Refund of Illegally Charged Excess Sale Area in Residential Projects

HIMANSHU DEWAN & 5 ORS. v. EXPERION DEVELOPERS PVT. LTD.

National Consumer Disputes Redressal Commission | Date: January 16, 2023

Introduction

The case of HIMANSHU DEWAN & 5 ORS. v. EXPERION DEVELOPERS PVT. LTD. involves a group of consumers who purchased residential apartments in the Windchants project developed by Experion Developers Pvt. Ltd. Located in Gurgaon, Haryana, the complainants alleged that the developer illegally charged them for an excess sale area that did not correspond to any actual increase in the carpet area of their respective apartments. The key issues revolved around the legitimacy of the additional charges, the maintenance of consumer rights post-conveyance deed execution, and the interpretation of joint complaints under the Consumer Protection Act, 2019.

Summary of the Judgment

The National Consumer Disputes Redressal Commission (NCDRC) partially allowed the complaint filed by Himanshu Dewan and other purchasers against Experion Developers. The complainants sought a refund of amounts paid towards alleged excess sale areas, asserting that the developer arbitrarily increased the sale area without any basis. The Commission found merit in the complainants' assertions, referencing previous judgments and statutory provisions, and directed the developer to refund the illegally charged amounts along with interest. Additionally, the developer was instructed to execute Supplementary Correction Deeds and pay costs to the complainants.

Analysis

Precedents Cited

The judgment extensively referenced several key precedents that influenced the court's decision:

• Brigade Enterprises Limited v. Anil Kumar Virmani (2022) 4 SCC 138: This Supreme Court judgment emphasized that a joint complaint by multiple consumers is maintainable under the Consumer Protection Act, even if they represent only a few consumers with identical grievances.
• Laureate Buildwell Pvt. Ltd (S) v. Charanjeet Singh (S) 479: This case clarified that subsequent purchasers who inherit obligations from original purchasers retain their status as consumers, thereby allowing them to seek redressal under the Act.
• Arifur Rahman Khan v. DLF Southern Homes (P) Ltd. (2020) 16 SCC 512: The Supreme Court held that executing conveyance deeds does not strip purchasers of their rights to claim compensation for service deficiencies, such as delayed possession.
• Pawan Gupta v. Experion Developers Pvt. Ltd.: A prior decision by the same Commission where the demand for excess area was canceled due to lack of evidence and unfair trade practices by the developer.

Legal Reasoning

The Commission's legal reasoning was grounded in the interpretation of the Consumer Protection Act, 2019, and relevant Supreme Court judgments. Key points include:

• Consumer Status of Subsequent Purchasers: Citing Laureate Buildwell Pvt. Ltd v. Charanjeet Singh, the Commission recognized that subsequent purchasers stepping into the original purchaser's obligations remain consumers entitled to redressal.
• Maintainability of Joint Complaint: Referencing Brigade Enterprises Ltd. v. Anil Kumar Virmani, the Commission affirmed that a joint complaint by multiple consumers with the same grievance is valid under Section 35(1)(a).
• Limitation Period: The Commission dismissed the developer's contention regarding the limitation period by noting the suspension of the limitation period by the Supreme Court and the existence of a continuing cause of action.
• Pecuniary Jurisdiction: The Commission clarified that under the Consumer Protection Act, 2019, pecuniary jurisdiction is determined solely by the value of the consideration paid, not including compensation claims, thus affirming its jurisdiction as the consideration exceeded ₹2 Crore.
• Unfair Trade Practices: The Commission identified the developer's arbitrary increase in sale area without proper evidence as an unfair trade practice, warranting the refund of illegally charged amounts.

Impact

This judgment has significant implications for the real estate sector and consumer rights in India:

• Strengthening Consumer Rights: It reinforces the protection of consumers against arbitrary practices by developers, ensuring that any additional charges are substantiated with credible evidence.
• Joint Complaints Viability: The affirmation that joint complaints are maintainable even by a few consumers sets a precedent for collective redressal mechanisms, encouraging more consumers to seek justice collectively.
• Clarification on Subsequent Purchasers: By recognizing subsequent purchasers as consumers, the judgment ensures that consumer rights are preserved through the transfer of property, maintaining accountability on developers irrespective of ownership changes.
• Guidance on Pecuniary Jurisdiction: The clarification on determining pecuniary jurisdiction based solely on the consideration paid streamlines the process for consumers to approach the appropriate redressal forum.

Complex Concepts Simplified

Excess Sale Area

Excess Sale Area refers to the additional square footage that a developer may claim beyond the originally agreed-upon carpet area of an apartment. Charging for excess sale area without any actual increase is deemed illegal and constitutes an unfair trade practice.

Consumer Protection Act, 2019

The Consumer Protection Act, 2019 provides a framework for addressing grievances of consumers against goods and services that are deficient or involve unfair practices. It establishes consumer forums at district, state, and national levels for redressal.

Pecuniary Jurisdiction

Pecuniary Jurisdiction determines the financial threshold within which a particular consumer forum (district, state, national) can entertain a complaint. Under the 2019 Act, it is based solely on the value of the consideration paid for goods and services.

Joint Complaint

A Joint Complaint allows multiple consumers with similar grievances to file a single complaint collectively, streamlining the redressal process and strengthening the consumer's position against the opposite party.

Conclusion

The NCDRC's decision in HIMANSHU DEWAN & 5 ORS. v. EXPERION DEVELOPERS PVT. LTD. underscores the judiciary's commitment to protecting consumer rights in the real estate sector. By invalidating the unjustified excess sale area charges and recognizing the legitimacy of joint complaints and the consumer status of subsequent purchasers, the judgment sets a robust precedent for future cases. It emphasizes the necessity for developers to maintain transparency and fairness in their dealings, ensuring consumers are not exploited through arbitrary financial demands. This decision not only serves justice to the complainants but also fosters a more accountable and consumer-friendly real estate market.