Karnataka State Consumer Commission Holds Frontier Shelters Liable For Deficiency In Service And Directs Delivery Of Possession

The Karnataka State Consumer Disputes Redressal Commission, comprising T.G. Shtvashankare Gowda (President) and Divya Shree M. (Lady Member), held Frontier Shelters Pvt. Ltd. liable for deficiency in service for failing to hand over possession of the flat within the agreed time period. The Commission found that their failure to deliver possession, despite receiving 95% of the total payment, amounted to deficiency in service. Brief Facts The Complainant, Ruma Mohandas Gopani, booked a 3+ Study BHK apartment (No. 5091) in the “Frontier Heights” residential project developed by Frontier Shelters Pvt. Ltd. (OP.1), whose Managing Partner is Chinappa Anand (OP.2). The parties entered into sale and construction agreement on 26-08-2019 and paid R.3 lakh as booking amount.The Complainant paid 95% of total sale consideration through several instalment payments totalling ₹91,87,717/-. The complainant also availed a loan of ₹20 lakhs from HDFC Bank, repaying it with interest of ₹2,65,128/-. Under the construction agreement, the OPs were required to hand over the completed flat by 31-03-2020, with a six-month grace period, and a delay compensation of ₹5 per sq. ft. per month on the super built-up area. Aggrieved by the Opposite Parties' failure to complete the project and deliver possession within the stipulated period, the Complainant filed the present consumer complaint alleging deficiency in service and unfair trade practice. The Complainant alleged that despite collecting almost the entire payment, the OPs failed to provide possession, complete amenities, or obtain the Occupancy Certificate. She further contended that the contractual compensation was unreasonable since comparable flats in the locality rented for approximately ₹80,000 per month. The Complainant also sought additional compensation of Rs. 80,000 per month, interest of ₹2,65,128/- at 18% p.a. on a ₹20 lakh loan, ₹3 lakhs for mental agony, ₹2 lakhs in litigation expenses, and ₹50,000/- for personal communication and visitation costs. Arguments by the Opposite Parties The counsel for Opposite Parties submitted that the delay in completing the project was due to a wrongful RERA extension and a High Court stay order, which restricted the construction. They submitted that most of the work was completed and was ready to hand over possession once the remaining payments were made. Furthermore, the counsel denied receiving Rs. 91,87,717/- or having any liability to pay delay compensation. Counsel requested the Commission to grant time until March 2026. Findings of The Commission The Karnataka State Consumer Commission observed that the opposite parties failed to deliver possession. It found that the M/S Frontier Shelter(OP.1) had received Rs.91,87,717/-, amounting to 95% of the total sale consideration for the apartment. The commission found that although the agreement required the opposite parties to hand over the flat by March 2020, with a six-month grace period; the project remained incomplete even at the time of the order. It noted that a long delay forced the Complainant to wait several years for possession. The Commission rejected Frontier Shelters' argument that the High Court's stay order caused the delay. It held that this defence was invalid because the stay order restricted sale of only 54 out of 266 flats, leaving more than 200 flats available. Therefore, the stay order did not prevent the Opposite Parties from completing construction. The Commission observed that the Opposite Parties must pay delay compensation as agreed in the construction contract. However, it rejected the Complainant's request for higher compensation of ₹80,000 per month, noting that there was no proof that the agreed rate was inadequate. The Commission also stated that the Complainant cannot claim more money than what was agreed, especially when the delay was caused by several external factors. The Commission concluded that the Opposite Parties' failure to deliver possession within the stipulated period, despite receiving 95% of the payment, constituted a deficiency in service. It partially allowed the complaint and directed OPs 1 & 2 to complete the project and hand over legal possession within three months. Furthermore, opposite parties were directed to pay delay compensation at ₹5 per sq. ft. per month on 1937 sq. ft. from 01-10-2020 until delivery, along with ₹10 lakhs for mental agony and ₹1 lakh for litigation costs. Case Title: Ruma Mohandas Gopani vs Frontier Shelters Pvt., Ltd. SC/29/CC/69/2024 Click Here To Read/Download The Order

Karnataka State Consumer Commission Holds Frontier Shelters Liable For Deficiency In Service And Directs Delivery Of Possession

Muhammed Razik

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