Pranav B Prem

The National Consumer Disputes Redressal Commission (NCDRC), in a significant ruling, held M/s SJP Infracon Ltd. liable for deficiency in service due to its failure to deliver possession of flats within the stipulated deadline. The bench comprising Hon'ble Mr. Binoy Kumar [Presiding Member], Hon'ble Mrs. Justice saroj yadav [Member] also criticized the builder for issuing possession letters based on Temporary Occupancy Certificates (TOCs) instead of valid Occupancy Certificates.

Background of the Case

The dispute arose from a consumer complaint filed by the Sri Radha Skygarden Homebuyers Association (“Complainants”) against M/s SJP Infracon Ltd. (“Builder”). The complaint was lodged under Section 58(1)(a)(i) of the Consumer Protection Act, 2019, to seek redress for delayed possession and other grievances.

Also Read: Integration of Armed Reserve, Police Battalion Into Kerala Civil Police Cadre Cannot Override Statutory Seniority Under Special Rules: Kerala HC

In 2010, the Builder launched a group housing project named 'Sri Radha Skygarden' in Greater Noida. Despite receiving approximately 95% of the consideration from homebuyers, the Builder failed to complete the project within the promised timeline. Clause 22 of the Allotment Letter mandated possession delivery within a specified time, offering only a nominal compensation of Rs. 5/- per square foot for delays. However, possession letters were issued only in March 2019, based on a TOC issued by the Greater Noida Industrial Development Authority, which acknowledged defects in the construction. Additionally, the Builder imposed arbitrary charges on homebuyers, including Rs. 75/- per square foot as 'Farmers Compensation' for bookings made before June 25, 2013. The aggrieved homebuyers formed a consumer association to collectively seek relief from the NCDRC.

Builder’s Contentions

The Builder contended that the complaint was false, frivolous, and barred by limitation. It argued that 16 out of 19 towers were completed, with 535 allottees already residing in their flats. The Builder also claimed that delays were due to unforeseen events, including demonetization, the implementation of GST, and the COVID-19 pandemic. Furthermore, it maintained that the Occupancy Certificates for the remaining three towers were pending and that the offer of possession was valid.

NCDRC's Observations and Findings

The Commission rejected the Builder’s claims, emphasizing the following points:

1. Failure to Obtain Occupancy Certificate: Despite repeated opportunities, the Builder failed to produce valid Occupancy Certificates. The Commission held that a TOC cannot substitute for an Occupancy Certificate as it only permits temporary use while requiring the rectification of defects. The Commission observed: "The TOC cannot be considered as OC as it is very clear from the language and particulars of TOC that, that was issued to remove the defects/discrepancies in the project in question."

2. Deficiency in Service: The NCDRC reaffirmed the legal position that if possession is not delivered within the stipulated timeframe, with a grace period of six months, the Builder is liable for deficiency in service. Referring to Fortune Infrastructure v. Trevor D'Lima [(2018) 5 SCC 442], the Commission noted: "A person cannot be made to wait indefinitely for the possession of the flats allotted to them and they are entitled to seek the refund of the amount paid by them, along with compensation."

3. Continuing Cause of Action: The Commission dismissed the limitation argument, holding that the delay in possession constituted a continuing cause of action.

4. Rejection of External Factors: The defense citing demonetization, GST, and COVID-19 was rejected on the grounds that these occurred after the project's stipulated completion deadline of August 2016. "The effect of demonetization, levy of GST and outbreak of Covid pandemic cannot be supposed to affect the completion of the project at all."

5. Illegal Imposition of Charges: The NCDRC held that the Builder could not recover 'Farmers Compensation' from the homebuyers, as it was not their contractual liability. "The OP cannot charge any amount in the garb of farmers’ compensation."

Reliefs Granted by the NCDRC

In light of the findings, the NCDRC allowed the complaint and directed the Builder to:

Also Read: “Order Vitiated by Fraud Must Be Recalled”: Bombay High Court Sets Aside Liquor License Transfer Based on Forged Aadhaar, Declares Collector’s Action Lawful Despite Absence of Review Power

1. The OP shall hand over the peaceful and vacant possession, after procuring the Occupancy Certificate, to allottees of their respective apartments, complete in all respects and in conformity with the terms and conditions of the Allotment Letter for the consideration mentioned therein (without any excess demand on account of farmers’ compensation or otherwise) with all additional facilities and as per quality standards promised in the agreement, within a period not later than six months;

2. The OP shall also execute Conveyance Deed in favour of the allottees of their respect apartment within the aforesaid period;

3. The OP is further directed to pay compensation on account of delay in handing over the possession of the apartments to the respective allottees from the promised date of delivery till the actual date of possession @ 8% per annum on the amount deposited from the date of the deposit.

4. The amount of delayed compensation payable to the alltotees first will be adjusted towards the balance amount payable to the OP. No penalty or penal interest shall be charged on the balance payment to be made to the OP;

5. In case the OP fails to hand over the possession as mentioned above, then the allottees have option either to wait for OC to take the possession or to seek refund of their money paid to the OP, along with interest @ 9% per annum from the date of deposit till the actual payment. If the refund is sought by the allottee then the OP has to refund the entire amount, along with interest @ 9% per annum within two months from the date of application so moved by the allottee. If the OP fails to refund the amount within two months then the rate of interest payable will be @ 12% per annum.

6. The OP shall also pay Rs.1,00,000/- (Rupees one lakh) as litigation costs to the complainant.

Appearance

For the Complainant: Mr. Sahil Sethi, Advocate Ms. Arushi Mann, Advocate Mr. Vikash kumar, Advocate

For the Opposite Party: Ms. Anam Sahar, Advocate

Cause Title: Sri Radha Skygarden Homebuyers Association V. M/S SJP Infracon Ltd.

Case No: C.C No. NC/CC/884/2020

Coram: Hon'ble Mr. Binoy Kumar [Presiding Member], Hon'ble Mrs. Justice saroj yadav  [Member]

[Read/Download order]