NCDRC Says Developer Cannot Forfeit Earnest Money; Asks IREO Grace Realtech To Refund Entire Money with 9% Interest
Moneylife Digital Team 25 January 2023
Holding a developer guilty of committing unfair trade practice and, thus, not entitled to forfeit earnest money, the National Consumer Disputes Redressal Commission (NCDRC) asked New Delhi-based IREO Grace Realtech Pvt Ltd to refund the entire money deposited by 15 home-buyers with an interest of 9%pa (per annum).
 
In an order on 23 January 2023, the bench of justice Ram Surat Ram Maurya (presiding member) and Dr Inder Jit Singh (member) says, "...the counsel for the opposite parties submitted that as the complainant has committed breach of contract as such 20% earnest money as mentioned in clause-6 of the agreement together with interest on delayed payments, brokerage and service tax are liable to be forfeited under clause-21.3 of the agreement. However, in the present case, the developer is guilty of committing unfair trade practice as such, it is not entitled to forfeit any amount. The developer has cancelled the allotment was 5 January 2017 but did not return the money deposited by the complainant." 
 
"IREO Grace Realtech is directed to refund entire money deposited by the complainants with interest at 9% per annum from the date of respective deposit till the date of refund, within a period of two months from this judgment," the bench says.
 
The case is related to 15 home-buyers booking flats in The Corridors project launched by the company in 2012 at Gurgaon. All the buyers were told by the developer that the price of the flat is Rs8,750/sqft (square foot) as the basic sale price and included one car parking space,Rs327.91/sqft as development charges, Rs100/sqft as interest-free maintenance security, Rs50/sqft as interest-bearing replacement fund and Rs2.5 lakh towards optional club membership charges.
 
These buyers paid the initial amount after which IREO Grace Realtech issued allotment letters. After accepting more money from buyers, the company executed the apartment buyer’s agreement on 24 April 2014. However, in the agreement, the buyers found out that the rate of the flat was mentioned as Rs9,400/sqft and preferential location charge at Rs327.91/sqft. When buyers asked the developer about increased rates, the company assured them that the revised rate would be taken back soon.  
 
After looking at their application forms, the buyers found that the developer had indulged in tampering and to the rate, Rs650 was added after Rs8,750 and 2BHK was written as 3BHK and super area as 1,892sqft by overwriting. 
 
Some of the buyers filed a civil suit for restraining the developer from cancelling the allotments of the apartment and raising unlawful and unjustified demand on the basis of manipulated rates and other consequential reliefs. In an order on 22 December 2016, a civil judge (senior division), directed the home-buyers to deposit the instalments at Rs8,750/sqft. However, later the suit was dismissed. An appeal filed against the order was also dismissed on 5 May 2018.
 
The home-buyers then filed a complaint before NCDRC alleging unfair trade practices by the developer. They alleged that IREO Grace Realtech started collecting money before approval of the building plan. The developer was neither the owner of the land nor was the collaboration agreement registered and, as such, it would not able to confer the title upon the buyer.
 
"Clause-13.3 of the agreement provides 42 months period from the date of approval of building plan, for offer of possession, with grace period of 180 days. This period expired on 22 January 2017 but the construction was not completed nor possession was offered. The developer made tampering in the application form and in the rate, Rs650 was added after Rs8,750 and 2BHK was written as 3BHK and super area as 1,892 sq ft by overwriting," the buyers stated.
 
IREO Grace Realtech, however, blamed the home-buyers for not paying all the instalments for their flats, due to which it cancelled the allotments. It also contended that the complaints are barred by limitation. "Terms of the agreement, which was executed on 24 April 2014, cannot be challenged in the complaint filed on 17 January 2019," it says.
 
However, NCDRC rejected the contention. It pointed out that some buyers have filed a complaint against the developer in the national commission. On 18 October 2016, NCDRC dismissed the complaint with the liberty to buyers to file a fresh complaint. Some buyers then filed a civil suit, which was dismissed on 5 May 2018. Buyers then filed a complaint with NCDRC on 17 January 2019.
 
"These facts have not been disputed by the opposite parties. The period from filing of CC/195/2015 till 5 May 2018 is liable to be excluded under Section 14 of Limitation Act, from two years limitation as provided under Section 24-A of the Consumer Protection Act. Cause of action arose on 2 February 2005, when the developer supplied the photostat copy of the application form of the complainant and she could notice manipulation and overwriting made in it. Therefore, the complaint is not barred by limitation," the bench ruled.
 
Further, it says, the change of rate and area by the developer by tampering with the application form is proved. "The developer has committed unfair trade practice."
 
There was a dispute about the rate of interest between the home-buyers and the developer. Citing the Haryana Real Estate (Development and Regulation) Rules, buyers submitted that it provides for the interest, 1.5%pa (per annum) above the market rate, in case of a refund. However, in one similar case, the Supreme Court has awarded interest at 10.5%pa.
 
NCDRC then directed IREO Grace Realtech to refund, within two months, the entire money paid by home-buyers along with an interest at 9%pa from the date of deposit till the date of refund.
 
(Consumer Case No107 OF 2019 Date: 23 January 2023)
Comments
saharaaj
1 day ago
real estate developers will sink th e State Government .. Yogi ji type of treatment is needed for such builders ..
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