Self-Financing Non -profit Housing Scheme Can't Be Held Liable To Pay Compensation For Delay : NCDRC

The National Consumer Disputes Redressal Commission, presided by Justice Ram Surat Maurya (presiding member) and Bharatkumar Pandya(member), in a petition against Uttar Pradesh Awas Evam Vikas Parishad, held that Statutory authorities in a self financing scheme cannot be burdened to pay compensation for delay in the handing over of the possession.Contentions of the ComplainantThe complainant, a registered association known as Brahmputra Welfare Association, represents home buyers. The Uttar Pradesh Awas Evam Vikas Parishad (the proprietor) is a statutory authority responsible for planning and developing affordable townships for all segments of society. The project's construction was supposed to be completed within 24 months, and possession was to be given to a fully furnished flat with specified amenities. Members of the complainant association were selected through a lucky draw for final registration, and the proprietor provided a payment plan. Despite diligent adherence to the payment plan, the construction faced delays due to possession issues and farmer agitation. The proprietor increased the cost of ground floor flats by over 40%, demanding GST (increased from 12% to 18%) and additional charges, even though construction was incomplete and possession was not granted. The complainant argued that the GST should not be imposed before the issuance of the completion certificate, as possession was delayed by the proprietor. The complainant is seeking relief from the commission to direct the proprietor to obtain 'completion' and 'occupation' certificates before issuing a fair and reasonable final demand under the affordable housing scheme. They request proper application of GST norms, payment of 18% per annum interest for delayed possession, and compensation of Rs. 2,500,000 each for mental agony and harassment, deficiency in service, and unfair trade practices. Additionally, the complainant seeks Rs. 500,000 for litigation costs and any other fitting relief based on the case's circumstances.Contentions of the Opposite PartyThe proprietor contended that the residential scheme "Brahmputra Enclave" was a self-financing project, not specifically designed for the weaker or lower-middle-income groups. The land acquisition for the project faced delays due to farmer protests, causing a one-year construction delay. Although applicants were given the option of a refund due to the site change and delay, none chose to do so. The final flat allotment occurred a year later than stipulated in the Registration Booklet's Rule 6. The booklet mentioned estimated flat costs, with a clear provision that final costs would be determined after construction completion, allowing applicants to seek a refund if costs increased by more than 20%. Due to construction delays beyond the proprietor's control, costs increased, and GST was applied as per legal requirements. The proprietor argued that the complaint lacked merit and should be dismissed.Observations by the CommissionThe commission observed that the booklet outlined a proposed construction completion period of 24 months from the demand letter issuance, but the land acquisition faced delays due to farmer protests, causing a one-year construction halt. Furthermore, the proprietor had notified the applicants of the site change, providing an option for a refund due to delay, but no applicants opted for it. As, the final cost approval process took place, and the proprietor issued possession offer letters. The commission cited the rulings in Bangalore Development Authority Vs. Syndicate Bank (2007) and B.B. Patel Vs. DLF Universal Limited (2022), which held that time is not an essence of the contract in civil construction work. The commission observed that the proprietor had explained in the past that the estimated cost mentioned in the Registration Booklet was not the final cost. Due to delays beyond the proprietor's control, both material and labor costs increased, resulting in an escalation of the final cost of the flats. Despite the complainant alleging an increase in cost, no evidence was presented to demonstrate arbitrary increases. The commission referred to past Supreme Court cases, such as Tamil Nadu Housing Board Vs. Sea Shore Apartment Owners Association (2008) and M.P. Housing & Infrastructure Development Board Vs. B.S.S. Parihar (2015), which established that in a self-financing scheme, the determination of prices falls within the housing board's domain, and the court should refrain from interference. The commission relied on the judgment in Bangalore Development Authority Vs. Syndicate Bank, (2007) to further observed that the proprietor has stated that GST is being realized on the balance amount and it cannot be said to be illegal, wherein the court ruled that in a self-financing scheme, a statutory body, not earning profit, cannot be burdened with payment of compensation in delay, and any increase in construction costs must be borne by the allottee.The commission...

Self-Financing Non -profit Housing Scheme Can't Be Held Liable To Pay Compensation For Delay : NCDRC

Ayushi Rani

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Self-Financing Non -profit Housing Scheme Can't Be Held Liable To Pay Compensation For Delay : NCDRC

Ayushi Rani

This is a premium content Available exclusively to Our subscribers

INR 1099+GST

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This is a premium content
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