Failure To Deliver Possession Of Flat, Pay Assured Returns: Delhi State Commission Holds WTC Noida Development Company Liable

Brief Facts:

The Complainant booked a flat in a project named 'World Trade Centre', developed by WTC Noida Development Company (“Developer”) by paying a sum of Rs. 2 Lakh. A developer-buyer agreement was executed on 13th August 2014. Thereafter, the Complainant agreed to a 100% downpayment plan after the Developer assured him to provide returns till the offer of the possession of the flat. In expectation of these assured returns, the Complainant paid the entire basic sale price of Rs. 82,27,052/- to the Developer between January 2014 and November 2014.

As per Clause 5.6 of the developer-buyer agreement, the Developer was supposed to complete the construction within 4 years. However, the construction was neither completed nor the possession was offered within the stipulated timeline. The Developer also extended the possession deadline to February 2020 and unilaterally altered the conditions of the assured returns owing to COVID-19. Even after revising the agreement and promising the Complainant that the returns would be readjusted after the pandemic, the Developer failed to fulfil its obligations. After several emails and communications, the Developer agreed to finalize a revised understanding of the assured returns. As per the revised understanding, the Developer agreed to pay 50% of the payable assured returns amounting to Rs. 37,500/- to the Complainant for February 2020-February 2022. The rest 50% was agreed to be adjusted towards the dues of the Complainant. The Developer also agreed to pay Rs. 75,000/- (full assured returns) to the Complainant, in case of failure to hand over the possession of the flat by February 2022.

Despite the revised understanding, the Developer failed to release the assured returns. The returns were released only for August, September and October. The Complainant raised a complaint with the Developer for the possession of the flat and payment of the remaining returns. However, the Developer failed to satisfactorily reply to the complaint. Therefore, the Complainant sent a legal notice to the developer on 25th August 2022. However, the Developer still failed to fulfil its obligations. Feeling aggrieved, the Complainant filed a consumer complaint before the State Consumer Disputes Redressal Commission, Delhi (“State Commission”).

Contentions of the Developer:

The Developer contended that the complaint was not maintainable as the Complainant did not fall within the definition of a 'consumer' under the Consumer Protection Act, 2019. The investment was made by the Complainant for a commercial purpose with the intent to earn profits. The Developer further contended that the Complainant voluntarily entered into the agreement, which stipulated that if possession of the flat was delayed after 13.02.2019, the Complainant was only entitled to continue with the agreement and wait until the offer of possession. It also contended that due to the COVID-19 pandemic and resultant lockdowns, the construction could not be completed on time.

Observations of the State Commission:

At the outset, the State Commission perused Section 2(7) of the Consumer Protection Act, 2019 which defines a 'consumer' as a person who buys goods or avails any service for a consideration which has been paid, promised, partly paid, partly promised or promised under any system of deferred payment. It was evident that the Complainant had paid the entire basic sale price to the Developer for buying the flat. Therefore, the State Commission held that the Complainant qualified as a 'consumer' under the Consumer Protection Act, 2019. Reliance was placed on Rohit Choudhary & Anr. vs. M/s Vipul Ltd. [Civil Appeal No. 5858/2017], wherein the Supreme Court held that even if a consumer purchases a property for earning a livelihood by self-employment, he will continue to be a consumer. The State Commission observed that the Developer failed to produce any evidence which proved that the Complainant was involved in the regular selling and purchasing of plots for commercial purposes.

The State Commission further held that the complaint was filed within the statutory deadline of 2 years from the 'cause of action'. Reliance was placed on Mehnga Singh Khera and Ors. vs Unitech Ltd. [I(2020) CPJ 93 (NC)], wherein the National Consumer Disputes Redressal Commission (“NCDRC”) held that that failure to hand over possession of a flat constitutes continuous wrong and a recurrent 'cause of action'.

The State Commission referred to Arifur Rehman Khan and Ors. vs DLF Southern Homes Pvt. Ltd. [2020 (3) RCR (Civil) 544], wherein the Supreme Court held that failure by a developer to comply with the contractual obligation to provide the flat within the stipulated timeline amounts to deficiency in service. It was observed that the Developer agreed to deliver the possession within 4 years of the date of the developer-buyer agreement, with a grace period of 6 months. However, even after including the grace period, there was a failure on the Developer's part to hand over the possession of the flat. Further evidence showed that the Developer was still finishing the remaining work and was not in a position to offer possession. By referring to Fortune Infrastructure vs Trevor D'Lima [(2018) 5 SCC 442], the State Commission held that a buyer cannot be expected to wait indefinitely for the possession of the concerned property.

The State Commission also observed that the Developer was supposed to pay assured returns to the Complainant under a 100% down payment plan. However, the Developer stopped paying the returns after February 2020 on the pretext of the COVID-19 pandemic. The failure to pay returns continued even after revising the terms of the returns. The State Commission held that the discontinuation was unjustified and amounted to a deficiency in service.

As a result, the State Commission directed the Developer to refund Rs. 82,27,052/- along with 6% interest per annum from the date on which each instalment/payment was received till the date of the order. In case the Developer fails to refund the amount with 6% interest within 2 months, the State Commission held that it would be liable to pay an interest of 9% per annum from the date of each instalment/payment till the actual realization of the amount. The Developer was also directed to pay Rs. 9,70,363/- against the outstanding assured returns pending from March 2020 till the filing of the complaint, as per the revised plan. Further, it was directed to pay Rs. 3,00,000/- as compensation for mental agony and Rs. 50,000/- for legal costs to the Complainant.

Case Title: Manpreet Sharma vs WTC Noida Development Co. Pvt. Ltd. and Ors.

Case No.: Complaint Case No. 191/2022

Advocate for the Complainant: Mr Divjot Singh Bhatia and Mr Shreesh Chadha

Advocate for the Opposite Parties: Mr Vijay Kr. Sharma

Date of Pronouncement: March 26th, 2025