Promised plot sold to someone else, buyer secures Rs 8 lakh payout from consumer court

A consumer commission in Visakhapatnam has awarded over Rs 8 lakh to a man who spent years trying to get a residential plot registered after paying Rs 6 lakh to a real estate developer in 2017. Finding that the developer had allegedly sold the plot to a third party, the commission held the builder guilty of deficiency in service and ordered a refund with compensation.

President Dr Gudla Tanuja and Varri Krishna Murthy (member) noted that the man allegedly approached police to resolve the matter and get the plot registered but found no resolution and finally moved the consumer commission.

“The commission holds that the complainant is entitled to a refund of the amount, as granting relief of execution of the sale deed will lead to further litigation, since the alleged plot is said to have been sold to third parties. The complainant is entitled to compensation for mental agony and torture due to the breach committed by the opposite party (builder),” the June 12 order read.

The commission was hearing a complaint filed by one Gangu Kameswara Rao, who sought directions to Hasini Estates and Constructions either to execute the sale deed for the plot in ‘Glorious Gardens Phase-II’ or refund the Rs 6 lakh paid by him along with compensation and costs.

‘Builder had no right to retain amount’

The consumer body held that the builders have no right to retain the amount paid by the complainant since they failed to fulfil their part of the obligation.

The commission noted that despite service of notice, the builder initially remained inactive and the matter proceeded ex parte.

However, at a later stage, the builder entered appearance through counsel and was permitted to participate in the proceedings by advancing written argument.

The commission noted that the complainant paid Rs 6 lakh between October 2017 and February 2018, but the builder failed to register the plot.

The commission found that the complainant is entitled to costs of litigation as he was made to seek redress, denying his legitimate rights provided under the agreement.

The consumer body directed the builder to refund Rs 6 lakh with interest at the rate of 9 per cent per annum from October 2017 till the date of realisation.

The consumer body further directed the company to pay Rs 2 lakh towards compensation for mental agony, harassment and inconvenience along with Rs 10,000 towards costs.

Waited 9 years for resolution

It was placed on record that the builder company formed layout “Glorious Gardens Phase-II” in Visakhapatnam in which they offered to sell a house plot for consideration of Rs 18.37 lakh.

The amount was payable in instalments, with 25 per cent payable at the time of execution of the sale agreement, another 25 per cent subsequently and the remaining 50 per cent at the time of registration.

The complainant claimed that he accepted the offer and paid Rs 4.60 lakh initially and later paid another Rs 1.40 lakh. An agreement of sale was executed on December 15, 2017.

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Thereafter, the complainant claimed that he demanded that the builder register the plot, but they postponed the same on some pretext that Visakhapatnam Metropolitan Region Development Authority (VUDA) had not issued permission.

When the complainant later demanded renewal of the agreement, the builder assured him that registration would be completed within three months and that renewal was unnecessary.

Subsequently, the complainant lodged a police complaint. The police held meetings with the managing partner of the company on more than one occasion, during which the builder assured that registration formalities would be completed, but no action followed.

The complainant alleged that despite repeated requests, the police failed to initiate any action against the builders and, as directed by the police, he approached the commission for rendering of justice.

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The complaint was represented by advocate S Sukanya Priya in the matter.

Builder’s defence

The builder, through the written arguments, contended that the reliefs claimed under the complaint cannot be granted as the dispute is covered under the Specific Relief Act, which has to be decided in a civil court.

It was further added that the complaint is barred by limitation, and to escape the consequences of a time-barred claim and payment of court fee, the complainant approached the commission with false averments.

It was submitted that the complainant failed to fulfil his part of the obligation. It was added. As a consequence of the same, the builder company forfeited the advance amount paid in terms of the sale agreement, and the property had been sold to a third party in view of the breach committed by the complainant.

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It was argued that there was no deficiency of service or unfair trade practice on their part and therefore the complaint should be dismissed with exemplary costs.

The real estate company was represented by advocate Krishna Yerni in the matter.

Significance of ruling

This ruling reflects that a real estate developer cannot retain a buyer’s money after failing to perform its obligations under the agreement. Even where specific performance becomes impractical because the property has been sold to third parties, the consumer body can order a refund with interest and award compensation for the mental agony and harassment caused by the builder’s conduct.

Consumer helpline number of respective state and national consumer commission: For consumer-related grievances, individuals may contact the consumer helpline in their respective states (Andhra Pradesh Consumer Commission Helpline: 0866-2551431) or call the National Consumer Helpline at 1915 for assistance.