception, the guides should require virtual influencers engaged in influencer marketing to disclose that they are not human. Specifically, the FTC should require virtual influencers to clearly and conspicuously disclose that they are bots in all promotional posts. And while research is likely needed to determine how best to convey that to consumers (for example, a hashtag such as #bot may not be enough), virtual influencers should not go two years before being “outed,” as was the case with Lil Miquela.
     
    Time to act
    It has been over a decade since the FTC’s Endorsement Guides were updated in 2009. When the FTC last updated the guides, not only did virtual influencers not exist, but the platforms on which they have recently thrived, such as Instagram and Snapchat, had yet to launch.
    Now, in a COVID-19 world, the use of virtual influencers who are unaffected by travel restrictions, stay-at-home orders and the basic truths of mortality will likely continue to rise. The multibillion-dollar influencer marketing industry has already proven itself a driver of sales. There’s every sign that the emergence of virtual influencers will only amplify that.
     
    Simply put, the use of virtual influencer marketing demands the FTC’s attention. The time for the agency to act is now.
     
    This article was updated on 6/23/20.
     
     
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