NCDRC Directs Godrej Projects To Refund Rs51.36 Lakh to Home-buyer
Moneylife Digital Team 31 October 2022
In a pathbreaking order, the National Consumer Disputes Redressal Commission (NCDRC) has held that if public amenities such as roads, water and electricity connections to a housing projects are not provided as advertised by builders in their promotion materials, then it could be a valid ground for the home-buyers to back out of a project. The apex consumer forum held that builder is liable to refund the amount to the buyer, even though such amenities are to be provided by the government, because a consumer who purchases an apartment on the basis of such a promise cannot be made to suffer. 
 
Accordingly, it directed Godrej Projects Development Ltd to refund the entire principal amount of Rs51.36 lakh to a home-buyer along with 9% interest as a compensation for its failure to provide a 24-metre road connecting the project. The road was depicted in the advertisements and buyer agreements, NCDRC said, while adding that road connectivity was an important feature which prompted buyers to take a decision to buy into the project.
 
The consumer court also held the builder responsible for ‘deficiency of service’ for not providing  regular water supply, electricity supply and sewerage treatment plant.
 
The case refers to a home-buyer, Rajiv Singhal, who had booked a 2,324sqft (square feet) apartment in the project Godrej Summit residential complex in Sector 104, Gurgaon  in August 2014 and had signed the apartment buyer’s agreement (ABA) in October 2015. He was to be given possession of the unit after 41 months with a grace period of six months. The builder obtained the occupancy certificate (OC) in June 2017 following which it raised a demand of balance payment from the buyer. 
 
On visiting the site, the home-buyer found that the unit was not in accordance with the plan and that the 24-metre road did not exist; safety measures, as promised, were not there and  proximity from Dwarka Expressway, etc, was not available, as promised by the builder, and, therefore, held back the final instalment.
 
In 2017, Mr Singhal moved the consumer court with the grievance that he had been given 'defective possession' over non-construction of a proposed 24-metre-wide road within the stipulated period of 41 months from the date of the allotment letter.
 
As the realty firm has not constructed the road when Mr Singhal asked for the refund of the entire amount, the realty firm cancelled the booking of his unit in December 2017 and forfeited the earnest money amounting to Rs46.94 lakh. He then filed a fresh plea before the consumer court.
 
The developer, on the other hand, submitted that it cannot do any construction outside the project and it was the job of the government authorities. It also contended that the 24-metre road connecting Sector 104 Gurgaon (project site) with Dwarka Expressway was projected by the government authorities in its plans and it did not mislead the buyers. 
 
Denying the allegations made by buyer and the developer said that the  commission lacks pecuniary jurisdiction in the present matter. “…the ambit of jurisdiction of Commission is strictly limited to examine the question of deficiency in service and not to go behind the agreement or terms of the agreement.” It said that the buyer is not a consumer in the present case as he has bought the flat for investment purpose, as per clause 19 of ABA, the matter should first be settled through arbitration and, hence, the present complaint is not maintainable.
 
The developer contended that there was no deficiency of service on its part as the construction of 24-metre road connecting the highway and drinking water was to be done by the state authorities.
 
Taking into account the way in which the proposed 24-metre road, a key feature of the project, was portrayed in the advertisements/brochure of the builder and the buyers’ agreements, the Commission said it was certainly an important factor for the prospective purchasers to book units in the project believing that such a connectivity would exist when it is completed.
 
While adjudicating a refund claim of the home-buyer on 21st October, the bench of justice Ram Surat Ram Maurya and Inder Jit Singh held that delay on the part of the civic authorities in constructing roads and providing water and electricity connections to a housing project could be a valid ground for the home-buyers to back out of a project and the builder is liable to refund the amount.
 
The bench accepted that builders are not responsible for construction of any development outside its property, which is to be done by state authorities, but said home-buyers, who invested money after getting influenced by such advertisements, could not be forced to suffer because of lack of facilities.
 
"Careful consideration of the pleas of complainant and OPs (opposite parties) regarding responsibility for construction of 24m wide road outside project area and relevant documents in this regard show that no doubt the responsibility for land acquisition and construction of that road lies with the state authorities, OPs have admitted that they are accountable to pay for the proportionate cost towards the said acquisition and construction."
 
"No doubt, the said issue is pending before the Hon’ble High Court of Punjab & Haryana for adjudication, the way proposed 24m road outside the project area leading to the Dwarka Expressway, which was a key feature of the project, was portrayed in the advertisements/brochure of the OPs and the Buyers’ Agreements, it was certainly an important factor for the prospective purchasers to book the units in the said project believing that such a connectivity would exist when the project is completed," the order noted.
 
NCDRC directed the developer to  refund the entire principal amount of Rs51,36,338 to the buyer, along with compensation in the form of simple interest at the rate of  9% per annum from the date of each payment till the date of refund.  The principal amount refundable is subject to verification of actual amount paid by the complainant, based on receipts, etc, it said.
 
The developer has also been asked to pay an amount of Rs25,000 as cost of litigation to the  complainant and directed the builder to make the payment within  three months from the date of the order.
 
The apex commission said that if the buyer has taken a loan from a bank or financial institutions and if it is still outstanding, the refund amount will be first utilised for repaying the outstanding amount of such loans and balance will be retained by the buyer. The buyer has been directed to submit the requisite documents from the concerned bank(s)/financial institution(s) to the builder within four weeks from receipt of the order to enable them to issue refund cheques/drafts accordingly.
 
Builders routinely advertise and sell housing projects, claiming that the site would soon be connected with metro or multi-lane roads. The NCDRC order will make the builders think twice about making such claims in their advertisements and, as a group, also work to ensure pressure on the government to complete infrastructure, utilities and public amenities in specified time frames. 
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