Wednesday, 6 April 2016

CONSUMER FORUM

                                          CONSUMER FORUM


                                                       




Subject:
A claim for Builder’s failure to refund money to a Buyer for non-possession of a flat is also a Consumer dispute.

Backdrop:
Sometimes, Consumer for opine that a claim for refund of an amount paid to a Builder on cancellation of a flat’s booking is not a Consumer dispute but a monetary claim which can only be adjudicated by a Civil Court. This interpretation is not correct. When a Flat Purchaser seeks a refund due to delay in construction or failure to deliver possession, the claim has a direct nexus with deficiency in service, also, the failure to refund constitutes an unfair trade practice.

The Maharashtra State Commission has given a verdict holding a Builder liable to refund the amount on booking cancellation due to the flat’s non-allotment.

Nallepalli Chandramouli had booked a flat with Trimurti Developers & Builders. According to the agreement dated April 20, 2005 a flat with a built-up area of 1,100 sq ft was to be allotted in Palm Towers Co-operative Housing Society for Rs. 19.8 Lakh.

Chandramouli paid the entire amount but, the Builder did not give possession as the flat had been sold to a third party earlier. The Builder kept dragging the matter, seeking time to buy the flat again and hard over possession to Chandramouli. After nearly six-and-a-half years, the Builder admitted inability to give possession. As real estate prices had escalated in the intervening period, the Builder agreed to pay Chandramouli Rs. 30 lakh in three installments, towards a refund. A Memorandum of Understating (MoU) was executed on September 5, 2011 and the first installment of Rs.10 lakh was paid at that time. But, the two pending installments of Rs. 10 Lakh each, due on October 15, 2011 and December 25, 2011, were not paid despite persistent follow up and a Legal notice.

Ultimately, Chandramouli along with the Consumer Welfare Association filed a complaint before the Maharashtra State Commission on April 19, 2012 against Trimurti Developers & Builders and its partner Rajendra D Mahale.
The Commission issued a notice but the Builders did not appear before the Commission nor file their reply; so the matter proceeded to ex-parte. In a Judgement, the State Commission held that the Builder was liable to pay the amount according to the MoU. Holding the failure service, the Commission directed the Builder to refund the balance of Rs 20 Lakh with interest at 15% per annum from December 25, 2011 onwards till the date of its actual payment, to Chandramouli. The Builder was also ordered to pay Rs. 25,000 as costs.

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