Case Title: M/S. Exact Developers & Promoters Pvt. Ltd Vs. Rajesh Sethi
Case Number: F.A. No. 07/2018
In a recent ruling by the National Consumer Disputes Redressal Commission, it was determined that M/S. Exact Developers & Promoters were liable for not providing adequate service. However, the state commission’s decision to award compensation for emotional distress was overturned since a single fault can’t warrant multiple compensations.
Here’s a quick rundown of the case:
The buyers had reserved a commercial unit from Exact Developers with the intent of operating a canteen for their sustenance. They had paid ₹29,67,187 to the developers, who had assured to turn over the property within three years. The agreement stated that if the developers failed to meet the deadline, the buyers could claim a refund with an 18% annual interest rate from the payment dates until realization. When the developers didn’t meet their commitment, the buyers asked for a refund with interest. Despite their request, the developers failed to comply, leading the buyers to file a complaint before the State Commission.
The developers, on the other hand, argued that the unit wasn’t booked with the purpose of running a canteen, and hence, the buyers weren’t “consumers” under the Act as it was a commercial transaction. They also claimed that the buyers had intentionally overlooked signing the agreement and were late in making payments. The developers contended that they had offered possession and the buyers failed to complete the formalities. They maintained that they had not failed in their services and asked for the complaint to be dismissed.
The Commission, after careful consideration, noted that the Supreme Court in Laxmi Engineering Works Vs. P.S.G. Industrial Institute (1995) had established that the ‘commercial purpose’ argument needs to be decided on a case-by-case basis. The developers hadn’t shown any proof that the buyers had booked the unit for commercial purposes. Therefore, the buyers were deemed ‘consumers’ under the Act and were entitled to relief.
The Commission also emphasized that the developers failed to hand over the possession within the agreed three years, despite the buyers paying ₹29,67,187 as per their plan. The developers’ claim of later offering possession didn’t hold true as the official possession date is when the Occupation Certificate is obtained.
However, drawing on the Supreme Court’s ruling in DLF Homes Panchkula Pvt. Ltd. Vs. D.S. Dhanda (2019), multiple compensations for a single default were ruled out as unjust. As a result, additional compensation for emotional distress couldn’t be upheld. The Supreme Court’s decision in Experion Developers Pvt. Ltd. Vs. Sushma Ashok Shiroor was also referred to, stating that a 9% simple interest compensation is fair and equitable.
In conclusion, the Commission partially agreed with the appeal and upheld the State Commission’s order, albeit with specific instructions. The developers were ordered to refund Rs. 29,67,187 with a 9% per annum interest rate and litigation costs of Rs. 33,000. However, the compensation for emotional distress was dismissed.
The ruling underscores the importance of honoring contractual agreements and the need for developers to show proof to support their claims. It also highlights that while consumers are entitled to compensation for defaults, multiple compensations for a single default are deemed unjust.
