Parshavnath Developers Admits Default, NCDRC Asks To Pay Balance Compensation of Rs12.47 Lakh with 9% Interest to Home-buyer
Moneylife Digital Team 14 September 2023
Holding New Delhi-based Parshavnath Developers Ltd liable to compensate for utilising payments given by home-buyers for one purpose or another regarding the projects floated by it, the national consumer disputes redressal commission (NCDRC) directed the developer to pay the balance compensation of Rs12.47 lakh with 9% interest to the homebuyer.
In an order, the NCDRC bench of justice AP Sahi (president) and Dr Sadhna Shanker (member) says, "...the Developer himself has admitted the default and has also complied with the directions issued from time to time on its own undertaking as is evident from the orders passed in the present complaint. It is thus evident that the Developer otherwise is liable to compensate the complainants as the payments which were extended by the complainants were utilised by the Developer for one purpose or the other regarding the projects floated by it. These payments were apart from any accrual of interest thereon were also for the benefit of the Developer and in such circumstances, compensation needs to be awarded together with interest thereon."
Referring to a judgement of the Supreme Court, the bench says it (the judgement) pins the liability of the developer only and in such circumstances, to that extent, the claim petition deserves to be allowed. "The compensation for default due to delay has been claimed to Rs41.57 lakh...From the order dated 20 October 2015 passed in this complaint, it is evident that compensation to the extent of Rs29.09 lakh has been paid through the demand drafts (by the Developer). This amount, therefore is to be deducted from Rs41.57 lakh, which comes to Rs12.47 lakh."
The case is related to UK-based Ram Sarup Kanda buying an apartment in a project developed by Parshavnath Developers on the land provided by the Chandigarh housing board. The Board contended that it had handed over the land to the developer for construction. However, Parshavnath Developers indicated that it was handed over unencumbered land, so the project could not be continued as planned.
In an order on 11 March 2013, NCDRC directed Parshavnath Developers to refund the amount with 9% interest. This was to be shared by the developer and the Chandigarh housing board in the ratio of 70:30.
However, the dispute between Parshavnath Developers and Chandigarh housing board reached the Supreme Court, which appointed an arbitrator. The arbitrator passed an order asking both to bear the liability towards residential unit buyers for a refund of advances (payment of sale price or part thereof), interest and compensation as awarded by any consumer fora or any court, in the ratio of 70:30, respectively.
Parshavnath Developers challenged NCDRC's 11 March 2013 order before the apex court. While dismissing the plea, the SC says, "We have carefully perused Clauses 9(c) and 9(d) of the agreement between the parties. In our view, Clause 9(d) pertains to a refund with interest if, for any reason, the Developer is not in a position to offer the flat to the buyers after the expiry of 36 months or an extended period. A reading of Clause 9(c) would show that the said clause also envisages a payment of compensation to the buyer at a particular rate. This clause would be applicable against the developers only if they are not in a position to offer (a) flat to the buyer after the expiry of 36 months or an extended period as stipulated under Clause 9(a) of the agreement. Therefore, in view of the above, we are of the considered opinion that the Commission (NCDRC) has not committed any mistake."
In the case of Mr Kanda, the hearing took place on several dates before NCDRC. In a hearing on 23 September 2015, the counsel for the home-buyer stated that Mr Kanda had received due payment from Chandigarh housing board, and the only amount due was compensation (from the developer) in terms of clause 9(c) of the flat-buyer's agreement.
During the next hearing on 20 October 2015, Parshavnath Developers handed over eight cheques for Rs78.42 lakh to the counsel of Mr Kanda as interest on Rs1.09 crore, the 70% liability of the developer. 
However, the counsel for Mr Kanda pointed out that the last post-dated cheque is dated 19 May 2016, and the homebuyer is entitled to interest on the deferment of the interest payment for almost eight months.
"We find substance in the submission. We, accordingly, direct that after accounting for the amount due to the complainants as compensation (Rs29.09 lakh), the developers shall pay interest on the amount of interest, which would remain unpaid on each date of post-dated cheque, from time to time till 19 May 2016 at 9% per annum," the bench says.
Seven cheques, issued till 19 March 2016, out of the eight given by Parshavnath Developers, were returned unpaid by the bank on the grounds of insufficient balance. During the hearing on 1 April 2016, the counsel for the developer handed over seven demand drafts to the counsel of Mr Kanda. 
The matter proceeded after that without any orders and adjournments were granted for the parties to complete their pleadings. The case remained pending during the pandemic. 
On 31 August 2022, NCDRC was informed that Mr Kanda had passed away and would be replaced by his wife, Saroj Devi, in the litigation. The bench accepted the submission. 
During the present hearing, the bench noted that Parshavnath Developers tendered a sum of Rs1.09 crore through a cheque dated 10 February 2015, which was the principal amount of 70% of the liability of the developer. The only dispute the bench says that needs consideration is regarding payment of compensation and interest.
NCDRC observed that out of the compensation of Rs41.47 lakh, the developer had paid Rs29.09 lakh to the home-buyer, leaving a balance of Rs12.47 lakh and interest. The bench then directed Parshavnath Developers to pay Rs12.47 lakh with 9% interest from 1 April 2016 within three months. 
(Consumer Case No237 of 2015  Date: 6 September 2023)
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