Delhi State Commission Directs WTC Noida To Refund 82.27 Lakhs And Pay 9.70 Lakhs As Assured Returns To Complainant

Background Facts

In 2014, Complainant booked a unit in the 'World Trade Centre' project in Greater Noida by paying a booking amount of Rs. 2,00,000. A Developer-Buyer Agreement was signed on 13 August 2014.

Complainant chose a 100% down payment plan under which the builder promised to pay assured returns until the possession of the unit. Between January and November 2014, the complainant paid a total of Rs. 82,27,052, which was the full basic sale price.

As per the agreement, the builder had to complete the construction within four years from the date of the agreement with an additional grace period of six months. However, the construction was not completed and possession was not offered. The builder later informed the complainant that the unit would be handed over in February 2020.

In May 2020, the builder sent an email saying the assured returns would be suspended due to the Covid-19 pandemic and revised terms would apply. According to the revised terms, the builder would pay Rs. 37,500 per month (half of the assured returns) from February 2020 to February 2022 and the remaining 50% would be adjusted against dues.

Although the builder agreed to these revised terms in writing they failed to make the payments regularly. The complainant received only Rs. 39,023 as assured returns for three months in 2020 and nothing afterward.

After multiple follow-ups, the complainant sent a legal notice in August 2022 seeking possession, assured returns and compensation. Then after, the complainant filed the complaint before the commission seeking refund, assured returns and compensation for harassment and mental agony.

Contentions of Builder

Builder contended that the complainant is not a consumer under the Consumer Protection Act, 2019 (Act), as the investment was made to earn profit and falls under commercial purpose. Builder further contended that the complaint lacks any valid cause of action and there is no deficiency in service or unfair trade practice on their part

Observation and Direction by State Commission

In order to determine whether the Complainant falls within the definition of a consumer, the Authority referred to Section 2(7) of the Act. It stipulates that the person who avails goods or services for consideration unless for resale or commercial purposes qualifies as a consumer.

Upon examining the Developer-Buyer Agreement and the receipts issued by the builder, the Authority noted that the Complainant had paid a total amount of Rs. 82,27,052 for the purchase of the unit. Therefore, the Authority held that the Complainant meets the requirement of a consumer under the Act.

In order to determine whether the Complainant has a valid cause of action to approach this Commission, the State Commission referred to Section 69 of the Act. It mandates that a consumer complaint must be filed within two years from the date on which the cause of action arises.

However, the Commission also noted that failure to deliver possession is considered a continuous wrong which gives rise to a recurrent cause of action. Since the Complainant has not been delivered possession nor refunded the amount paid, the Commission held that the cause of action still survives.

To determine whether the builder was deficient in providing their services to the Complainant, the State Commission placed reliance on the judgment of the Supreme Court in Arifur Rahman Khan and Ors. vs. DLF Southern Homes Pvt. Ltd., (2020) 3 RCR (Civil) 544. In this case, the Supreme Court held that the failure of a developer to provide possession of a flat within the contractually stipulated period constitutes a deficiency of service.

State Commission held that the builder was deficient in rendering services. They had not only failed to offer possession within the agreed time but had also given false assurances about construction progress and wrongfully discontinued assured returns.

Therefore, State Commission directed builder to refund the full amount of Rs. 82,27,052 paid by the Complainant along with interest at the rate of 6% per year calculated from the date each payment was received by the builder until date of the judgment.

Additionally, State Commission directed builder to pay Rs. 9,70,363 towards outstanding assured returns from March 2020 till the date of filing of the complaint as per the revised plan, Rs. 3,00,000 as compensation for mental agony and harassment and Rs. 50,000 towards litigation costs.

Case - Ms. Manpreet Sharma Versus WTC Noida Development Co. Pvt. Ltd & Anr

Citation – Complaint Case No.- 191/2022

Counsels for Complainant – Mr. Divjot Singh Bhatia & Mr. Shreesh Chadha, Advocates

Counsel for Opposite Parties - Mr. Vijay Kr. Sharma, Advocate