Order Name: Greater Mohali Area Development Authority (GMADA) Vs. Sunil Kumar Dahiya
Case No.: F.A. No. 490/2020
The National Consumer Disputes Redressal Commission, chaired by Mr. Subhash Chandra and Dr. Sadhna Shanker, has ruled that it is unreasonable to make a buyer wait for possession after a 7-year delay, justifying a refund with interest.
Summary of the Case
The Greater Mohali Area Development Authority (GMADA), a government entity in Punjab, launched the Purab Premium Apartment project, offering 4,500 flats. The complainant participated in a draw and was allotted a Type II residential unit. After depositing 95% of the flat’s cost and receiving a Letter of Intent, the complainant was asked to pay the remaining 5% upon possession. However, the complainant chose to request a refund of the deposited ₹59,75,752. The developer responded by offering only ₹53,31,245, citing a revised law. Unsatisfied, the complainant approached the State Commission of Punjab for the withheld amount of ₹6,27,510, 12% interest per annum, compensation for mental distress, and legal expenses. The State Commission ruled in favor of the complainant, directing the developer to refund the deducted amount, pay 8% interest on the entire deposited amount until the partial refund, continue paying 8% interest on the withheld amount until fully refunded, and cover ₹20,000 in litigation costs. The developer then appealed to the National Commission.
Developer’s Arguments
The developer contended that the State Commission did not fully consider the facts or identify any service deficiency. They argued that refund requests should occur after the Letter of Intent but before the Allotment Letter, as per the terms. The complainant sought a refund two months post-Allotment Letter, unlike other allottees who received refunds with 8% interest after 36 months. The developer argued that, as per the Indian Contract Act, time wasn’t crucial to the contract, and the State Commission wrongly identified a service deficiency. The developer also claimed the complainant was negligent for not taking possession within 30 days of the Allotment Letter and that all actions were within contractual terms. They further argued for the right to forfeit 10% of the consideration with interest and penalties and deemed the 8% compounded interest excessive, citing various Supreme Court decisions. They claimed the complaint was an afterthought, filed 131 days post-refund, warranting dismissal.
Observations by the National Commission
The National Commission found the case similar to a prior judgment in Chief Administrator, GMADA & Anr. Vs. Sandeep Bansal & Anr. (2021), which dealt with similar refund and interest rate issues. It was noted that if development work wasn’t completed within a specified time, the complainant could withdraw and receive a full refund with 8% compound interest. Additionally, the Supreme Court’s decision in Kolkata West International City Pvt. Ltd. vs. Devasis Rudra supported that a seven-year delay made it unreasonable for a buyer to wait, thus justifying a refund with interest. Consequently, the National Commission instructed the developer to refund the outstanding amount of ₹6,27,510 with 9% interest from the date of deduction until realization, pay 9% interest on the previously refunded ₹53,31,245 from the deposit date until the refund, and provide ₹20,000 for litigation expenses.
Takeaway
This judgment emphasizes the importance of timely possession in real estate projects. Developers must adhere to agreed timelines, and buyers are entitled to refunds with interest if delays are unreasonable.
