Order Name: M/S. Omaxe Chandigarh Extension Developers Private Limited & Anr. Vs. Lakhbir Singh
Case No.: F.A. No. 233/2021
The National Consumer Disputes Redressal Commission, led by Mr. Subhash Chandra and Dr. Sadhna Shanker, concluded that interest on deposited amounts should act as both restitution and compensation, starting from the deposit date.
Case Background
The complainant booked a plot in the Omaxe Chandigarh Extension project for ₹71,62,295.70. The developer promised plot delivery within 24 months. However, they failed to meet this timeline, neither completing the development nor securing necessary permissions. The complainant, following a time-linked payment plan, paid ₹59,38,800 and was moved to a smaller plot as the original was unavailable. No written agreement was signed, yet the developer attempted to demand more money. Frustrated, the complainant sought a refund due to undelivered possession and filed a complaint with the State Commission in Chandigarh. The State Commission ruled in favor of the complainant, ordering the developer to refund ₹50,89,642 with 12% interest, ₹1,50,000 as compensation, and ₹35,000 for litigation costs. The developer appealed to the National Commission.
Developer’s Argument
The developer contended that they had returned the principal amount and disputed the 12% interest rate as excessive. They also argued against multiple compensations, particularly the ₹1.85 lakh compensation awarded by the State Commission.
National Commission’s Observations
The main issue was the service deficiency by the developer. The Commission noted the developer’s failure to justify the delay, highlighting a clear service deficiency. The Supreme Court case, Experion Developers Pvt. Ltd. Vs. Sushma Ashok Shiroor, set a precedent that interest on deposits should be both restitutionary and compensatory, effective from the deposit date. The Commission deemed a 9% interest rate reasonable but found the ₹1,85,000 compensation for mental anguish unsustainable.
Conclusion
The National Commission adjusted the State Commission’s order, directing the developer to pay 9% interest on ₹50,89,642, while nullifying the ₹1,85,000 compensation for mental distress.
Takeaway
This judgment emphasizes the importance of upholding promises in real estate agreements and the role of interest as both compensation and restitution when delays occur. It also clarifies that compensation for mental distress should be justifiable and proportionate.
