NCDRC Holds Developer Liable For Failing To Provide Redeveloped Flat, Awards ₹3.91 Crore Compensation
Pranav B Prem
The National Consumer Disputes Redressal Commission, comprising Justice Sudip Ahluwalia (Presiding Member) and Dr. Sadhna Shanker (Member), has held Sahaj Ankur Realtors liable for deficiency in service for failing to provide the promised redeveloped flat or the alternative accommodation within the stipulated period. The Commission partly allowed the complaint and directed the developer to pay compensation of ₹3,91,72,189.50 along with interest.
The complainants were tenants of flats in Madhav Baug, Andheri (East), Mumbai. On 20 September 2013, they entered into a registered Agreement for Permanent Alternate Accommodation with Sahaj Ankur Realtors in connection with the redevelopment of the property. Under the agreement, the developer undertook to allot Flat No. 801 admeasuring 700 sq. ft. carpet area along with podium parking within 24 months from issuance of the Commencement Certificate, with a further six-month grace period. Out of the total area, 650 sq. ft. was to be provided free of cost, while the complainants agreed to purchase an additional 50 sq. ft. for ₹11,40,000, of which ₹6,00,000 was paid in advance.
The developer was also required to furnish a performance bank guarantee, pay dislocation compensation, and provide monthly transit rent. However, the project did not progress within the stipulated time, and the developer failed to obtain necessary approvals. Consequently, a Deed of Indemnity-cum-Undertaking dated 10 January 2015 was executed, pursuant to which the complainants handed over vacant possession of their premises.
Under the indemnity deed, the developer undertook to obtain approval for Flat No. 801 within six months. Failing this, it agreed to allot two alternative flats bearing Nos. 301 and 302, free of cost, with allotment letters placed in escrow. It was further agreed that if neither the agreed flat nor the alternative flats could be provided, the developer would pay the market value for 1,317 sq. ft. carpet area along with 25% additional compensation.
The complainants alleged that the developer failed to obtain approvals within the stipulated period, stopped paying transit rent, and failed to fulfil its contractual obligations. They further stated that plans furnished in 2018 depicted Flat No. 801 as a refuge area. It was also admitted that the alternative flats kept under the indemnity arrangement had been sold to a third party without the complainants’ consent. Aggrieved, the complainants approached the Commission seeking allotment of the alternative flats or monetary compensation.
The developer contended that the complainants were not consumers and that the dispute arose out of a landlord-tenant relationship. It also argued that the indemnity deed was unenforceable for want of registration. Opposite Party Nos. 2 and 3 contended that they had no privity of contract with the complainants.
The Commission rejected the objection to maintainability and held that the permanent alternate accommodation agreement and the indemnity deed were intrinsically connected with the redevelopment service. Since the complainants had surrendered possession and paid consideration for additional area, they fell within the definition of consumers.
The Commission observed that the very execution of the indemnity deed constituted an admission of delay and non-compliance with the original agreement. It noted that the developer had undertaken to obtain approval for Flat No. 801 within a fixed period but failed to do so. It also found that plans supplied in 2018 showed the flat as a refuge area, reinforcing the complainants’ grievance.
Most significantly, the Commission recorded that the alternative flats forming the core security under the indemnity arrangement had been sold to a third party during the subsistence of the undertaking and without the complainants’ consent. This, it held, amounted to a clear breach of the developer’s obligations.
Rejecting the argument regarding non-registration of the indemnity deed, the Commission held that the complainants were seeking compensation for deficiency in service and not specific performance of a property transfer. The document was therefore admissible to establish the obligations undertaken and the consequences of non-performance.
In view of the admitted sale of the alternative flats and the prolonged delay, the Commission held that directing possession at such a belated stage would not be appropriate. It found that the equitable relief would be monetary compensation equivalent to the value of the flats the complainants were entitled to receive.
The Commission determined the compensation on the basis of the 2015–16 circle rate, observing that the complainants had approached the Commission several years after becoming entitled to the alternative flats and could not claim later market value. Applying the applicable circle rate of ₹19,829 per sq. ft. and converting the carpet area to built-up area, the value of the flats was assessed at ₹3,13,37,751.60. An additional 25% contractual compensation amounting to ₹78,34,437.90 was added, making the total payable ₹3,91,72,189.50.
Accordingly, the Commission directed Opposite Party No.1 to pay ₹3,91,72,189.50 to the complainants along with interest at 6% per annum from the date of filing of the complaint until realisation, and ₹50,000 towards litigation costs, to be paid within eight weeks. In case of default, the outstanding amount would carry interest at 8% per annum from the date of default until realisation. The complaint against Opposite Party Nos. 2 and 3 was dismissed for lack of privity of contract.
Cause Title: Pushpa Jagannath Shetty & Ors. v. Sahaj Ankur Realtors & Ors.
Case No.: Consumer Complaint No. NC/CC/238/2019
Coram: Justice Sudip Ahluwalia (Presiding Member) and Dr. Sadhna Shanker (Member)
