The Supreme Court has upheld orders of a state consumer commission and the national commission to refund payment with interest to a homebuyer for over seven years’ delay in handing over possession of the flat he had booked with a Kolkata-based builder. The court said a buyer cannot be required to wait indefinitely for possession of his house.
“A buyer can be expected to wait for possession for a reasonable period. A period of seven years is beyond what is reasonable. Hence, it would have been manifestly unfair to non-suit the buyer merely on the basis of the first prayer in the relief sought before the state consumer disputes redressal commission,” a bench comprising Justice DY Chandrachud and Justice Hemant Mehta said while hearing a case filed by the builder, Kolkata West International City Pvt Ltd, against the order for refund passed by the state and national consumer commissions.
The SC pronounced the verdict last Monday. Welcoming the order, an umbrella association of home buyers – Fight for RERA tweeted, “Landmark judgment from Hon’ble Supreme Court on the refund to buyer from the developer. Hope this will set at rest arbitrary orders being passed by RERA authorities denying refunds on their own despite #RERA provision there for refunds.”
In this case, one Devasis Rudra had paid Rs 39.29 lakh in 2006 to the builder and as per the agreement the house was to be handed over by December 31, 2008, and there was a grace period of six months. But the house was not handed over on time. In 2011, Rudra filed a complaint before state consumer commission seeking possession of the house or refund of the amount he had paid with 12 percent annual interest. He also sought compensation of Rs 20 lakh.
The state commission directed the developer to refund the money with interest at 12 percent and compensation of Rs 5 lakh. When the builder challenged the order in the National Commission Disputes Redressal Commission (NCDRC), it reduced the compensation amount to Rs 2 lakh while upholding the rest of the state commission’s order.
Giving its verdict on whether the buyer was entitled to seek a refund or was barred from doing so, having claimed compensation as the primary relief in the complaint, the bench said, “Even in 2011, when the buyer filed a complaint, he was ready and willing to accept possession. It would be manifestly unreasonable to construe the contract between the parties as requiring the buyer to wait indefinitely for possession.”
While participating in recent RERA workshops organised by the housing ministry, some of the regulators had announced that they were not allowing a refund in certain cases to ensure that the projects get completed. They had also pushed for barring home buyers from approaching consumer forums since these entities often pass an order for refund and don’t consider the implications on completion of projects.