MUMBAI: Observing that retention of a flat purchaser’s hard-earned money without delivery of possession constitutes a continuing wrong, the state consumer commission directed city-based Bombay Realty and The Bombay Dyeing & Manufacturing Co Ltd to refund approximately Rs 4.09 crore—comprising the principal deposit and 12 years of accrued interest and compensation—to two Jamshedpur-based homebuyers after the developer failed to deliver the apartment booked in 2016 on time.“…a flat purchaser cannot be compelled to wait indefinitely for possession, and when a builder defaults or fails to deliver, the consumer is fully entitled to seek a refund of the principal amount along with reasonable interest. Retaining the hard-earned money of homebuyers while failing to deliver the unit amounts to unjust enrichment,” the Maharashtra State Consumer Disputes Redressal Commission said.The commission directed Bombay Realty and The Bombay Dyeing & Manufacturing Co Ltd to jointly and severally refund Rs 1.95 crore with 9 percent annual interest from the respective dates of deposit until realization. The commission also ordered payment of Rs 1 lakh as compensation for mental agony, harassment and deficiency in service, and Rs 50,000 as litigation costs.The developers argued that the complaint was time-barred and contended that an arbitration clause in the booking documents ousted the commission’s jurisdiction. The developers also claimed a legal right to forfeit a portion of the paid amount due to alleged payment defaults by the buyers.The commission, however, held that a builder cannot rely on an arbitration clause or technical limitation objections when substantial buyer funds are retained without possession. “The objection regarding the arbitration clause is untenable in light of the settled position of law. Sections 3 and 100 of the Consumer Protection Act explicitly provide that the remedies under the Act are in addition to and not in derogation of the provisions of any other law,” the commission said.The commission added, “When a developer fails to deliver possession within a reasonable time or stalls execution while retaining substantial public funds, it constitutes a clear deficiency in service and an unfair trade practice.”The commission held that consumer remedies remain available despite an arbitration clause. The order said, “This commission possesses full statutory jurisdiction to adjudicate the present dispute.”Presiding Member Poonam V Maharshi and Member Nisha Chavhan allowed the complaint filed by Raj Kumar Agarwal and Rahul Agarwal in 2022. The complaint concerned Flat No 801 in the “Two ICC” project at Island City Centre, Dadar East, Mumbai, booked for Rs 9.94 crore along with two car parking spaces.The complainants had paid Rs 1.95 crore towards the flat, including TDS. The first payment of Rs 25 lakh was made on Aug 29, 2014, and an allotment letter was issued on Oct 6, 2014, under a 30:70 payment plan. According to the complainants, despite timely payments and adherence to initial milestones, the developer delayed construction by over a year. Consequently, discussions ensued regarding a revision of the payment plan to a construction-linked plan. However, instead of issuing a revised schedule, the developers allegedly issued arbitrary demands under the old scheme and subsequently issued a pre-termination letter on Sept 6, 2016, threatening cancellation and forfeiture.The complainants cancelled the booking in Oct 2016 and sought a refund with interest.The complainants initially pursued criminal proceedings against the developers in Jamshedpur, which were ultimately quashed by the Jharkhand High Court on Dec 9, 2021. This decision was upheld when the Supreme Court dismissed the Special Leave Petition on May 13, 2022. However, the SC explicitly preserved the right to seek civil remedies for monetary recovery.The developer issued a fresh demand letter on January 3, 2022, and persistently refused to refund the deposited funds, prompting the complainants to file the consumer complaint in Aug 2022.The developers contended that the consumer complaint should be dismissed on multiple grounds, primarily arguing that it was time-barred under the Consumer Protection Act, 2019, since the cause of action arose in 2016 but the complaint was not filed until Aug 2022. They also argued that the commission lacked jurisdiction due to a mandatory arbitration clause in the Booking Application Form. Further, the developers argued that the dispute stemmed entirely from the complainants’ payment defaults rather than any deficiency in service or construction, legally entitling them to cancel the allotment and forfeit the stipulated portion of the paid amount as per the agreed terms.
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