NCDRC Asks Tata Housing To Refund Principal Amount after Deducting EMD To a Home-buyer
Moneylife Digital Team 18 May 2023
Considering that the complainant was not interested in possession and wants only a refund, the national consumer disputes redressal commission (NCDRC) directed Tata Housing Development Co Ltd to refund the entire principal amount after deducting earnest money and pay the balance to the home-buyer.
In an order last week, the bench of justice Ram Surat Ram Maurya (presiding member) and Dr Inder Jit Singh (member) says, "....considering that Tata Housing has fulfilled his obligations of offering possession within the committed timeframe (with grace period) if the complainant wishes to take the refund, it can be granted by Tata Housing only after earnest money forfeiture, which is reasonable. Complainant himself, realising this, has made an alternative prayer of refund after minimal forfeiture of Rs10 lakh." 
"From the pleadings, it seems that mutual agreement between the parties for a refund with a minimum deduction of Rs10 lakh did not materialise. Considering that the complainant is still not interested in possession and wants only a refund, the interest of justice will be met for both sides if Tata Housing is directed to refund Rs79.38 lakh, the principal amount paid by the complainant after making a deduction of Rs15 lakh only and refund the balance of Rs64.38 lakh with simple interest at 9%pa (per annum) from the date of refund," the bench says.
Gurgaon-based Dinesh Kumar Lakhanpal had booked a 3-bedroom hall kitchen (BHK) in the Primanti project of Tata Housing. As per the apartment buyer agreement (ABA) executed on 14 June 2014, Tata Housing promised to deliver possession of the flat on or before October 2017. On 24 January 2018, Mr Lakhanpal sent a legal notice to Tata Housing seeking a refund of the amount he paid for the flat. 
On 22 March 2018, the developer sent a letter to Mr Lakhanpal for delivery of possession and seeking the remaining payment by May 2018. However, the home-buyer wanted a full refund, which Tata Housing refused. Mr Lakhanpal agreed to a minimal forfeiture of Rs10 lakh. In an email on 7 April 2018, Tata Housing agreed to refund the paid amount with minimal forfeiture. In the meantime, the developer sent a reply on 24 April 2018 to the legal notice raising false and frivolous grounds for the delay.
Tata Housing submitted that clause 6 (b) of the application for booking allows the complainant to cancel the allotment of the apartment and seek a refund of money, without interest, paid by the complainant subject to forfeiture of application money or the actual payment paid subject to a maximum of 15% of the sale price.
"After realising that such cancellation would entail deductions, Mr Lakhanpal decided not to cancel the allotment of the apartment. However, despite certain force majeure circumstances, which were completely beyond the control of Tata Housing, the construction was completed within the grace period which was agreed upon under ABA on account of the force majeure period. The delay along with the reasons were timely communicated to Mr Lakhanpal and confirmed that the possession of the apartment would be offered around May 2018," it stated.
However, Mr Lakhanpal sent a legal notice on 24 January 2018 to cancel the allotment and sought a refund for the delay in the delivery of possession. The developer says, "The malafide intent and motive of Mr Lakhanpal is evident from a bare perusal of the said legal notice, which alleges inordinate delay on the part of Tata Housing, whereas the total delay in delivery of possession from the date mentioned in the ABA was at maximum three months only, and in any event covered under the contractually prescribed extension which Tata Housing is entitled to." 
Tata Housing says it obtained the occupancy certificate (OC) on 9 March 2018 and, in a letter on 19 March 2018, offered possession of the flat to Mr Lakhanpal. "However, he ignored the offer of possession and instead continued to pressurise Tata Housing to give into his illegal demands."
Further, the developer says that Mr Lakhanpal was allotted possession under a special developer-sponsored scheme. Tata Housing completed the construction without any payment from the buyer beyond the initial 30% payments and financed the balance 70% using its own resources. 
"If at this time Mr Lakhanpal is allowed to exit from the project, without showing any reasonable cause, it would amount to rescinding the contract for sale and purchase of the apartment.... Mr Lakhanpal cannot be allowed to unilaterally rescind from his contractual obligations basis his whims and fancies. The complainant has failed to show any unfair trade practice on the part of Tata Housing, except for delay in delivery of possession," it added.
After hearing both sides and perusing the documents, NCDRC observed that even if Tata Housing's contentions of delay on account of force majeure reasons are not accepted, the delay is only four and a half months which is not unreasonable. "Hence, in our opinion, in the present case, Mr Lakhanpal is obligated to take possessions which was offered with a valid OC. If he does not wish to take possession but wants refund of his money, Tata Housing will be entitled to make reasonable deductions towards forfeiture of earnest money."
The bench then directed Tata Housing to refund, within three months, the entire principal amount of Rs79.38 lakh after deducting Rs15 lakh towards forfeiture of earnest money and refund the balance of Rs64.38 lakh to Mr Lakhanpal, along with simple interest at 9%pa from the date of each payment till the date of refund. 
"In case Mr Lakhanpal has taken loan from bank, or other financial institution and the same or any portion of the same is still outstanding, the refund amount will be first utilised for repaying the outstanding amount of such loans and balance will be retained by him," NCDRC clarified. 
(Consumer Case No1636 of 2018  Date: 11 May 2023)
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