Builder kept homebuyer's money for 10 years, court orders to refund Rs 5.25 lakh

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NEW DELHI: A consumer commission in Hoshiarpur has directed a builder and a housing society to refund Rs 5.25 lakh to a software engineer after finding that they collected money for a housing project that remained only on paper for over a decade.What was the issue?Jagpreet Singh Tamber, a software engineer from Punjab, applied for membership in the "Krisha Heights" housing scheme in 2015. The project, promoted by Colors Housing Society, promised that construction would begin the same year and be completed within 36 to 48 months. Relying on these assurances, Tamber paid a total of Rs 5.36 lakh through bank cheques.However, during a site visit in July 2017, he found that no construction had started and not even basic development work had been carried out.He then surrendered his membership and sought a refund of Rs 5.25 lakh, excluding the non-refundable membership fee. Instead of returning the money, the builder and the housing society passed responsibility between each other and failed to refund the amount.After a legal notice sent in September 2022 also went unanswered, Tamber approached the consumer commission alleging deficiency in service and unfair trade practices.

What did the commission say?The District Consumer Disputes Redressal Commission, Hoshiarpur, comprising President Naveen Puri and members Prem Singh Salaria and Harvimal Dogra, termed the matter a "classic case" of unfair trade practice.The commission observed that the builder and the housing society had accepted substantial sums from an innocent consumer in 2015 while promising possession within four years, but the project remained entirely on paper even after more than a decade."More than a decade has passed since those funds were pocketed, yet the project remains entirely on paper," the commission said.Rejecting the defence that delays in government policy had stalled the project, the commission held that builders cannot collect money from buyers without first obtaining mandatory approvals and then use public deposits as interest-free capital while consumers wait indefinitely."A real estate entity cannot utilise public deposits as interest-free capital while holding consumers hostage to speculative regulatory milestones," it said.The commission noted that once the builder failed to demonstrate substantial progress within the promised timeline, the buyer became legally entitled to a full refund.Accordingly, it directed the builder and the housing society to refund Rs 5.25 lakh along with interest at 7 per cent per annum from December 16, 2015, the date of the last major deposit, until actual payment is made. The order is to be complied with within 45 days.