NCDRC Directs Refund with Interest After Builders Fail to Deliver Possession in 'Commanders’ Gateway' Project
Pranav B Prem
The National Consumer Disputes Redressal Commission (NCDRC), New Delhi, has held M/s Jupiter Infrastructure (Bangalore) Pvt. Ltd., along with M/s Valji Gokuldas & Sons, M/s Laxmi Enterprises, and M/s Thakkar Realties Pvt. Ltd., liable for deficiency in service, breach of contractual obligations, and unfair trade practices for their failure to deliver possession of residential units in the 'Commanders’ Gateway' project. The Commission directed the developers to refund the collected amounts with interest and pay litigation costs to the buyers' association.
The order was delivered by a bench of Mr. Binoy Kumar (Presiding Member) and Justice Saroj Yadav (Member) in a consumer complaint filed by the Commander's Gateway Homebuyers Welfare Association on behalf of 119 buyers.
Background
The developers launched a real estate project named “Commanders’ Gateway” in collaboration among the above-named entities. Buyers were enticed through standard allotment letters and made advance payments amounting to 20% of the total sale consideration for apartments, row houses, and plots. However, no formal Agreement for Sale was ever executed. The allotment letters promised possession by March 2015.
Despite this commitment, the developers later cited delays in securing statutory approvals, particularly from CIDCO under the NAINA (Navi Mumbai Airport Influence Notified Area) regulations, and failed to commence construction. Between 2014 and 2016, buyers were repeatedly assured via email that approvals would be obtained and construction would soon begin. In November 2015 and August 2016, they were even offered alternative projects in Pune, Goa, and Bangalore instead of refunds.
Several buyers submitted formal cancellation and refund requests. In response, partial refunds were made to some buyers through post-dated cheques. However, these cheques were dishonoured due to insufficient funds or blocked accounts. Criminal proceedings were initiated under Section 138 of the Negotiable Instruments Act, and an FIR was registered against the developers under Sections 420 and 406 of the IPC. Some directors were arrested, and anticipatory bail applications were rejected by the Bombay High Court.
Defense by the Developers
While Jupiter Infrastructure did not participate in the proceedings and was proceeded against ex parte, the other entities contended that:
Construction began on 18.10.2019 and this fact was suppressed by the complainants.
The buyers had already received partial refunds and thus had no claim.
Many buyers were investors or had purchased the units for rental income, disqualifying them as consumers.
Some buyers had defaulted on their payment obligations.
The sole proprietor of the firms had passed away during the proceedings, and his legal heirs should not be held liable.
NCDRC’s Findings
The Commission held that the developers misrepresented the project’s approval status despite being aware of the 2013 notification assigning approval authority to CIDCO. It was evident from the record that construction was never started, and no valid explanation or evidence had been provided for the delay.
It observed that the buyers had entered into a construction-linked payment plan, under which payments were to be made as per the construction schedule. However, since construction never began, the obligation to make further payments did not arise. The developers’ failure to act diligently and provide possession for over 10–12 years amounted to deficiency in service and unfair trade practice.
The Commission further rejected the contention that the buyers were not ‘consumers’, citing Kavita Ahuja v. Shipra Estates [I(2016) CPJ 31], and stated that the burden of proving commercial intent lay with the opposite parties, which they failed to discharge.
Liability of Legal Heirs
One of the significant legal issues dealt with in the judgment was whether the legal heirs of the deceased sole proprietor (Mr. Shailesh Dawda) of the entities could be held liable. The NCDRC referred to Vinayak Purshottam Dube (Deceased) Through LRs v. Jayashree Padmakar Bhat & Ors. [(2024) 9 SCC 398], where the Supreme Court held that legal heirs are liable for monetary obligations of the deceased to the extent of the estate inherited. Since this case did not involve any obligation requiring personal skill or expertise, the legal heirs were held responsible to refund the amounts from the inherited estate.
The Commission also emphasized that the developers’ prolonged inaction, misrepresentations, dishonoured refunds, and failure to obtain approvals despite knowing regulatory requirements collectively established a clear case of deficiency and breach.
Final Directions
Accordingly, the NCDRC issued the following directions:
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The opposite parties were directed to refund the entire amount collected from each member of the complainant association with simple interest at 9% per annum, from the respective dates of deposit until realization.
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Any amount already refunded would be deducted, but would also carry 9% interest from the date of original deposit until the date of that refund.
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If the balance amount is not paid within six weeks, a higher interest rate of 12% per annum would apply from the end of that period until actual payment.
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The opposite parties were further directed to pay ₹1,00,000 towards litigation costs to the complainant association.
Appearance
For the Complainant: Mr Sahil Sethi, Ms Arushi Mann, Mr Vikash Kumar, Advocates.
For the Opposite Parties: Mr Satal Singhai, proxy for Mr Vikramaditya Singh, Advocate
Cause Title: Commander's Gateway Homebuyers Welfare Association V. M/s Jupiter Infrastructure (Bangalore) Pvt. Ltd. and Ors.
Case No: Consumer Complaint No. 450 of 2019
Coram: Hon'ble Mr. Binoy Kumar [Presiding Member], Hon'ble Justice Saroj Yadav [Member]
[Read/Download order]
