Delhi Consumer Commission Grants Relief To Homebuyer; Raises Refund Interest To 12% Against Ahluwalia Contracts Ltd
Pranav B Prem
The Delhi State Consumer Disputes Redressal Commission, presided over by Ms. Bimla Kumari, has granted significant relief to a homebuyer by enhancing the rate of interest on refund from 6% to 12% per annum in line with the terms of the Builder Buyer Agreement. The Commission held the builder, Ahluwalia Contracts (India) Ltd., liable for deficiency in service for failing to deliver the flat within the stipulated time, and directed payment of the due amount with enhanced interest until realization.
Background of the Case
The appeal was filed by Vijay Kumar, who had booked a residential flat—Flat No. 410, 4th Floor, measuring 1305 sq. ft.—in the builder’s project “Ahlcon Apartment” developed by Ahluwalia Contracts (India) Ltd. The total sale consideration of the flat was ₹6,26,400, out of which the complainant had paid ₹3,24,000 between 1989 and 1992. Despite receiving these payments, the builder failed to complete construction or hand over possession within the promised time.
According to the complaint, the builder had, through its letter dated 14.04.2000, demanded escalation charges and interest at 24%, even though the delay was caused by its own inaction. It further issued a maintenance bill without having delivered possession and warned the complainant that the allotment could be cancelled. Subsequently, in March 2006, the builder sold the same flat to a third party, Arvind Panwar, through a registered sale deed, without ever offering physical possession to Vijay Kumar.
Proceedings Before the District Forum
Aggrieved by these actions, the complainant filed a consumer complaint before the District Consumer Disputes Redressal Forum-II, New Delhi, alleging deficiency in service and seeking refund along with interest and compensation. The District Forum partly allowed the complaint, finding deficiency in service on the part of the builder for failing to deliver possession within the stipulated period. It directed the Opposite Party to refund ₹3,24,000 along with simple interest at 6% per annum from the date of filing the complaint till realization.
However, the Forum noted that the complainant had not appeared during later proceedings and observed that although the builder was at fault, the complainant too did not show keen interest in making timely payments. Dissatisfied with the grant of only 6% interest, Vijay Kumar preferred an appeal before the Delhi State Consumer Commission seeking enhancement of the interest to 12% as per the Builder Buyer Agreement.
Contentions of the Parties
The appellant contended that the District Forum erred in awarding only 6% interest despite a clear clause in the Builder Buyer Agreement entitling the allottee to refund with 12% simple interest in case the builder failed to deliver the unit. He argued that the Respondent admitted to receiving ₹3,24,000 between 1989 and 1992, but failed to transfer the property or refund the amount with contractual interest.
The builder, on the other hand, claimed that the complainant was a defaulter who did not make timely payments and failed to take possession when offered. It asserted that repeated opportunities were given, including a letter dated 01.06.2005, but the complainant showed no interest. The builder further stated that since the flat was sold to another buyer in 2006, the complainant was only entitled to refund of the principal amount already paid, and that the 6% interest awarded by the District Forum was adequate and reasonable.
Findings and Observations of the State Commission
After hearing both sides and examining the record, the Commission noted that the District Forum had rightly held the builder liable for deficiency in service for its failure to complete construction and hand over possession. However, it found that the Forum had erred in reducing the rate of interest to 6%, contrary to the explicit terms of the Builder Buyer Agreement. Referring to Clause 3 of the Agreement, the Commission observed: “It is also agreed, understood and declared that if due to the result of such changes, there is any increase/decrease in the super area, the revised price will be applicable at the original rate... However, for any reasons, whether within or outside control of the Company, if the Company is not in a position to transfer the said apartment to the allottee(s), the Company shall be responsible to refund the amount paid by the allottee(s) with a simple interest @ 12% p.a.”
The Bench emphasized that this clause unambiguously required the company to refund the amount with 12% interest per annum if it failed to deliver the unit. Since the builder had admittedly sold the flat to a third party, the Commission held that the complainant’s right to refund with 12% interest had accrued under the contract terms. The Commission observed that “the Respondent had agreed to refund the amount paid by the Appellant along with simple interest at 12% per annum in case the company was not in a position to transfer the unit. Therefore, the District Forum was not right in awarding only 6% interest.”
Decision and Directions
Allowing the appeal, the Commission modified the District Forum’s order, directing Ahluwalia Contracts (India) Ltd. to refund ₹3,24,000 to the complainant along with simple interest at 12% per annum from the date of filing of the complaint till realization.The Commission took note of the builder’s submission that it had already paid ₹4,58,190 (comprising the principal amount and 6% interest) to the complainant through a demand draft dated 17.10.2016, which was encashed on 07.11.2016. Accordingly, it directed the builder to pay the balance amount representing the difference between 6% and 12% interest for the relevant period.
In view of these findings, the appeal was allowed, with the parties directed to bear their own costs. The Commission ordered that a copy of the judgment be provided to all parties free of cost and uploaded on the Commission’s website for reference.
The Delhi State Consumer Commission’s ruling reinforces that builders are bound by the terms of their own agreements and cannot evade contractual obligations on refund interest by citing delays or alleged defaults. By enhancing the interest rate from 6% to 12% in line with the Builder Buyer Agreement, the Commission ensured equitable compensation to the homebuyer for the builder’s prolonged failure to deliver the flat. Ultimately, the appeal was allowed, and Ahluwalia Contracts Ltd. was directed to pay the remaining balance with 12% simple interest from the date of filing the complaint till realization, recognizing clear deficiency in service and contractual breach on the builder’s part.
Appearance
Mr. Pankaj Jain, counsel for the Appellant
Mr. Vedant Mund, counsel for the Respondent
Cause Title: Vijay Kumar Vs. Ahuluwalia Contracts Ltd.
Case No: FA-448/2016
Coram: Ms. Bimla Kumari
