Delhi State Consumer Commission: Parsvnath Developers Directed To Refund ₹4 Lakh With Interest For Failing To Deliver Flat In Greater Noida Project
Pranav B Prem
The Delhi State Consumer Disputes Redressal Commission, presided over by Justice Sangita Dhingra Sehgal (President) and Member Bimla Kumari, has directed Parsvnath Developers Ltd. to refund ₹4,00,000 with interest to two flat buyers for failing to commence construction and deliver possession of the allotted flat in the Parsvnath Palacia Project, Greater Noida, terming the builder’s conduct as deficiency in service and unfair trade practice.
Background
The complainants, Ms. Madhu and Mr. Sanjay Kumar, had booked a flat in Parsvnath Palacia, Greater Noida, in 2006, by paying ₹4,00,000 as advance towards the booking. Subsequently, vide allotment letter dated 22 June 2007, Flat No. B1-705 was allotted to them, with an assurance that possession would be handed over by 2010. However, construction never commenced, and the builder later issued a letter dated 11 September 2010, extending the possession timeline to June 2012. Despite repeated visits to the builder’s office, the complainants received no updates. A legal notice seeking a refund was sent on 22 December 2014, but the builder neither responded nor refunded the amount. The complaint was initially filed before the District Consumer Commission, but returned for want of pecuniary jurisdiction and refiled before the Delhi State Commission under Section 17 of the Consumer Protection Act, 1986, seeking refund, interest, and compensation for mental agony.
Complainants’ Submissions
The complainants contended that despite assurances, the builder neither commenced construction nor executed any buyer’s agreement, and no possession was delivered even years after the promised date. They argued that the delay amounted to deficiency in service and unfair trade practice under the Consumer Protection Act, 1986. They sought a refund of ₹4,00,000 with interest at 24% per annum, and ₹5,00,000 as compensation for mental agony and inconvenience caused by the builder’s prolonged failure.
Builder’s Defence
Parsvnath Developers Ltd., represented by its Chairman and Managing Director, contested the complaint, arguing that the complainants did not qualify as “consumers” under Section 2(1)(d) of the Consumer Protection Act, claiming that the booking was made for investment or commercial gain. The builder further contended that:
The complaint involved complex questions of fact and law that should be tried by a civil court.
The complaint was barred by limitation under Section 24A of the Act.
The delay, if any, was due to global recession, which affected the real estate sector.
It was also argued that liability for delay was contractually limited under the proposed Flat Buyer Agreement.
Findings of the Commission
After hearing both parties, the Commission rejected all preliminary objections raised by the builder.
Complainants are “Consumers”
The Commission held that the complainants were “consumers” under the Act since no evidence was provided to prove that the flat was purchased for commercial purposes. Citing Aashish Oberai v. Emaar MGF Land Ltd., the Commission reiterated that ownership of more than one property does not automatically make a purchase commercial in nature. The order stated: “Mere allegation that the purchase of the property is for commercial purpose cannot be the ground to reject the present complaint.”
Complaint Not Barred by Limitation
The bench ruled that the failure to deliver possession constituted a continuing wrong, giving rise to a recurring cause of action until possession was handed over or refund made. Citing Mehnga Singh Khera & Ors. v. Unitech Ltd., the Commission held: “Failure to give possession of the flat is a continuous wrong and constitutes a recurrent cause of action as long as possession is not delivered.”
Consumer Fora’s Jurisdiction Affirmed
Rejecting the builder’s argument that the matter required civil court adjudication, the Commission clarified that consumer fora are fully empowered to decide housing-related grievances arising from deficiency in service. It observed that the complainants availed the builder’s services for a consideration, and failure to deliver the flat constituted deficiency under Section 2(1)(g) of the Act.
Deficiency in Service and Misrepresentation
The Commission noted that no construction had been carried out, and no Flat Buyer Agreement had ever been executed. It held that the builder’s conduct amounted to misrepresentation and cheating: “The circumstances clearly show that the Opposite Parties made false representation of facts about the project, which resulted in injury and loss of opportunity to the complainants.” Rejecting the plea of delay due to global recession, the bench found no evidence of any legal or natural impediment preventing construction: “There was no evidence of any lock-out, strike, war, terrorist action, or act of God that could have delayed completion of the project.”
Directions and Relief
Holding Parsvnath Developers Ltd. guilty of deficiency in service and unfair trade practice, the Commission allowed the complaint and directed the opposite parties to:
Refund ₹4,00,000 to the complainants with 6% interest per annum from the date of each payment till 15.10.2025.
If the refund is not made by 15.12.2025, the interest rate shall increase to 9% per annum till realization.
Pay ₹1,00,000 as compensation for mental agony and harassment.
Pay ₹50,000 as litigation costs.
Finding that the builder’s conduct amounted to gross negligence and prolonged inaction, the Delhi State Consumer Commission held that failure to commence construction or deliver possession within a reasonable time constituted deficiency in service and unfair trade practice. Accordingly, the complaint was allowed, and the builder was directed to refund the booking amount with interest and compensation.
Appearance
Mr. Ajay Swami, Counsel for the Complainants.
Mr. T.P. Chauhan & Ms. Tanvi Garg, Counsel for the Opposite Parties
Cause Title: Ms. Madhu & Anr. Vs. Parsvnath Developers Ltd
Case No: CC. NO./608/2019
Coram: Justice Sangita Dhingra Sehgal (President), Member Bimla Kumari
