Compensation For Delays Are Subject To Market Conditions: NCDRC Holds Eldeco Infrastructure Liable For Deficiency In Service

Brief Facts of the Case

The case involves a dispute between the complainant and the builder company regarding purchasing an independent floor unit in “Eldeco Estate One” in Ludhiana. The complainant agreed with the Eldeco Infrastructure/builder for the unit at a total price of Rs. 30,71,040 and made an initial payment. Subsequently, the complainant paid the remaining amount after obtaining a loan from the bank. The builder was supposed to hand over physical possession of the flat within 18 months of receiving the entire basic price but failed to do so. Additionally, the Complainant alleges that basic amenities were not provided and that the total cost of the unit was misrepresented in the agreement. The complainant disputes charges for service tax and external development charges (EDC), as these were not mentioned in the agreement. The complainant also seeks compensation for rent paid for a rented house, interest on the loan, insurance premium, and losses due to the non-delivery of promised amenities. The complainant approached the State Commission regarding the same, and the commission allowed the complaint. The complaint in question is a revision petition filed by the builder against the state commission's order.

Contentions of the Opposite Party

The builder requested a reduction in the interest rate, a refund of Rs. 54,504 for excess payment, and reconsideration of the Rs. 3,00,000 compensation for mental distress, which was directed by the state commission. Additionally, they claimed that the 9% per annum interest rate awarded by the State Commission was too high. Referring to a previous order from the Commission, they stated that the builder had handed over physical possession of the flat to the complainant. Still, as the complainant had not complied with the Final Demand Notice for payment, they were not entitled to any interest. It was also argued that the complainant should be directed to pay the outstanding balance specified in the Final Demand Notice along with stamp duty and registration fees for the sale deed. They further contended that the builder had not received any excess amount, so the direction to refund Rs. 54,504 should be reversed. Lastly, they claimed that the Rs. 3,00,000 compensation for mental distress awarded by the State Commission was excessive and should be revoked.

Observations by the Commission

The Commission observed that the main issue to be determined was the appropriate amount of interest. They referenced recent Supreme Court judgments to guide their decision. In the case of Wing Commander Arifur Rahman Khan and Aleya Sultana and Ors. Vs. DLF Southern Homes Pvt. Ltd., (2020), it was emphasized that developers are accountable for breaching promises made to buyers regarding amenities. The court ordered compensation at a rate of 6% simple interest per annum from the expiry of thirty-six months from the execution of agreements until the date of possession. Another relevant case, DLF Home Developers Ltd. vs. Capital Greens Flat Buyers Assn., (2021), highlighted the need for just compensation for delays in possession. The court lowered the compensation rate from 7% to 6%, considering the unique market conditions. Additionally, the commission referred to DLF Homes Panchkula Pvt. Ltd. vs. D.S.Dhanda, where it was held that multiple compensations for singular deficiencies are not justifiable.

Consequently, the commission concluded that compensation of 6% per annum simple interest for the delay in possession, calculated from the promised possession date to the actual possession date, would be fair. They also deemed refunding the excess amount and 9% per annum interest appropriate and commensurate with the complainant's loss and injury.

Case Title: Eldeco Infrastructure & Properties Ltd Vs. Rajinder Sharma

Case Number: R.P. No. 1943/2017