Failure to deliver possession within a reasonable time is unfair: NCDRC

The National Consumer Disputes Redressal Commission, chaired by Mr. Subhash Chandra and Dr. Sadhna Shanker, has held that a buyer cannot be made to wait indefinitely to obtain possession and that failure to deliver the goods within a reasonable time is unfair and amounts to a defect in service.

Brief facts of the case

The complainant booked a plot of 400 square meters from the Punjab Town Planning and Development Authority/Developer and paid Rs. 2,40,000 as deposit, and was declared winner in a lucky draw . After receiving a letter of intent, she paid Rs. 3,60,000, with the promise that possession would be given after development work or within 18 months. However, no development work had been carried out by the developer at the time of filing the complaint. The complainant received an allotment letter for a specific plot, paid the required amounts and requested refund of excess payments and rebate, as per the allotment conditions. Despite multiple requests, the developer was slow to respond, ultimately repaying only part of the excess amount, without paying interest. The plaintiff was also faced with a re-allocation of different land, which she challenged as illegal. The developer acknowledged delays and incomplete work but still failed to hand over ownership of the land, leading to allegations of poor service and unfair trading practices. Feeling aggrieved, the complainant filed a complaint with the Punjab State Commission, which upheld his complaint. He directed the promoter to refund the amount deposited by the complainant of Rs.26,56,500 with interest at 12% per annum, grant compensation of Rs.3,00,000 for causing and pay Rs.50,000 as litigation costs. Dissatisfied, the developer filed an appeal with the National Commission.

Developer Disputes

The developer argued that the complainant is not considered a consumer within the meaning of the law and the State Commission has no jurisdiction. They also claimed that the complainant was not entitled to interest on the excess amount, that the case involved complex facts not amenable to summary proceedings and that there was no deficiency in their services. They therefore requested that the complaint be dismissed.

Observations of the National Commission

The National Commission observed that the question was whether the failure of the developer to deliver the property within the agreed time frame amounted to deficiency in service. Based on the evidence, the complainant applied for residential land, making her a consumer under the Consumer Protection Act, and the consumer forum had jurisdiction to hear the matter. The developer’s claim that the land had been purchased at auction for commercial purposes was rejected, as no auction had taken place and the developer provided no evidence. The Commission found that the developer reallocated a different plot of land without informing or obtaining the consent of the complainant, which was illegal. Possession was supposed to be handed over within 18 months, but the developer failed to complete the development works and provide the necessary completion certificate, which constitutes a deficiency in service and an unfair trade practice. We relied on previous cases such as Vision India Realtors Pvt. against Sanjeev Malhotra And Calcutta West International City Pvt. against Devasis Rudrawhich established that failure to deliver possession within a reasonable time is unjust. Regarding the excess payment, the developer repaid Rs. 2,48,175, and as per the conditions of award, no interest was payable on the amount advanced. However, the complainant was entitled to a refund of the deposited amount as well as compensation at an interest rate of 9%, citing Experion Developers Pvt. Ltd v Sushma Ashok Shiroor.

The National Commission modified the order of the State Commission and directed the developer to refund the amount deposited with 9% interest, failing which the interest rate would increase to 12%.

Case title: Punjab Planning and Urban Development Authority (PUDA) Vs. Surekha Singla

File number: FA No. 131/2021

Click here to read/download the order