Delhi Consumer Commission Orders Rs 79 Lakh Refund for Unfulfilled Flat Promises

Holding that homebuyers cannot be made to wait indefinitely for promised flats, the Delhi State Consumer Disputes Redressal Commission recently directed Sanchar Nest Sahkari Awas Samiti Ltd., a Ghaziabad-based cooperative housing society, to refund over Rs 79 lakh with interest to two purchasers who were left without possession nearly 16 years after joining the housing project.

The Commission also awarded Rs 4 lakh as compensation for mental agony and harassment and Rs 1 lakh towards litigation costs. The complainants, Pramod Kumar Mahotra and Mahender Singh Bisht, had joined the cooperative housing society in 2010 after being promised residential flats in a project at NH-24, Noida. According to the complaint, the flats were initially scheduled to be delivered by 2012.

However, after disputes arose concerning the original project land, the society shifted members to another project, Palm Wood Enclave at Wave City, Ghaziabad, and demanded additional payments. Separate agreements were executed in July 2013 for two 3BHK flats measuring 1599 sq ft each. The complainants arranged finances through loans and continued making payments as demanded by the society. In total, they paid Rs 79,43,099 towards the flats.

Despite the payments, allotment letters were issued only in June 2019. Even thereafter, physical possession was not handed over. The complainants alleged that the society continued raising additional demands while repeatedly extending the completion timeline.

One of the principal objections raised by the society was whether cooperative housing society members are 'consumers' under the Consumer Protection Act. The Commission held that the complainants were indeed consumers under the Consumer Protection Act, 2019. The society had argued that it was merely a cooperative body formed by its members and not a commercial service provider. However, the Commission observed that a person who hires or avails services for consideration falls within the definition of a consumer. Since the complainants had paid substantial consideration for allotment and construction of flats, they were entitled to invoke consumer jurisdiction.

The Commission also noted that housing construction undertaken for consideration constitutes a 'service' under consumer law, and delays in handing over possession amount to a deficiency in service. The remedies available under the Consumer Protection Act continue to remain available even after the enactment of the Real Estate (Regulation and Development) Act, 2016 (RERA). The Commission further observed that failure to deliver possession gives rise to a continuing cause of action, enabling homebuyers to seek relief before consumer forums so long as possession remains undelivered.

The Commission rejected the argument that the complaint was filed beyond the limitation period. Referring to settled law, it observed that failure to hand over possession gives rise to a recurring and continuous cause of action. As long as possession remains undelivered, the homebuyer's grievance survives and can be pursued before a consumer forum.

The society also contended that the project was registered under RERA and therefore consumer proceedings were not maintainable. Rejecting the submission, the Commission observed that remedies available under the Consumer Protection Act are additional remedies and not excluded by RERA. It held that registration of the project under RERA did not bar consumer jurisdiction.

On the merits, the Commission found that the society had failed to produce any document showing the promised date of possession. Even assuming a reasonable construction period of 42 to 48 months, the project remained incomplete far beyond that timeframe. The Commission observed that the flats remained undelivered for several years even before the Covid-19 pandemic and therefore the pandemic could not be used to justify the delay.

Holding the society liable for deficiency in service, the Commission directed refund of Rs 39,08,865 to one complainant and Rs 40,34,234 to the other. The refund will carry interest at 8.25 per cent per annum, corresponding to the home loan interest rate, and will increase to 11.25 per cent per annum if payment is not made by August 8, 2026.