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Emerging India Real Assets Pvt. Ltd. v. Kamer Chand
Factual and Procedural Background
This Revision Petition arises from a complaint filed by Respondent No. 1 against two companies incorporated under the Companies Act, 1956, who are Opposite Party Nos. 2 and 3 in the complaint. The complainant had booked a farmhouse in the project titled "Siswan Paradise" offered by Respondent No. 1. Possession was to be delivered within three years from the agreement dated 06.06.2013. However, a public notice by Greater Mohali Area Development Authority (GMADA) dated 03.11.2012 declared that the project had no legal sanction. The complainant sought a refund of the amount deposited with Respondent No. 2 (the developer) and the petitioners, but after no positive response, filed a complaint before the District Consumer Disputes Redressal Forum II, Chandigarh.
The District Forum allowed the complaint, directing the petitioners and Respondent No. 1 to jointly or severally refund ₹7,10,000 along with 12% interest per annum from the respective dates of deposit. Additionally, ₹1,00,000 was awarded as compensation for mental agony and harassment. The State Consumer Disputes Redressal Commission, U.T., Chandigarh, in First Appeal No. 51/2016, affirmed the District Forum’s order. The present revision petition challenges the State Commission’s order dated 09.02.2016.
Legal Issues Presented
- Whether the petitioners, as marketing agents and companies incorporated under the Companies Act, 1956, can be held liable for refund of money collected by the developer in a project lacking legal sanction?
- Whether the absence of requisite approvals and sanctions for the project renders the sale and marketing of farmhouses illegal and actionable under consumer protection laws?
Arguments of the Parties
Petitioners' Arguments
- The petitioners contended that they were only marketing agents for the project and thus not liable to refund the amount collected by the developer, Siswan Paradise Pvt. Ltd.
State Commission's Observations
- The State Commission decried the conduct of the opposite parties in launching and selling the project without obtaining necessary governmental approvals.
- It noted that the marketing agency must face consequences for selling a project without official sanction, thereby duping buyers.
- The public notice by GMADA indicated that Respondent No. 2 and the petitioners were sister concerns, implying collusion.
- No application for project approval had been filed prior to marketing, and no sanction was granted by competent authorities.
- The parties were held to have committed a criminal offence of cheating by selling property without proper approvals.
- The developer sold shares in joint land rather than properly partitioned property, further undermining legality.
Table of Precedents Cited
No precedents were cited in the provided opinion.
Court's Reasoning and Analysis
The court agreed with the State Commission’s findings that the petitioners, as corporate entities and marketing agents, were responsible for ensuring the legality of the project before offering farmhouses for sale. The absence of any sanction or approval from competent authorities was critical, and the marketing of an unsanctioned project constituted cheating and deception of buyers. The court emphasized that the petitioners could not claim ignorance of the project’s status given their role and corporate nature. The decision to uphold the refund and compensation order was based on these established facts and the conduct of the parties, with no jurisdictional error found warranting interference in revision jurisdiction.
Holding and Implications
The revision petition was dismissed.
The direct consequence of this decision is the affirmation of the refund and compensation order against the petitioners and the developer. The ruling holds marketing agents liable alongside developers for selling projects without legal sanction, reinforcing consumer protection against unauthorized real estate developments. No new precedent was explicitly set beyond the affirmation of the existing consumer protection framework.
ORDER (ORAL) This Revision Petition by two companies incorporated under the Companies Act, 1956, Opposite Party Nos. 2 and 3 in the complaint, is directed against the order dated 09.02.2016 passed by the State Consumer Disputes Redressal Commission, U.T., Chandigarh (for short the State Commission) in First Appeal No. 51/2016. By the impugned order, the State Commission has affirmed the order, dated 16.09.2015, passed by the District Consumer Disputes Redressal Forum II, U.T., Chandigarh (for short the District Forum) in Complaint no. 518/2014. By said order, the District Forum, while allowing the complaint filed by Respondent No. 1, had directed the Petitioners and one M/s. Siswan Paradise Pvt. Ltd., Opposite Party No. 1 in the complaint, to jointly or severally, refund to the complainant an amount of 7,10,000/-, alongwith interest @ 12% per annum from the respective dates of deposit of money by two complainants with Respondent No. 2, the Developer. The District Forum also awarded a compensation of 1 lac to the complainant on account of mental tension, agony and harassment suffered by him.
2. Briefly stated, the material facts giving rise to the present Revision Petition are that; the Respondent No. 1, Siswan Paradise Private Ltd. floated a project titled as Siswan Paradise offering farmhouses as single units. Allured by the advertisement, the complainant booked one farmhouse, vide agreement dated 06.06.2013. The possession of the said farmhouse was to be delivered within three years from the date of the agreement. However, it appears that having come across an advertisement, issued by Greater Mohali Area Development Authority on 03.11.2012, informing the public at large, that project Siswan Paradise had no legal sanctity, the complainant approached the Respondent No. 2, the developer, and the Petitioners in this Petition, for refund of total amount deposited by him with Respondent No. 2, herein. Having failed to elicit any positive response from any of the Opposite Parties in the complaint, the complainant filed the complaint, in which the aforesaid directions came to be issued.
3. Being aggrieved by the said directions, the petitioner unsuccessfully took the matter in further appeal before the State Commission. Hence, the present revision petition.
4. We have heard ld. counsel appearing for the petitioner. The short grievance of the petitioners is that being only the marketing agents for the said project, they cannot be held liable for refund of the amount collected by the Developer i.e. Siswan Paradise Pvt. Ltd.
5. We are unable to persuade ourselves to agree with the ld. counsel. While affirming the order passed by the District Forum and commenting and deprecating the conduct of the Opposite Parties in the complaint, in launching the project and selling the farmhouses, even without obtaining sanction/approval from the competent authority, the State Commission has observed as follows:- If a marketing agency sells out a project, for which, no approvals/sanctions have been granted by the Govt. Authorities, the said agency has to face the music and consequences of duping the gullible buyers, of their hard-earned money. In the public notice, it has specifically been mentioned by the GMADA that respondent no.2 and appellant no.1 are the sister concern. It is also apparent on record that before appellant no.1 started marketing the project, not even an application has been filed by respondent no.2, to get approval/sanction from the competent authorities, to launch the project. The information supplied vide letter dated 26.08.2014, referred to above, clearly states that not even a single application qua granting sanction to the project, has been received and dealt with, by the Competent Authority. In connivance with each other, the appellants and respondent no.2 committed a criminal offence of cheating. As per established law, builder cannot sell its property, unless and until proper approvals/sanctions have been obtained by it, from the Competent Authorities. It appears from the reading of documents on record that instead of selling a unit in a project, respondent no.2 in a very arbitrary manner, sold its share in a joint land measuring approx. 3807 acres, bearing hadbast No.326, Khewat No.92, Khatauni no.254-352, at Village Mirzapur, District Mohali, Punjab. There is nothing on record that said land was ever partitioned.
6. We are in complete agreement with the view taken by the State Commission. As noted above, the petitioners happen to be body corporate. Before offering the farmhouses in the said project as Agent of Respondent No. 2, they must be aware about the status of the sanction for launch of the project. Therefore, it is beyond ones comprehension that the present Petitioner was not aware about the actual state of affairs for which only the developer could be held responsible.
7. We do not find any jurisdictional error in the order passed by the Ld. State Commission warranting our interference in revisional jurisdiction. The revision petition fails and is dismissed accordingly. ......................J D.K. JAIN PRESIDENT ...................... M. SHREESHA MEMBER
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