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Cooperative Housing Complex Of Housefed Punjab v. Gurdev Singh Azad
Factual and Procedural Background
This appeal arises from an order of the State Consumer Disputes Redressal Commission, Punjab (the "State Commission") in Consumer Complaint No. 149 of 2014. The Complainant, a senior citizen and retired government employee, was allotted a Category‑I flat with a tentative cost of ₹20,18,000. The payment schedule in the allotment contemplated initial deposits and later instalments. The Complainant paid an initial amount of ₹1,01,000 on 03.03.2009 and, by 31.08.2011, had paid a total of ₹12,11,000.
The Complainant was informed on 12.03.2012 that possession was likely in the last quarter of 2012, but possession was not delivered even by 2013. After follow‑up correspondence and an RTI request, the Opposite Party (the housing cooperative) issued a demand letter dated 19.11.2014 claiming a final cost of ₹32,60,000 and calling for payment of a further ₹20,49,427 (after crediting ₹12,11,000 already paid). The Complainant filed a complaint seeking prohibition of the excessive demand, handing over of possession within three months, or alternatively refund of amounts paid with interest @15% p.a., compensation of ₹10,00,000 and costs.
The State Commission allowed the Complaint in part and directed the Opposite Party to refund ₹12,11,000 with interest @12% p.a. from the respective dates of deposit, awarded compensation of ₹1,00,000 and costs of ₹11,000 (with specified interest consequences for non‑compliance). The Opposite Party appealed to the National Consumer Disputes Redressal Commission under Section 19 of the Consumer Protection Act, 1986. The National Commission (Hon'ble Mrs. M. Shreesha, Presiding Member) heard the appeal and issued the impugned order dated 06 Feb 2018.
Legal Issues Presented
- Whether the Complainant can be made to wait indefinitely for offer of delivery of possession and, in consequence, whether the Complainant is entitled to refund of the amounts he deposited with the housing society.
- Whether the fact that Consumer Fora have limited jurisdiction on pricing of housing projects affects the relief sought by the Complainant (i.e., whether pricing issues preclude the grant of refund or other consumer relief).
- Whether an offer of possession made after the Complainant had sought refund (and after initiation/withdrawal of proceedings before the District Forum) prevents the Complainant from obtaining a refund under the terms of the allotment/brochure.
Arguments of the Parties
Appellant's Arguments (Housing Society / Opposite Party)
- The figure of ₹20,18,000 in the allotment letter dated 22.06.2009 was only a tentative cost; the final cost worked out to ₹32,60,000, and the allottee is bound by the terms which envisage payment of the balance at possession.
- Condition No. 3 of the allotment letter provides that "Balance, if any, towards difference of Final Cost and Tentative Cost of the flat shall be paid at the time of handing over of the possession of the flat."
- Condition No. 8 states that the price is liable to increase for specified reasons (variation in plinth area, change in specifications, increase in cost of raw materials, etc.) and such increases are binding on the allottee.
- The 'surrender of flat' clause does not stipulate any refund after possession has been offered; and in this case the offer of possession (by letter dated 19.11.2014) was made before any refund could be claimed.
- Delays in the project were caused by factors such as site flooding, scarcity of materials, delay in NOC from the power authority, and other project realities which justify the final cost and the timeline.
Respondent's / Complainant's Arguments
- The Complainant contended that possession was not delivered within the timeframe communicated (possession was promised for last quarter 2012 but not delivered by 2013) and that repeated requests for information were ignored or met with evasive replies.
- The Complainant alleged that the demand letter of 19.11.2014 (seeking a total of ₹32,60,000) was issued to harass him and did not explain how the final cost was computed.
- As a result of the unexplained increase and failure to deliver possession, the Complainant sought refund of amounts paid with interest (initially @15% p.a.), and compensation for mental harassment and agony (claimed ₹10,00,000), together with costs.
- The Complainant relied on correspondence (including RTI requests and unsatisfactory replies) to demonstrate prolonged silence and lack of information from the Appellant about the date of possession.
Table of Precedents Cited
| Precedent | Rule or Principle Cited For | Application by the Court |
|---|---|---|
| Bangalore Development Authority Versus Syndicate Bank (2007) 6 SCC 711 | Authority for the proposition that completion of a project without disclosing a date of possession and without giving substantial reasons for delay is impermissible; a developer/society cannot keep an allottee in the dark about possession timelines. | The court held that even if 'time' was not the essence of the contract, mere absence of a specified date does not absolve the Appellant from its obligation to disclose possession timelines and to complete the project reasonably. The National Commission relied on this precedent to support the conclusion that the Appellant's prolonged silence and failure to provide possession justified a refund of amounts paid with interest. |
Court's Reasoning and Analysis
The National Commission began by identifying the narrow questions for decision: despite the general principle that Consumer Fora have limited jurisdiction to adjudicate pricing in the housing sector, the immediate issue was whether the Complainant could be compelled to wait indefinitely for possession and whether that justified a refund of amounts paid.
The court reviewed undisputed facts: the allotment was on 22.06.2009, the Complainant had paid ₹12,11,000 by 31.08.2011, and the allotment letter contained no specified time for delivery of possession. The Complainant had sent multiple letters seeking information; after an RTI application the Appellant provided an evasive reply. Although the Appellant had replied on 12.03.2012 that possession was likely in the last quarter of 2012, possession was not delivered and further communications from the Complainant went unanswered for more than two years.
The court accepted that Consumer Fora cannot determine pricing broadly, but emphasized that the core concern here was delay and silence. Relying on the Supreme Court precedent in Bangalore Development Authority v. Syndicate Bank, the court found that completion of a project without disclosing the date of possession and without substantial reasons runs counter to the principles laid down by the Supreme Court. In that light, the Appellant's prolonged silence and failure to give a timeline for possession amounted to deficiency in service and unfair trade practice, particularly given the vulnerability of the elderly Complainant.
The court further examined the timing of events: the offer of possession by the Appellant (demand letter dated 19.11.2014 giving a possession date of 15.02.2015) was issued after the Complainant had sought redress before the District Forum and after the Complainant sought a refund. Since the offer of possession was made only after the Complainant sought refund, the Appellant’s contention that the surrender/possession clause barred refund was held to be unsustainable on the facts.
Having reached the view that the State Commission's direction to refund ₹12,11,000 with interest @12% p.a. was not illegal, the National Commission affirmed that relief. However, it exercised discretion to modify the compensation component: it reduced the compensation awarded by the State Commission from ₹1,00,000 to ₹50,000 and set aside the default interest on the compensation amount that the State Commission had ordered.
Holding and Implications
APPEAL ALLOWED IN PART
Holding:
- The National Commission affirmed the State Commission's order insofar as it directed refund of ₹12,11,000 to the Complainant with interest @12% p.a. from the respective dates of deposit (till realization) and costs as previously ordered.
- The National Commission reduced the compensation awarded by the State Commission from ₹1,00,000 to ₹50,000 and set aside the default interest @12% p.a. that had been ordered on the compensation amount by the State Commission.
- No order as to costs was made by the National Commission.
- The statutory amount deposited by the Appellant at the time of filing the appeal was ordered to be transferred to the Consumer Legal Aid Account.
Implications:
- Direct effect on the parties: The Complainant is entitled to a refund of ₹12,11,000 with interest @12% p.a. as directed earlier; the compensation awarded by the State Commission was reduced to ₹50,000. The Appellant must comply with the refund and related directions of the State Commission as modified by the National Commission.
- Broader precedent: The decision applies established authority (Bangalore Development Authority v. Syndicate Bank) to reaffirm that a housing authority/society cannot keep an allottee in the dark about possession and cannot rely on the absence of a specified time in the allotment to avoid obligations. The opinion did not purport to lay down a new principle of law beyond the cited authority; the National Commission primarily applied existing precedent to the facts.
NATIONAL CONSUMER DISPUTES REDRESSAL COMMISSION
NEW DELHI
FIRST APPEAL NO. 1355 OF 2017
(Against the Order dated 16/03/2017 in Complaint No. 149/2014 of the State Commission Punjab)
1. MANAGING DIRECTOR, COOPERATIVE HOUSING
COMPLEX OF HOUSEFED
PUNJAB, S.C.O. NO. 150-151-152, SECTOR-34-A, CHANDIGARH ...........Appellant(s) Versus
1. GURDEV SINGH AZAD
S/O. SHRI PHUMAN SINGH, R/O. MANDIR STREET, AZAD NAGAR, FEROZEPUR CITY ...........Respondent(s)
BEFORE:
HON'BLE MRS. M. SHREESHA,PRESIDING MEMBER For the Appellant : Mr. Dharam Vir Sharma, Sr. Advocate with Ms. Madhu Bala Sandhu, Advocate
For the Respondent : Mr. Raman Goklaney, Advocate Dated : 06 Feb 2018
ORDER
MRS. M. SHREESHA, MEMBER
Aggrieved by the order in Consumer Complaint No. 149 of 2014 passed by the State Consumer Disputes Redressal Commission, Punjab, Chandigarh (in short "the State Commission"), the Opposite Party preferred this Appeal under Section 19 of the Consumer Protection Act, 1986 (in short "the Act"). By the impugned order, the State Commission has allowed the Complaint in part directing the Opposite Party to refund ₹12,11,000/- to the Complainant with interest @ 12% p.a. from the respective dates of deposits, together with compensation of ₹1,00,000/- and costs of ₹11,000/-. The Opposite Party was directed to comply with the order within 30 days of the receipt of the certified copy, failing which, the amount of compensation awarded, shall attract interest @12% p.a. from the date of the order till the date of realization.
2. The facts material to the case are that the Complainant, a senior citizen and a retired Government employee opted to purchase a flat from the Opposite Party, in category-I, the tentative price of which was ₹20,18,000/-. The initial deposit of 5% of the tentative cost was to be paid within 30 days from the date of the allotment letter, 45% of the cost was to be paid in 8 quarterly instalments of ₹1,30,500/- and the remaining 40% of the cost i.e., ₹8,07,000/- was to be paid in 120 monthly
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instalments of ₹13,017/-. On 03.03.2009, the Complainant paid an amount of ₹1,01,000/- and was allotted a flat in category-I vide allotment letter dated 22.06.2009. On 31.08.2011, the Complainant paid ₹12,11,000/- with a slight deviation from the Schedule of Payment given by the Opposite Party. It was averred that on 12.03.2012, the Complainant was informed that the flat would be delivered in the last quarter of 2012. However, possession was not delivered even in the year 2013 and the Complainant made a representation on 06.06.2013, but received no reply. It was pleaded that on 19.11.2014, the Opposite Party instead of delivering possession, sent a demand letter to the Complainant to deposit ₹20,49,427/-, thereby escalating the cost of flat from ₹20,18,000/- to ₹32,60,000/-. After deducting ₹12,11,000/-, paid by the Complainant, the Complainant was asked to pay an additional amount of ₹20,49,427/-. Vexed with the attitude of the Opposite Party, the Complainant approached the State Commission seeking direction not to charge the excessive amount in pursuance to the letter dated 19.11.2014, to hand over the possession within 3 months, from the date of filing of the Complaint, or in the alternative to refund the amount paid with interest @15% p.a. together with compensation of ₹10,00,000/- and other costs.
3. The Opposite Party filed their Written Version stating that there was no commitment regarding the date of delivery of possession either in the brochure or in the allotment letter. It is settled law that the question of price of flat cannot be gone into by the Consumer Fora and therefore, this Complaint is not a 'Consumer Dispute'. It was averred that the estimates were prepared in the year 2008 when it was decided to float the Project for government employees, which was later extended to the general public. Therefore, after the allotment of the work and completion of the project, there has been an increase in the final cost of the flats and the Complainant is bound by the terms and conditions of the contract. As the site was located in Zirakpur- Patiala Highway, which was a low lying area, the site got flooded a number of times and construction was delayed as the rain water had to be drained out from the site. There was scarcity of building material like sand, gravel and bricks, NOC was not issued by the Punjab State Power Cooperation Ltd, for which Petition No. 6 of 2014 under Section 142 of the Electricity Act, 2003 had to be filed by the Opposite Party. It was only after the passing of the order by this Commission that NOC was issued by the Deputy Chief Engineer on 12.06.2014. Possession of flats could not have been delivered without supply of electricity and without issuance of the NOC. Therefore, the exact cost was worked out, after the completion of the Project, which is as per the terms and conditions of the allotment.
4. It was pleaded that Clause 4 regarding 'Surrender of Flat', does not stipulate any refund after the possession of the flat has been offered. In this case, the possession of the flat has been offered to the Complainant vide letter dated 19.11.2014, therefore, the amount cannot be ordered to be refunded in view of the clause of the brochure.
5. Based on the evidence adduced, i.e., Ex. C-1 to C-12 and Ex. OP1 to OP16, the State Commission allowed the Complaint in part, as aforenoted, observing as follows:-
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"10. Instead of giving the reply to the aforesaid letters written by the complainant, the opposite party issued Final Notice dated 19.11.2014 (Ex.C-12) for payment of balance amount of Rs.20,49,427/-, which is a sheer harassment and it is nowhere mentioned in the said letter in what manner the final cost has been assessed. It appears that the same has been sent just to harass the complainant. The details are required to be furnished how the opposite party calculated the final cost of Rs.32,60,000/- whereas initial cost was of Rs.20,18,000/- only. If the cost increases due to unreasonable delay on the part of opposite party to complete the project, then complainant cannot be burdened in an arbitrary manner. Bare minimum principles of natural justice are required to be followed. A person of 70 years of age who is already in the evening of his life cannot wait for such a long period. Prior to that no notice whatsoever has been sent with regard to the payment of the cost. It has been specifically mentioned in the allotment letter and the conditions Ex.C-5 how the instalments with respect to the price Consumer Complaint No.149 of 2014 10of the flat were to be paid. There is approximately 60% increase in the price of the flat and that too without any justification.
11. Moreover, the reasons for delaying the possession given in the reply have not been proved by way of cogent evidence. These factors may have been kept in mind by the opposite party before launching of the Project. The complainant is not to wait for indefinite period for possession of the flat. He is justified in not making further payment as there was no development at the site. The opposite party remained silent for about two years and when the complainant asked information under the RTI Act, 2005 about the status and delivery of possession, the demand letter dated 19.11.2014 Ex.C-12 has been issued to the complainant. This notice appears to have been issued with mala fide which is certainly creating mental tension and agony to an aged person. This action of the opposite party not only amounted to deficiency in service but also adoption of unfair trade practice by it. Therefore, it is held that the complainant is entitled to the refund of Rs.12,11,000/- paid to the opposite party along with interest and costs. The complainant is also entitled to compensation on account of mental harassment and agony suffered by him in the evening of his life."
6. Learned Senior Counsel for the Appellant submitted that ₹20,18,000/- mentioned in the allotment letter dated 22.06.2009 is only a tentative cost and the final cost arrived at was ₹32,60,000/-. He drew the attention of the Bench to Condition No. 3 of the Allotment letter in which it is stated that "Balance, if any, towards difference of Final Cost and Tentative Cost of the flat shall be paid at the time of handing over of the possession of the flat" and hence the Respondent cannot now say that the cost of the flat was enhanced arbitrarily. Condition No. 8 of the terms and conditions also states that "the price is liable to increase due to variation in plinth area, scope of work, change in specifications, design, increase in cost of land, rate of interest, amount of interest, increase in the cost of raw materials or for any other reason and the same shall be binding upon allottee."
Learned Senior Counsel further submitted that the conditions with respect to 'surrender of flat' do not stipulate any refund after the offer of the possession of
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the flat and that the scheme was closed in the year 2014.
7. The Complainant, first filed the Complaint before the District Forum, withdrew the same on 20.08.2014 and then approached the State Commission on the ground of jurisdiction and filed the Consumer Complaint on 12.09.2014 and amended the same on 23.12.2014.
8. Learned Counsel for the Respondent submitted that 60% of the tentative cost was already paid by the Complainant by 31.08.2011 and that he wrote to the Appellant on 06.02.2012 seeking information about the delivery of possession, for which the Appellant replied vide letter Ref. No. 17146 dated 12.03.2012, stating that possession of flat is likely to be handed over during the last quarter of the year 2012. He further submitted that another letter was addressed on 06.06.2013 stating that even after a lapse of 15 months, possession has not been delivered. He also sought information under R.T.I. filed before the State Commission as Ex.C-8 and C-9 for which he received a reply vide Ex.C-10 dated 23.08.2013 stating that
"this organization at present does not provide any information".
9. The facts not in dispute are that the Complainant has paid an amount of ₹12,11,000/- upto 31.08.2011; that the tentative cost of the flat was ₹20,18,000/-; that the allotment was made on 22.06.2009; and that there was no time period mentioned in the Allotment letter. It is pertinent to note that the Complainant had written a number of letters to the Appellant seeking information about the delivery of possession. It is relevant that after addressing a letter to the Appellant on 06.02.2012, the Respondent received a reply that the possession of the flat was likely to be handed over during the last quarter of the year 2012. However, admittedly even by 06.06.2013, the possession was not handed over and the Respondent had written another letter seeking a specific date of delivery of possession. As the Respondent did not receive any sort of information regarding the date of delivery of possession, he was constrained to seek information under R.T.I. on 12.08.2013, for which he received a reply on 23.08.2013 which is evasive, bald and does not give any information about the delivery of possession.
10. Though, there is force in the contention of the Learned Senior Counsel that Consumer Fora cannot go into pricing and its fixation, the brief point which falls for consideration here is whether the Complainant can be made to wait indefinitely for offer of delivery of possession. It is relevant to note that it was only after the Respondent sought for information regarding the date of delivery of possession that the Appellant issued a final notice on 19.11.2014 for payment of ₹20,49,427/- though there was no date of delivery of possession mentioned in the Allotment letter.
11. Having regard to the catena of judgments of the Hon'ble Supreme Court, there is force in the contention of the learned Counsel for the Appellant that the 'Consumer Fora' do not have jurisdiction to decide the pricing of the Housing Sector. Therefore, the point that falls for consideration is whether the Complainant is entitled for refund of the amount he has deposited with the Petitioner Society, in the light of total silence by the Petitioner Society with regard to
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the date of completion of the project.
12. In the instant case though 'Time' was not the essence of contract, the fact remains that the Allottee was not even informed of the likely date and was kept in the dark and the Appellant has remained silent for more than two years even after the Respondent sought information under the R.T.I. Act. Merely saying that 'time' is not specified in the Allotment letter does not absolve the Appellant from completion of the project not disclosing the date of possession, without giving substantial reasons, is ultra vires to what the Hon'ble Supreme Court has laid down in "Bangalore Development Authority Versus Syndicate Bank" (2007) 6 SCC 711. The direction of the State Commission to refund the amount paid by the Complainant at reasonable interest @12% cannot be stated to be illegal in any manner. The Appellant was deficient in not giving any information about the date of delivery of possession after its letter dated 12.03.2012. The contention of the Learned Counsel that no refund shall be given after the offer of possession is made, is unsustainable in the light of the fact that in the demand letter dated 19.11.2014, vide which the Respondent was directed to take the possession of the flat by 15.02.2015, is much after the Complainant approached the District Forum. To reiterate, the Complaint was initially filed before the District Forum and was withdrawn on 20.08.2014, which date is much prior to the demand letter which was issued by the Appellant herein. It is also relevant to mention that the Appellant filed their Written Version before the District Forum on 23.07.2014 and the offer of possession was made much later on 19.11.2014. It can be safely concluded that the offer of possession was only after the Complainant sought for refund of the amount paid and therefore, it does not attract the 'refund clause' stated under 'surrender of flat'.
13. Since interest has already been awarded @12% p.a. from the respective dates of deposit, till the date of realization, I find it a fit case to reduce the compensation awarded from ₹1,00,000/- to ₹50,000/- and also set aside the default interest @12% p.a. on the compensation amount of ₹1,00,000/-, which was awarded by the State Commission.
14. In the result, this Appeal is allowed in part reducing the compensation from ₹1,00,000/- to ₹50,000/- and setting aside the default amount while affirming the rest of the order of the State Commission. No order as to costs.
15. The statutory amount deposited by the Appellant at the time of filing of the Appeal shall stand transferred to the Consumer Legal Aid Account.
......................
M. SHREESHA
PRESIDING MEMBER
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