Case title:
Veena Khanna Vs Ansal Properties & Industries Ltd
Date of Order:
9 July, 2007
Bench:
HONBLE MR. JUSTICE M.B. SHAH, PRESIDENT,
MRS. RAJYALAKSHMI RAO, MEMBER
Parties:
Petitioner: Mrs. Veena Khanna
Respondent: M/s. Ansal Properties & Industries Ltd., M/s. Adharshila Towers (Pvt.) Ltd. & M/s. Ansal Buildwell Ltd.
SUBJECT:
Veena Khanna vs Ansal Properties & Industries Ltd is a case heard by the National Consumer Disputes Redressal Commission (NCDRC) in 2007. The case deals with the issue of delay in the completion of a property project and the liability of the builder for compensation under the Consumer Protection Act, 2019.
IMPORTANT PROVISIONS:
The Consumer Protection Act of 1986:
- Section 2(g)- Deficiency is defined as any flaw, imperfection, shortcoming, or defect in the feature, quality, amount, nature, worth, authenticity, capacity, or standard that must be maintained and regulated in accordance with the laws and statutes in effect or any agreement/contract claimed by the seller with regard to the products and goods.
According to the Consumer Protection Act of 1986, the party who is offended by the developer's failure to deliver the property on time may register a complaint with the forum having jurisdiction over the property or the developer's office.
Depending on the claims or compensation, the venue to which the disagreement or complaint is to be addressed will change. Consumers may only file complaints under the terms of the Consumer Protection Act if they point out an unfair business conduct or any flaw in products or services.
OVERVIEW:
- On 9.7.1996, the complainant made an offer to buy a flat for a total of Rs. 23,33,344/-, and the parties came to an agreement to this effect. Following that, the complainant made payments totaling Rs. 15,12,000 on various dates up until 16.1.1998 before ceasing to make payments on the remaining balance because the construction project had not advanced. The Complainant claims that by letter dated 9.1.1998, Opposite Party No. 1 agreed to deliver possession of the flat by 1.6.1999. But, the apartment was not built and was not delivered.
- The Complainant wanted a refund of the deposit amount plus interest at a rate of 18% per annum for this deficiency of service on the side of the Opposing Parties, but the Opposing Party refused to comply. As a result, complaint No. 251/2000 was submitted to the Delhi State Commission on September 13, 2000.
- The Delhi State Commission accepted the complaint and ordered the opposing party to return Rs. 15 lakhs with interest accruing at a rate of 13% per year from the date the last installment was deposited until the date of payment. The complainant arranged for the money to be borrowed at the stated rate, so interest at the rate of 13% was permitted.
- The complainant filed an appeal against that decision in the hopes that the opposite parties (builders) would be ordered to deliver the apartment's possession and that she would get appropriate compensation to enable her to buy a flat with the agreed-upon size.
- The complainant must receive compensation for the delay in the flat's construction and the failure to assign it to her. It is essentially impossible for a retired government employee to buy a flat at the current price due to the delays in construction and decision-making.
- Thus, there are two options.
(a) One option is to provide adequate compensation for the delay and order the opposing parties to give the complainant possession of a different flat close to the location where the flat was assigned;
(b) another option is to provide adequate compensation to allow the complainant to buy a new flat with the same area in the same or a nearby locality.
ISSUES RAISED:
The Consumer Protection Act of 1986:
Passed in order to defend consumers' interests, according to the preamble-
It accomplishes the entire goal of enabling the average person to obtain goods and services that live up to the quality claims made by the seller or provider.
The consumer has the right to seek compensation for any deficiencies by contacting the appropriate state or federal body. It shields the average person against wrongdoing by service providers and retailers.
The consumer is given the opportunity to make a complaint against unfair commercial practices, restrictive trade practices defective goods, and subpar service.s
ARGUMENTS ADVANCED BY THE APPELLANT:
- The appellant was prepared and willing to take possession of the apartment, but the builder's construction of the apartments took an unusually long time.
- It is further argued that the plaintiff could not wait years to take a risk because they were government employees. She was thus compelled to register a complaint in order to request a refund of the money along with interest and appropriate compensation.
ARGUMENTS ADVANCED BY THE RESPONDENT:
- It is false and is refuted that Respondents have provided subpar service. The flat's construction has already been finished, and finishing tasks have been started and are moving along quickly, which is the correct state. The apartment will presumably be finished soon in all respects, at which point the complainant will receive possession.
- The Complainant is not permitted to unilaterally and arbitrarily withdraw from the parties' completed contract or demand a return of any money already paid to the Respondents or interest thereon.
- Due to a construction agreement between the parties, the Respondents have already made a sizable investment in the building of the apartment, and it is now too late for the Complainant to withdraw from the stated construction arrangements. That the complainant has incurred any injury as claimed or at all is incorrect and is denied.
- The Complainant was not subjected to any mental anguish, mental torture, or mental harassment at the hands of the Respondents, it is further disputed.
JUDGEMENT ANALYSIS:
- Due to the growth in the price of real estate, it appears that the builder took unfair advantage of the State Commission's previously mentioned order, which provided the opposite parties with a preferred option, and refunded the complainant's deposit with interest as instructed.
- Just because there was no proper compensation granted and there was a choice to either refund the money or hand over possession of the apartment did the opposing parties take advantage.
- In light of the builder's (Opposite Parties) aforementioned stance, National commission observed that the State Commission could have issued a specific order instructing the builder to deliver ownership of the unit as soon as it is finished and should have given the builder fair compensation order for the construction delay to the aggrieved party. It should not have offered any options so that the builder might refuse to transfer ownership of the property if the price increases.
- In courts view, it is true that the Complainant has prayed for the refund of the amount, but this complaint remained pending before the State Commission for more than five years It is well known that there was a significant increase in the market prices of immovable property during that time.
- Also, it is important to keep in mind that Consumer Fora will conduct inquisitorial proceedings rather than being subject to adversary system procedure (inquiry). Therefore, in inquisitorial proceedings, the State Commission ought to have looked into the substance of the matter and at the opposition's defense, wherein there is a specific admission that as soon as the flat would be ready after construction, the possession would be delivered, instead of just the complaint made by the complainant.
- In this case, a direction for the surrender of the flat's possession should have been given, and for any delays in doing so, fair compensation should have been given.
- This Appeal is permitted in light of the circumstances. The opposite parties are required to give the complainant Rs. 7,50,000 as compensation.
- However, the builder is free to offer the complainant an alternative flat of the agreed-upon size and price in the same neighborhood or close by if they feel that the compensation of Rs. 7,50,000/- (Rupees seven lakhs and fifty thousand) is too high or exorbitant.
- Lucknow Development Authority vs M.K. Gupta (1994): In this instance, the Supreme Court ruled that a builder or developer is responsible for seeing that the project is finished on time and is liable for any delays.
CONCLUSION:
- A State Commission decision was overturned by the National Commission. The National Commission noted that a refund of money with interest charged at the bank rate does not necessarily mean that the complainant has received enough compensation for the builder's failure to deliver ownership of the unit and delay in finishing it. It was mentioned that it is essentially impossible for a consumer to buy a flat at market price because of the delays in building and decision-making.
- According to the ruling, the State Commission was required to order the builder to give the customer ownership of the same apartment or an apartment of an equivalent size together with compensation for the delivery delay.
- In any case, sufficient compensation ought to have been given to allow the complaint to buy a new flat of the same size at the going rate. Interest payments by themselves are insufficient payment.
- Furthermore, while it is true that the State Commission ordered a refund of the amount deposited with interest that the complainant was paying to the bank, this does not imply that the complainant is fairly compensated for the builder's delayed completion of the flat and failure to deliver the flat's possession. For a retired government employee to buy a flat at the current market price, it is essentially impossible due to the delays in building and decision-making.
- In such cases, the State Commission was required to order the opposing parties to give the complainant ownership of the same apartment or a flat of comparable size together with compensation for the delivery delay. Instead, under any circumstances, sufficient compensation should have been provided to allow the complainant to buy a new flat of the same size at the going rate on the market. Since the complainant took out the loan and was required to pay it back to the bank, the payment of interest is not in any way a form of compensation. This indicates that the assailed judgment directs a return of the sum paid by the complainant.
- The Supreme Court held in Ghaziabad Development Authority v. Balbir Singh (2004) 4 SCC 65 regarding Compensation that under consumer protection laws is required to recompense for loss or injury suffered by consumers; as a result, the quantum of compensation to be awarded would necessarily have to be determined based on the facts and circumstances of each case.
