The Maharashtra State Consumer Disputes Redressal Commission has directed the Bombay Dyeing and Manufacturing Company Ltd and Bombay Realty to jointly and severally refund Rs 1.95 crore to two of the homebuyers from Jamshedpur for the delay in handing over a residential apartment at Mumbai. The commission further directed to pay Rs 1.5 lakh towards compensation and litigation costs and was held guilty of deficiency in service and unfair trade practices.
The order was issued after the commission ruled that a real estate developer could not continue holding on to the payments of a homebuyer until the developer had already set out an unreasonable time to deliver the property. The commission also added that holding on to a significant share of the payment without delivering the deal would mean enrichment without cause.
The sale was for 1,941 sq.ft. apartment with two car parks in Dadar East Mumbai on a total consideration of Rs.9.94 crore. The two Jamshedpur residents bought the apartment in August-October 2014 and were given an allotment letter under the 30:70 payment schedule, their complaint added. They paid Rs 1.95 crore including Rs.25 lakh booking amount.
As per the homebuyers, the homebuilders had adhered to the installment plan. But, construction work was put on hold for over a year even though everything was under contract and payments were made.
Dispute Over Payment Schedule and Flat Cancellation
The complainants claimed that they later had discussions to change the payment plan from the 30:70 scheme as originally agreed to a construction-linked schedule. But the developers purportedly kept demanding payments based on the previous arrangement.
But in September 2016, the homebuyers were issued a pre-termination notice that threatened to cancel the allotment and forfeit the amount paid. As a result, the homebuyers argued that the demands for payments were not justified, and mostly since the rate of construction was slow.
After that, buyers rescinded the booking in October 2016 and demanded a refund of the entire amount of 1.95 crore paid to the developers.
But rather than initiate a refund, the developers allegedly persisted with making demands for payment and contacting the complainants on the transaction.
Later, the purchasers filed criminal proceedings against the developers. These proceedings were ultimately quashed by the Jharkhand High Court and the Supreme Court but left the complainants at liberty to seek civil proceedings for recovery of their money.
Consumer Commission Rejects Developers' Limitation Argument
The developers had earlier filed a technical objection before the Maharashtra Consumer Commission on the ground that the complaint was not maintainable as the dispute had arisen in 2016 and so was time barred.
The commission dismissed the reasoning by finding that the defendants issued a new demand for payment in January 2022. The commission found the January 2022 demand for payment explicitly admitted that the transaction was still extant and constituted a continuing cause of action.
The bench of presiding officer Poonam Maharshi and member Nisha Amol Chavhan noted that failure to deliver possession of buyers' money amounted to a continuing wrong. It also held that the complaint had been made within the prescribed period having regard to the end of the previous bona fide proceedings and the continuing demand made by the developers.
The panel used Supreme Court judgments to argue the developers should not be able to hold onto billions of dollars paid by homebuyers but not provide the residential units.
Developers Held Responsible for Deficiency in Service
The commission in its order had observed that refusing to give possession for a reasonable period or obstructing the progress of a project while holding onto buyers' monies amounts to deficiency in service and unfair trade practice.
It also noted that property buyers have invested their huge amounts of money and expect the developer to deliver possession within the stipulated period. Developers, it added, must honour their contractual commitments and cannot keep the money paid to them forever when the transaction has not been consummated.
The commission has directed the jointly and severally the principal amount of Rs 1.95 crore to the complainants Bombay Dyeing and Manufacturing Company Ltd and Bombay Realty. The developers are also to pay Rs 1.5 lakh due to compensation and litigation expenses.
This judgment underscores real estate developers' liability in transactions for delayed possession, with creditors' plea to forcibly recover exorbitant demand payable by consumers, and appeals for refund. It also strengthened consumers' plea to get consumer remedies when their developers failed to deliver its promises while still holding large sums of money.
