NCDRC Modifies Relief Granted Against Barnala Builders; Confirms Deficiency in Service But Reduces Interest and Sets Aside Additional Compensation
Pranav B Prem
The National Consumer Disputes Redressal Commission (NCDRC), presided over by Justice Sudip Ahluwalia and Dr. Sadhna Shanker, has held M/s Barnala Builders & Property Consultants liable for deficiency in service in connection with its residential project “Maya Garden City” located on Chandigarh-Ambala Highway, Punjab. However, the Commission modified the relief granted by the State Consumer Disputes Redressal Commission, Punjab, by reducing the rate of interest and setting aside the compensation, while enhancing the litigation cost.
Background of the Case
The complainants, Ritika Gill and Sandeep Gill, had booked a flat—Flat No. 501, Block D-2 (2-BHK, super area 1307 sq. ft.)—under a down-payment scheme in the project "Maya Garden City" developed by the appellant, M/s Barnala Builders. The booking was made after being impressed by promotional advertisements and brochures which represented the project as fully developed and legally unencumbered.
The complainants paid an initial amount of ₹1,00,000 by cheque on 13.08.2011, followed by ₹4,25,000 on 03.09.2011, bringing the earnest money to ₹5,25,000. By 30.12.2011, the builder demanded ₹28,00,000 as the next installment, eventually raising a total demand of ₹26,25,000 as balance consideration. The complainants paid this amount by arranging a housing loan from the State Bank of India and remitted it on 01.10.2012.
It was only after these substantial payments that the builder belatedly produced an undated Agreement to Sell which introduced several previously undisclosed and onerous terms. These included clauses relating to parking allocation at the builder’s discretion, a pre-payment of three years’ maintenance charges, exclusion of the builder’s maintenance responsibility after possession, and extension of the possession deadline from 30.11.2013 to 30.11.2014.
Additionally, the complainants were asked to pay an unexplained service tax of ₹1,02,743 in February 2013, which they reluctantly did fearing forfeiture. A further service tax demand of ₹3,91,589 was made in November 2013, without proper computation, and was followed by repeated reminders in 2014 despite the complainants’ objections.
On 10.11.2014, the builder issued a "possession" letter although crucial development works, permanent utility connections, and necessary statutory approvals, including Completion/Occupation Certificates, were still absent. The possession offer also demanded additional sums under various heads such as balance price, interest, service tax, and maintenance, which were not part of earlier agreements.
Having already paid over ₹34 lakh without receiving actual possession supported by necessary certificates, the complainants served a legal notice on 22.11.2014 seeking a refund, which was met with threats of forfeiture. Thereafter, they filed a consumer complaint before the State Commission, Punjab, for a refund along with compensation and litigation costs.
Decision of the State Commission
The State Commission allowed the complaint and directed the builder to refund ₹34,27,747 along with 12% interest per annum from the date of each deposit until realisation. Additionally, ₹1,00,000 was awarded as compensation and ₹11,000 towards litigation expenses.
Builder’s Contentions Before NCDRC
Challenging the State Commission’s order, the builder contended that the apartment was fully habitable and most development work, including fire safety clearance, Air-Force NOC, and State-level environmental clearance, had been completed. They argued that the complainants delayed payments and breached the payment schedule, warranting penalties under the agreement, which treated time as the essence of the contract.
The builder also defended the service tax demands as statutory levies under the Finance Act, 1994, which were contractually payable by the buyer. Further, it was claimed that possession had been duly offered and many other buyers in the same project had already taken possession without dispute.
Complainants’ Response
The complainants argued that the builder had never provided a mandatory Occupation-cum-Completion Certificate as per the Punjab Apartment and Property Regulation Act, 1995. Therefore, the possession offered was only on paper and not legally valid. They relied on Supreme Court decisions such as Faqir Chand Gulati v. Uppal Agencies Pvt. Ltd [CA No. 3302/2005] and Pioneer Urban Land and Infrastructure Ltd. v. Govindan Raghavan [(2019) 5 SCC 725] to establish that possession without statutory approval is incomplete and constitutes deficiency in service. They also contended that they had paid more than 95% of the total sale price while the builder failed to deliver the promised development and approvals, justifying their claim for refund with interest and costs.
Observations and Findings of the NCDRC
The Commission observed that the complainants had broadly complied with the down-payment plan and that minor delays on their part did not justify the builder’s deficiencies. The Commission agreed that in consumer matters, awarding interest along with refund serves the purpose of compensation and that granting additional lump sum compensation was unnecessary.
Relying on the Supreme Court’s judgment in Experion Developers Pvt. Ltd. v. Sushma Ashok Shiroor [2022], the Commission reduced the interest rate from 12% to 9% per annum on the deposited amounts. The direction to pay ₹1,00,000 as separate compensation was set aside but the litigation cost was increased from ₹11,000 to ₹40,000.
Verdict
The appeal was partly allowed by modifying the State Commission’s order. The builder was directed to refund the deposited amount of ₹34,27,747 along with 9% interest per annum from the respective dates of deposits. The additional ₹1,00,000 compensation was disallowed but litigation costs were enhanced to ₹40,000. The builder was directed to make the entire payment within six weeks, failing which the outstanding amount would attract interest at the rate of 12% per annum until realisation.
Appearance
For The Appellant: Mr. Navneet R., Advocate Ms. Alankrita Sinha, Advocate.
For The Respondent: Mr. Sandeep Gill, In Person.
Cause Title: M/S. Barnala Builders & Property Consultants V. Ritika Gill & Anr.
Case No: NC/FA/120/2017
Coram: Hon'ble Mr. Justice Sudip Ahluwalia [Presiding Member], Hon'ble Dr. Sadhna Shanker [Member]
[Read/Download order]
