Consumer commission orders Pune builder to hand over flat or refund Rs 32.87 lakh with 15% interest

PUNE: The Maharashtra State Consumer Disputes Redressal Commission has held in an important ruling that a builder cannot take a large sum from a buyer, leave work incomplete for years and then cite hurdles that were already known when the agreement was signed. It has directed Nandgude Patil Developers Pvt. Ltd. and its director Vilas Eknath Nandgude to hand over a flat in Pimple Nilakh or refund Rs 32.87 lakh with 15% annual interest.

The commission also ordered Rs 2 lakh for mental agony and inconvenience and Rs 50,000 towards litigation costs.

The complaint was filed in 2014 by Gautam Suresh Paranjape over Sulochana City Phase-I. The hearing was conducted by acting president Mukesh V. Sharma and member Poonam V. Maharshi.

Paranjape booked flat D-502 on June 16, 2011, under a registered agreement for Rs 41.24 lakh. He paid Rs 32.87 lakh, which includes a loan from LIC Housing Finance and Rs 9.5 lakh from his father's provident fund savings.

Despite having paid about 80% of the price, he alleges that construction remained incomplete. Meanwhile, he kept paying a monthly EMI of Rs 26,162 and lived in rented accommodation.

The developer said work was stalled by flood-line restrictions near the Mula river under a government notification of October 25, 2010. It also said other buyers had withheld payments.

The commission found, however, that the developer never produced the notification despite promising to do so. More significantly, the restrictions and clearance problems it cited predated the June 2011 agreement.

The commission observed, "A builder who enters into an agreement with full knowledge of a difficulty cannot later call that same difficulty an unforeseen event beyond his control."

According to the commission, failing to state a possession date violates the Maharashtra Ownership of Flats Act. Relying on the Supreme Court's Fortune Infrastructure judgment, it held that three years from registration of the agreement, that is, until June 16, 2014, was a reasonable period to complete the work.

The commission said, "When no date of possession is fixed in the agreement, the buyer cannot be made to wait forever."

It also criticised the imbalance in the agreement: the buyer was charged 18% interest on late payment, while the developer had no fixed deadline for delivery.

The builder's claim that a further Rs 2.18 lakh was due cannot excuse years of delay, the commission said, especially when nearly 80% of the price had already been paid.

Holding the developer and its director jointly liable for deficiency in service and unfair trade practice, the commission directed that possession be given within two months of receiving the order. Interest of 9% a year on Rs 32.87 lakh must also be paid from April 23, 2014, until delivery.

Alternatively, Paranjape may opt for a refund of Rs 32.87 lakh with 15% annual interest from the date of each payment until the amount is recovered.

The commission awarded a total of Rs 2.5 lakh as compensation and costs, but rejected a separate claim for rent to avoid double compensation. The builder did not respond despite repeated attempts.