Buyer Wins Case Against Godrej Projects Development Ltd for Delayed Possession

Rajiv Singhal Vs Godrej Projects Development Ltd. & Anr (NCDRC Delhi)

Buying a property is often the biggest investment that most people make in their lives. It is an exciting time filled with the promise of a better future but also a time fraught with danger. Unfortunately, for many buyers, buying a property is not without its perils, and one of the most significant risks is delayed possession or no possession at all. This blog will explore a recent case exposing a property developer’s failure to deliver possession of a unit as per the Apartment Buyers Agreement (ABA).

Rajiv Singhal, a homebuyer, filed a complaint against Godrej Project Development Ltd. and another for failing to deliver possession of his unit as per the terms and conditions of the Apartment Buyers Agreement (ABA). Despite paying a sum of Rs. 51,26,000/- and the unit allotted to him in August 2014, he had not received possession even after the stipulated period of 41 months with a grace period of 6 months. The buyer requested a refund of the entire amount paid, including interest, and compensation of Rs. 10,00,000/- for mental distress, harassment, discomfort, and undue hardship caused to the buyer, as well as Rs. 1,00,000/- for legal expenses.

The Unfulfilled Promise

Godrej Projects Development Ltd. failed to provide a 24-metre road connecting the project, depicted in the advertisements and buyer agreements. This road was a key selling point in the company’s advertisements and buyer agreements, and many buyers made their investment decisions based on this promise. Unfortunately, when the project was inspected, it was discovered that the road was absent, and the distance to the nearest public way was over 1.5 kilometers through slums.

This lack of road connectivity was not the only issue against the builder. The project was also found to lack adequate utilities like water, sewage, and electricity, which were being supplied through tankers and generators. Additionally, the complainant expressed concerns about fire safety and environmental approvals, claiming that these were obtained based on an approved site plan that showed entry and exit on a 24-meter wide road that no longer existed, rendering the approvals invalid.

It’s important to note that while Godrej Projects Development Ltd. promised the road connectivity, the responsibility of constructing the 24-metre-wide road connecting the housing project to the Dwarka Expressway was that of the state authorities. This lack of clarity may have contributed to the failure to deliver the promised road connectivity.

The Verdict

The Consumer Court ruled in favor of the homebuyer, stating that uncertainty over the construction of a road and deficiency in services had disadvantaged the project’s allottees. The Commission found that the builder had violated the terms of the agreement, and the terms were arbitrary and one-sided. The Commission also found that the builder had sent a possession notice, claiming to have received the Occupancy certificate and raised a demand for the balance payment, even though the unit was not in accordance with the plan.

The builder had also made changes to the site plan without the buyer’s consent, which resulted in the municipal corporation issuing a letter stating that the changes were an infringement of National building code by-laws. Accordingly, the Commission ordered the builder to refund the total amount of Rs. 51,36,338/- paid by the buyer along with interest @ 9% per annum from the date of each payment till the date of refund. In addition, the developer was directed to pay Rs. 25,000 as a litigation cost to the complainant within three months from the order date.

Conclusion

To summarize, the real estate industry is a complex and dynamic sector, and buying a property is a significant decision. Homebuyers put their hard-earned money and trust in the builder, expecting timely possession of their dream home. However, not all builders deliver on their promises, leading to buyer disputes and financial losses.

Real estate developers must deliver projects on time and in the promised condition. If they fail to do so, they are liable for deficiency of service and can be held accountable by the consumer court.

FULL TEXT OF THE JUDGMENT/ORDER OF NATIONAL CONSUMER DISPUTES REDRESSAL COMMISSION NEW DELHI

1. The present Consumer Complaint (CC) under Section 21 has been filed by the Complainant against the OPs for failure to hand over the possession of the unit No C0701, Block C, in Godrej Summit located at Sector 104 Gurgaon, Haryana ,as per terms & conditions envisaged under Apartment Buyers Agreement (ABA) dated 26.10.2015.: It is inter-alia prayed in the complaint to direct the OPs to: –

i. Refund total amount paid by the Complainant along with interest @18% p.a. from date of payment.

ii. Pay compensation of Rs. 10,00,000/- towards mental agony, harassment, discomfort and undue hardships caused to Complainant.

iii. Pay Rs.1,00,000/- towards litigation cost.

2. Notice was issued to OPs to file their written statement within 30 days. An I.A. No.11690/2018 filed by the Complainant seeking amendment of the complaint and to bring on record certain additional facts which had happened subsequent to filing of the complaint, was allowed vide order dated 22.02.2019. OP-2 in their written statement has authorized OP-1 to act on their behalf, same was accepted by this Commission vide order dated 22.01.2020. An I.A No.7777/2021 was filed by the OP-1, seeking deferment of hearing of the present complaint due to pendency of writ petition No.6187 of 2018 before Hon’ble High Court of Punjab and Haryana for acquiring the requisite land and provide 24 metre road connecting highway, however the same was rejected by this Commission as the allotment was already cancelled on 09.12.2017, and the Complainant is seeking refund of his money.

3. It is averred/stated in the Complaint that: –

i. Complainant booked a unit in the said project of OPs on 05.03.2014 by paying Rs.9,90,000/- as booking amount and after 5 months paid a total sum of Rs.51,26,000/- after which the said unit was allotted to Complainant on 13.08.2014. After a period of more than one and a half year Apartment Buyers Agreement(ABA) was executed between Complainant and OPs on 26.10.2015, wherein the said unit was to be given for possession after 41 months with a grace period of 6 months .

ii. The Complainant aggrieved by the actions of OPs for providing defective possession had filed a CC 2494 of 2017 before this Commission and the Commission allowed the complainant to withdraw the complaint and file fresh complaint, if the OP fails to construct 24m wide proposed road within the stipulated period of 41 months from the date of allotment letter. As the OP has not constructed the said road furthermore, when the Complainant asked for the refund of the entire amount, OPs cancelled the booking of the said unit vide termination letter dated 09.12.2017. Hence the present complaint was filed.

iii. This Hon’ble Commission has issued pre-admission notice dated 12.02.2018, to OPs for not creating any third party rights on the said flat, however OPs in violation of above notice sent a notice to Complainant regarding cancellation of the allotted flat.

iv. The terms and conditions of the agreement were arbitrary and one sided, and the OPs used their dominant position and made Complainant sign the one sided agreement on the threat of forfeiture of the earnest money paid by him. OPs have made the changes in the site plan without taking the consent of the Complainant and have breached the terms of the agreement, and due to such change/modification, municipal corporation issued a letter dated 21.01.2013 stating that such changes are an infringement of National building code by-laws.

v. On 28.06.20 17, OPs sent the possession notice claiming to have received the Occupancy certificate and raised a demand of balance payment by the Complainant. After site visit, it was found that the unit was not in accordance with the plan i.e. 24m road connecting to public was not existing, safety measure as promised were not there, proximity from Dwarka Expressway etc. were not available as promised by the OPs. Hence, Complainant was constrained to withhold the payment of final installment.

vi. OP vide letter dated 09.12.2017 cancelled the allotment of the said unit and forfeited the earnest money amounting to Rs.46,94,957/- and paid only the balance. Rs.4,41,506/- arbitrarily citing various reasons of delay payments and other charges deduction as per the policy.

vii. It is alleged in the complaint that the act and omission of the OPs falls under the definition of unfair trade practices and restrictive trade practices within the ambit of Consumer Protection Act 1986 for which buyers should be adequately compensated.

4. The OPs in their written statement/reply while denying the averments/ allegations made by the complainant, have stated that:-

i. This commission lacks pecuniary jurisdiction in the present matter, the ambit of jurisdiction of Commission is strictly limited to examine the question of deficiency in service and not to go behind the agreement or terms of the agreement, Complainant is not consumer in the present case as he has bought the flat for investment purpose, as per clause 19 of ABA the matter should first be settled through arbitration and hence present complaint is not maintainable.

ii. There is no deficiency of service on part of OPs as the construction of 24 metre road connecting highway and drinking water was to be done by the state authorities vide letter of intent 08.12.2011 issued by Government authorities against the application for construction by the OPs, the Complainant in the present case in order to malafidely harass the OPs has intentionally not made HUDA and other Government authorities as Opposite parties.

iii. OPs have been in constant touch with Government authorities and has also written letter to Executive Engineer HUDA for providing update on the issue vide letter dated 20.03.2018 and also lodged a written complaint with SHO Rajendra park, Gurgaon.

iv. OPs have also filed a Writ petition bearing No.6187 of 2018 before Hon’ble High court of Punjab and Chandigarh seeking direction of court to the concerned Government authorities to develop and construct the said 24 metre road.

v. OP completed the construction of the said unit and after obtaining occupancy certificate on 20.06.20 17, offered possession to the Complainant on 28.06.20 17 subject to making balance payment and completing the formalities. The Complainant never discharged their payment obligations as per agreed payment schedule and refused to pay balance 75% of the remaining amount, despite repeated reminders and due to chronic defaults on the part of Complainant, allotment was cancelled on 09.12.2017 with consequences as per agreed terms of the contract.

5. Complainant in his rejoinder while reiterating the contentions of the complaint, denied allegations of OPs raised in their written statement.

6. Evidence by way of an Affidavit was filed by the complainant and OP broadly on the lines of averments made in their respective complaint/reply. Written Synopsis was also filed by the Complainant and OP(s). The details of the flats allotted to the Complainant/other relevant details of the case are given in the Table below.:-

7. Heard counsels of both sides. The learned counsel for the complainant while reiterating facts of the complaint cited various Hon’ble Supreme court judgements to support their contentions and submitted that the undue delay in handing over the possession and the dilapidated state of the unit caused mental agony to the Complainant and OPs are liable for it. The learned counsel for the OPs while reiterating the contentions of their written statement, submitted that, the drinking water and sewage treatment etc., utilities which Complainant is concerned about are getting delayed due to Government authorities and OPs are not liable for it, and are not deficient in providing services.

8. The contention of OPs that this Commission lacks pecuniary jurisdiction is not valid. Under Section 21 of the Act, Commission has the jurisdiction where value of goods and services and compensation, if any, claimed exceeds Rupees one crore. The contention that complainant is not a consumer as he has purchased the unit for commercial purpose is also rejected as no such evidence has been adduced by the OPs in this regard.

9. The main grievance against the OPs is regarding inconsistences/deficiencies in the construction of the project like absence of 24 m wide road connecting to public way at a claimed distance of 500m from Dwarka Expressway, which was found to be more than 1.5 km via slums, and inadequate utilities like water by tankers, sewage and electricity by generators. Further, the Complainant had raised concern regarding fire safety and environmental approvals, alleging that the same were obtained on the basis of approved site plan showing entry and exit on 24 m road, which was no longer the case, therefore invalidating them. The OPs falsely declared in their compliance report to environmental clearance condition that entry and exists are bell mouthed shaped and open to a 24 m wide road, hence traffic congestion is not anticipated. The OPs have not informed and sought consent of the allottees for significant change to the sanctioned plans as per Clause 6.2 of the agreement. The change made by the OPs, the revised on-ground site plan condition i.e. access via narrow revenue raasta is an infringement of National Building Code, which states that the width of the main street on which the building abuts shall not be less than 12m and one end of the street shall join another street not less than 12m in width.

10. The case of the OPs is that they are not responsible for the construction of any development outside its As per Sectoral Plan dated 08.12.2011 for Sector 104, Gurgaon, prepared by Government Authorities, 24m sub-arterial road connecting Dwarka Expressway and land reserved for development and construction of the same has been depicted. The said 24m road connecting sector 104 Gurgaon/said project with Dwarka Expressway was also projected in the later Development Plans for the year 2025 as well as the Development Plan for 2031. Subsequently, even the zoning of the project was approved on 08.12.2011, pursuant thereto the building plan in April, 2012, whereby the entry and exit was approved on the 24 m road to be built by the concerned state authorities. Hence, the OPs claim not to have made any misrepresentation to the complainant at any time. The responsibility to construct the 24 m road falling outside the project land and connect it to the Dwarka Expressway was always of the State Authorities. OP-1 was only accountable to pay for the proportionate cost towards the said acquisition and construction, (with respect to 24m road falling outside the project land) as and when to be demanded by concerned authority. It is HUDA and other Government authorities who are actually responsible for the non-construction of the 24m wide external road falling outside the project area. The OPs were only required to construct the 24m road falling within the project site, i.e., the licensed area/project land at its own cost and transfer the same to the Government free of cost. The OPs were not required to acquire and construct the 24 m road falling in the public land outside the project land. The OP being a consumer centric organization, and in order to provide access to its customers, have been time and again making representation to the authorities showing its concern with regard to the non-construction of 24m wide road outside the project area. Due to continuous inaction on the part of the Government, OPs were compelled to file a writ petition no. 6187 of 2018 before the Hon’ble High Court of Punjab & Haryana seeking directions to the concerned authorities to develop and construct the aforesaid 24m road falling outside the project land, which is pending adjudication. Hence, the absence of 24 m inter-sectoral road falling the outside project area is not due to the fault of the OPs, as such there is no deficiency of service qua OPs. OPs have obtained the OC from the authorities which can be obtained only after complying with each and every pre­requisite and has been issued by concerned authorities after inspecting the project.

11. Careful consideration of the pleas of complainant and OPs regarding responsibility for construction of 24m wide road outside project area and relevant documents in this regard show that no doubt the responsibility for land acquisition and construction of that road lies with the state authorities, OPs have admitted that they are accountable to pay for the proportionate cost towards the said acquisition and construction. No doubt, the said issue is pending before the Hon’ble High Court of Punjab & Haryana for adjudication, the way proposed 24 m road outside the project area leading to the Dwarka Expressway, which was a key feature of the project, was portrayed in the advertisements/brochure of the OPs and the Buyers’ Agreements, it was certainly an important factor for the prospective purchasers to book the units in the said project believing that such a connectivity would exist when the project is completed. On account of uncertainty about the construction of this project as well as the possible timeframe even if the road gets constructed finally, has certainly put the allottees of the project at a disadvantage. As regards deficiencies with respect to regular water supply, electricity supply and sewerage treatment plant, a perusal of written statement/reply of the OPs show that grievances of the complainant in this regard are genuine and such utilities are being presently provided to the allottees on adhoc basis only till the concerned state authorities make permanent arrangements for provision of such utilities on regular basis by laying down the proper infrastructure for the same. Hence, in view of the foregoing observations with respect to non-provision of 24 m wide road outside the project area as well as deficiency in provision of other utilities on regular basis till the committed time-frame of offer of possession, the complainant was justified in seeking refund of their deposits and action of OPs in cancellation of the allotment with consequence of forfeiture of the earnest money deposited of Rs.46,94,957/- is not correct. It was conceded by the counsel for the OPs during the hearing that even the forfeiture amount has been more than the required as per relevant clause of the agreement.

12. For the reasons stated hereinabove, and after giving a thoughtful consideration to the entire facts and circumstances of the case, various pleas raised by the learned Counsel for the Parties, the Consumer Complaint is allowed/disposed off with the following directions/reliefs: –

i. The OPs shall refund the entire principal amount of Rs.51,36,338/- (Rupees fifty one lakh thirty six thousand four hundred sixty thee only) to the complainant, alongwith compensation in the form of simple interest @ 9% per annum from the date of each payment till the date of refund. The principal amount refundable mentioned in this para is subject to verification of actual amount paid by the complainant based on receipts etc.

ii. The OPs shall pay a sum of Rs.25,000/- as cost of litigation to the complainant.

iii. The liability of the OPs shall be joint as well as several.

iv. The payment in terms of this order shall be paid within three months from today.

v. In case the complainant has taken loan from Bank(s)/other financial institution(s) and the same/any portion of the same is still outstanding, the refund amount will be first utilized for repaying the outstanding amount of such loans and balance will be retained by the complainant. The complainant would submit the requisite documents from the concerned bank(s)/financial institution(s) to the OPs four weeks from receipt of this order to enable them to issue refund cheques/drafts accordingly.

13. The pending IAs, if any, also stand disposed off.