The State Consumer Disputes Redressal Commission has ruled in favour of homebuyers who had paid nearly ₹2 crore for a flat that was never delivered. In a strongly worded order, the Commission directed the builder to return the entire principal amount along with interest, compensation and costs, while making clear observations on the retention of buyers’ hard-earned money and the limited reach of arbitration clauses.
Background of the Case
Complainants Raj Kumar Agarwal and another had booked Flat No. 801 in a project of Bombay Realty in 2014 and deposited ₹1,95,94,431. The project suffered delays. The buyers sought restructuring or cancellation, but the money remained with the builder without possession being offered. The consumer complaint (CC/188/2022) was filed in 2022 after earlier proceedings, including litigation that reached the Supreme Court.
Limitation and Continuing Wrong
The builder argued that the complaint was time-barred because the cause of action arose in 2016. The Commission rejected this. It noted that the dispute over refund, criminal proceedings and resolution attempts continued across forums up to the Supreme Court’s order dated 13 May 2022. The builder itself issued a fresh demand letter on 3 January 2022, acknowledging the transaction. Retention of the buyers’ money without delivery of possession was treated as a continuing wrong. The complaint, filed within two years of the culmination of prior proceedings and continuing demands, was held to be within limitation under Section 69 of the Consumer Protection Act, 2019.
Arbitration Clause Does Not Oust Consumer Forum
The builder also contended that an arbitration clause in the booking documents barred the consumer complaint. The Commission held this objection untenable. Sections 3 and 100 of the Consumer Protection Act make the remedies under the Act additional to, and not in derogation of, other laws. Relying on the Supreme Court’s decision in Aftab Singh vs Emaar MGF Land Ltd., the Commission reaffirmed that an arbitration clause in a buyer-builder agreement does not take away the jurisdiction of consumer fora. The Commission therefore possessed full statutory jurisdiction.
Deficiency in Service and Unfair Trade Practice
It was undisputed that ₹1,95,94,431 had been deposited for Flat No. 801. When a developer fails to deliver possession within a reasonable time while retaining substantial funds, it constitutes deficiency in service and an unfair trade practice. The Commission observed that a flat purchaser cannot be compelled to wait indefinitely. Citing Pioneer Urban Land & Infrastructure Ltd. vs Govindan Raghavan and Experion Developers (P) Ltd. v. Sushma Ashok Shiroor, it held that a buyer is entitled to seek refund of the principal with reasonable interest when the builder defaults.
Forfeiture Clauses and Unjust Enrichment
The builder relied on forfeiture clauses in standard-form agreements. The Commission held that such clauses cannot override the equitable jurisdiction of consumer courts. Retaining the hard-earned money of homebuyers while failing to deliver the unit amounts to unjust enrichment. The Commission therefore found deficiency in service and unfair trade practice established.
Final Order
The complaint was allowed. The opponents (jointly and severally) were directed to:
- Refund the entire principal of ₹1,95,94,431 with interest at 9% per annum from the respective dates of deposit until actual realisation.
- Pay ₹1,00,000 as compensation for mental agony, harassment and deficiency in service.
- Pay ₹50,000 towards litigation costs.
Copies of the order were directed to be supplied free of cost to both parties. The order was passed by Ms. Poonam V. Maharshi, Presiding Member, and Dr. Nisha Amol Chavhan, Member.
The decision reinforces that builders cannot indefinitely retain buyers’ funds without delivering possession, that continuing wrongs keep limitation open, and that arbitration clauses do not extinguish consumer forum remedies. For homebuyers facing similar situations, the order provides a clear pathway to seek full refund with interest and compensation.
Also Read: Builders Took ₹90 Lakh, Sold Flat to Someone Else — Consumer Commission Orders ₹1.05 Crore Refund
