Flat-owner Can't Get Compensation as per Current Ready Reckoner Rates: NCDRC
Moneylife Digital Team 11 September 2023
While setting aside an order passed by the state commission, the national consumer disputes redressal commission (NCDRC) ruled that the compensation or relief granted to a flat-buyer cannot be given based on current market value as per the ready reckoner, and it must be given considering the agreed sale price only. 
In an order, the NCDRC bench of justice Sudip Ahluwalia (presiding member) and air vice-marshal (AVM) J Rajendra (retd) (member) says, "While determining the amount of compensation, the state commission considered the market rate of the said flat in dispute as per the prevailing ready reckoner. In our view, such considerations as well as calculations, are questionable. Even if such consideration is otherwise permissible, at best, the relief that could have been granted was proportionate to the actual payment made by her vis-à-vis the total agreed consideration."
Hearing two appeals, the bench directed Mumbai-based Harsh Constructions and Siddhivinayak Developers to jointly and severally hand over the vacant and peaceful possession of the flats by accepting the balance amount towards the total agreed consideration, and execute a registered sale deed within one month in favour of the buyers. If the developers fail to complete the construction and deliver the possession, they are asked to refund the money deposited by the home buyers with an interest of 9%pa (per annum) from the date of deposit. 
NCDRC also asked Harsh Constructions and Siddhivinayak Developers to pay Rs2 lakh compensation each to the two flat-buyers for misleading and keeping them in the dark for over five years regarding the progress and completion of the construction of the flats and citing untenable reasons. 
In 2006, Sarita Mishra and Rachna Shukla booked two flats in Divyam Heights in Andheri West in Mumbai and paid the booking amount. Harsh Constructions and Siddhivinayak Developers then executed the sale deeds. As per clause 8 of the sale agreement, the developers assured and promised to hand over possession of the flats by the end of June 2008. 
However, the home-buyers found that the progress of construction was stagnant since 2006 and, except for the demand letter, there was no response from the developers about resuming construction, they alleged. Ms Mishra and Ms Shukla (through the Consumer Welfare Association) then approached the Maharashtra state consumer disputes redressal commission. 
They claimed that while they were ready and willing to pay further instalments, the developer dishonestly demanded the cancellation or termination of the agreement on false and fabricated grounds. 
During the hearing before the state commission, Harsh Constructions and Siddhivinayak Developers contended that the homebuyers failed to make payments on various occasions. The complaints filed are premature, as the construction of the building in question could not be completed due to the pending public interest litigation (PIL) in the Bombay High Court (HC), the developers submitted.
However, rejecting the contention, the state commission asked Harsh Constructions and Siddhivinayak Developers to hand over the flats after accepting balance payments or else pay the home-buyers a proportionate amount in view of rising prices of immovable property in that area. It also directed the developers to pay Rs1 lakh each as compensation towards mental agony and hardship besides costs of litigation quantified at Rs25,000.
Aggrieved by the order, Harsh Constructions and Siddhivinayak Developers approached NCDRC. They contended that the state commission failed to consider the demand letters they sent to the home-buyers. They also submitted that the construction resumed after the HC dismissed the PIL. 
Further, the developers contended that the delay was due to force majeure circumstances, including the pendency of PIL and writ petitions filed in the Bombay HC and lack of necessary approvals from the Municipal Corporation of Greater Mumbai (MCGM).
However, referring to NCDRC's 21 September 2021 order in Sivarama Sarma Jonnalagadda vs Maruthi Corporation Ltd, the bench reiterated that the complainant cannot wait indefinitely for the delivery of possession.
"It is clear that there was a significant delay in handing over possession of the flat to complainants as per the agreement. (The) complainant cannot be expected to wait indefinitely, as she has already paid a substantial amount with the expectation of timely possession. In several cases, the Supreme Court has asserted the right of buyers to receive fair delay compensation when developers unduly and unreasonably delay possession as per the agreement," the bench says.
NCDRC also noted that the PIL was filed before the home-buyers booked their flats. Further, the counsel for the developers specifically clarified that there was no stay granted by the Bombay HC in any of these cases against any construction activity, especially concerning the construction project under dispute.
"...the PIL filed, which in any case was disposed of on 9 February 2012, was of no consequence to the present case. Thus, the contention of the appellants claiming that the construction project was effected due to certain litigations before Bombay HC is entirely unacceptable and misleading," the bench says.
In addition, NCDRC says, "It is also intriguing to notice that, on the one hand the appellants (developers) claimed that the progress of the project was impacted on account of certain PILs and other litigations, on the other hand, they also claimed that they sought payment of instalments from the homebuyers. Notwithstanding the fact that the demand for payment of instalment by the appellants is uncorroborated, the claim itself is questionable because, as per their own version, the project was affected on account of litigations and thus did not progress. If that is so, there could not have been any requirement of scheduled instalment payments from the homebuyers."
"...there was unreasonable and unjustified delay by the appellants (developers) in completing the construction and they have not provided any reasonable justification for delay as well as failure to comply with the terms of the contract. Therefore, the homebuyers are entitled to fair relief and reasonable compensation for such untenable actions and misleading contentions by the developers," the bench says.
While modifying the state commission order, NCDRC directed Harsh Constructions and Siddhivinayak Developers to hand over the flat to Ms Mishra by accepting a balance payment of Rs13.89 lakh out of the agreed consideration of Rs18.04 lakh and execute a sale deed within one month. In case the developers fail to complete the construction and thus deliver the possession, they are directed to refund Rs4.15 lakh with an interest of 9%pa to Ms Mishra. Harsh Constructions and Siddhivinayak Developers are also asked to pay Rs2.25 lakh as costs for misleading and keeping her in the dark for five years about the completion of the project and litigation costs.
NCDRC directed the developers to accept Rs21.21 lakh balance payment from Ms Shukla out of a total sale price of Rs28.67 lakh and execute a sale deed within one month after receiving the balance payment. If the developers fail to complete and hand over the flat, they should refund Rs7.54 lakh with an interest at 9%pa from the date of deposit till its payment. Harsh Constructions and Siddhivinayak Developers are directed to pay Rs2.25 lakh to Ms Shukla as compensation and litigation costs.
(First Appeal Nos995/996 of 2016      Date: 4 September 2023)
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