Kingston Properties Liable For Failure To Execute An Agreement For Sale After Receiving Advance Amount, NCDRC Confirms Award Of One Lakh Compensation

The National Commission Disputes Redressal Commission (NCDRC) bench comprising Binoy Kumar, Presiding Member and Saroj Yadav, Member has held Kingston Properties Pvt. Ltd. liable for failure to execute an agreement for sale after receiving advance amount as per Section 4 of the Maharashtra Ownership Flats Act, 1963. Further, the bench held that the imposition of cancellation charges imposed by the builder without any agreement was an unfair trade practice. Brief facts: The complainants decided to purchase a flat/unit in the project- 'Oberoi Woods' of Kingston Properties Pvt. Ltd (“builder”) which was situated at Goregaon East for a total consideration of Rs. 38,32,000. A sum of Rs. 1,91,600/- was paid as earnest money. Despite receipt of the advance money, the builder failed to issue a receipt for the same or enter into a written agreement as provided by Section 4 of the Maharashtra Ownership Flats Act, 1963. The possession was to be delivered within 8 months and the balance amount to be accepted at that time. Multiple letters were sent by the complainant requesting for receipts and execution of a written agreement but the builder failed to do so. Subsequently, the builder cancelled the booking by issuing a cheque of Rs. 1,14,960/- after deduction of 2% flat cost as cancellation charges. The builder cited non-payment of 20% of total amount within 30 days from date of booking of flat as the reason for cancellation. Any agreement of deduction of 2% on cancellation was denied by the complainants. The complainants further reminded the builder of short payment to which the builder replied with false allegations. On not receiving any satisfactory response, a complaint was filed before the State Commission, Maharashtra. The State Commission partly allowed the complaint, awarding Rs. 25,000 as costs. Directions were issued to the complainant to deposit an amount of Rs. 1,14,960/- with the Commission pursuant to which agreement was to be executed with the builder and the remaining consideration to be deposited afterwards. Rs. 1,00,000 was also awarded as compensation for mental agony. The builder challenged the decision of the State Commission before the NCDRC. Submissions of the builder: The builder submitted that it was understood between the parties that an agreement would be executed only upon payment of 20% of the sale price but the complainants have paid only 5% of the total amount. It was submitted that the cheque issued by the builder was duly encashed by the complainants and their issue is limited to deduction of cancellation charges and not termination of the booking. It was next submitted that the booking was terminated on 01.10.2004 and the complaint was filed after almost a decade and therefore the complaint is not maintainable since it is beyond the limitation period. Submissions of the Complainants: The complainants submitted that the appellants deliberately concealed the essential details of the flat at the time of booking despite payment of earnest money. It was submitted that the builder failed to enter into an agreement for sale as per Section 4 of the Maharashtra Ownership Flats Act, 1963 and the booking was cancelled abruptly without any notice. It was the contention of the complainant that they were never informed about any requirement of paying 20% of total sale consideration prior to the agreement. Observations of the Commission: The bench took note of Section 4 of the Maharashtra Ownership Flats Act, 1963 which prohibits a promoter from accepting any advance amount exceeding 20% of the sale price without executing a written registered agreement for sale. It was observed that the builder's contention that such a requirement arises only when advance amount is 20% of consideration is a result of a misinterpretation of the law. Thus, it was held that failure to execute an agreement for sale when the advance amount was just under 20% is a breach of a legal duty and constitutes 'deficiency in service'. On the issue of cancellation of booking, due to non-payment of 20% amount within 30 days, the bench observed that no document has been brought on record by the builder to show that such 30 days payment condition was agreed upon between the parties. It was further observed that the cancellation being without any notice and without any contractual basis was arbitrary. Hence, the refund of part of the amount and imposition of cancellation charges was held to be an act of unfair trade practice. The bench then proceeded to observe that no document has been placed on record by the builder to support his contention that all flats in the project 'Oberoi Woods' have been sold and that thus, the complainants are entitled to possession on payment of balance consideration. Hence, the order of the State Commission awarding Rs. 25,000 as costs was upheld. Directions issued by the State Commission...

Kingston Properties Liable For Failure To Execute An Agreement For Sale After Receiving Advance Amount, NCDRC Confirms Award Of One Lakh Compensation

Aakanksha Bajoria

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