The National Consumer Disputes Redressal Commission in a recent order has directed a builder to refund money to home buyers for delayed projects with interest rates similar to the rate for a house building loan in a corresponding period given by scheduled nationalized bank.
The NCDRC was hearing complaints filed against the builders Country Colonizers Pvt. Ltd. under Section 17 of the Consumer Protection Act, 1986. The builders had invited applications for residential project ‘Wave Garden’ in Mohall in which investments Rs. 10 crore had been made by around 20 last home buyers. Although the builders had promised completion of the project within 3 years, they had failed to complete it within the last 7 years. The complainants had pleaded for obtaining a fair amount from the builder consisting of the refund of the deposited amount, with ‘just and equitable interest’ lump sum compensation and cost of litigation.
The bench comprising of S.M Kantikar and Dinesh Singh, finding deficiency in service under section 2(1)(g) & (o) and unfair trade practices under section 2 (1)(r) on the part of the builders, held that they would have to pay compensation and litigation costs to home buyers seeking a refund.
Observing that there cannot be two opinions about refunding the amount, the Commission held that:
“that in respect of the interest on the amount deposited, ‘it is always desirable and preferable, to the extent feasible and appropriate in the facts and specificities of a case, that some objective logical criteria be identified and adopted to determine an apt rate of interest. The rate of interest cannot be arbitrary or whimsical, some reasonable and acceptable rationale has to be evident, subjectivity has to be minimized. In our considered view, bearing in mind that the subject unit in question is a residential dwelling unit, in a residential housing project, the rate of interest for house building loan for the corresponding period in a scheduled nationalized bank (take, State Bank of India) would be appropriate and logical, and, if ‘floating’ / varying / different rates of interest were / are prescribed, the higher rate of interest should be taken for this instant computation.”
Lumpsum compensation and a cost of litigation of 1 Lakh each was awarded to the buyers. The Court further held that the first charge on such amount would be to the banks, in view of the loans to facilitate transaction between the buyer and the builder, reasoning, that they function as per their rules and should not be unnecessarily and unjustifiably put to trouble in a consumer dispute substantively between the buyer and the builder.
It was further observed that once the amount awarded for deficiency in service was adjudicated, the onus on the builder would be prompt and dutiful in making necessary payments within the stipulated time.
It was held that creating further harassment, difficulty and helplessness for the ordinary consumers by delaying payments was unacceptable and delay would be penalized. The builder i.e. the juristic person along with the Directors has been concerned functionaries are liable individually, jointly and severally as per the observation of the Court in reference to section 25(3) and penalties under section 27(1) of the Act.