Builder paid for breach of contract by buyer

The National Commission noted that the agreement provided for a refund of money, along with interest, but the purchasers had never sought refund

Magic Info Solutions was engaged in land development. It had undertaken a group housing project at Gurugram in collaboration with Godrej Properties, to be named Godrej Summit.
 

Pumit Kumar and Mohit Kumar Chellaramani booked a 2 BHK flat in this project by paying a booking deposit of Rs 10 lakh on September 11, 2012. They were allotted a flat with a super built-up area of 1,269  square (sq.) feet (ft) along with one covered car parking space for a total consideration of Rs 78.8 lakh. 
 

Subsequently, a sale agreement was executed on April 26, 2013, which stipulated a period of 47 months and a further six months as grace period for possession. The agreement also provided for compensation of Rs 5 per sq. ft per month for delay 

in possession.
 

The buyers took a loan of Rs 50 lakh from ICICI Bank to pay the instalments towards the flat, and made timely payment till September 23, 2016. Later, they sent emails enquiring about the stage of completion of construction, but did not get a satisfactory response. Their request for permission to visit the site was also ignored. Instead, a demand of Rs 4.56 lakh was made on May 30, 2017, asking for the amount payable on possession. Despite paying this amount, possession was not given. A visit to the site was again denied on the ground that internal work was still being carried out.
 

Finally, intimation to take possession was given on November 6, 2017, along with a demand for the deposit of stamp duty, registration charges, common area maintenance, and electricity charges. These amounts were also paid.
 

The buyers subsequently filed a complaint before the National Commission on February 18, 2018, demanding a refund of their money on the ground that construction had been delayed. The builders contested the case, and faulted the buyers for not completing the formalities and taking possession.
 

The National Commission observed that the agreement provided for 47 months for construction and a further grace period of six months, which entitled the builder to give possession by July 3, 2017. It also noted that the intimation letter for possession was given on May 30, 2017, and the final possession letter was issued on October 5, 2017. The Commission concluded that the delay in possession was not significant, hence the flat purchasers were not entitled to seek a refund.
 

The Commission also noted that the agreement provided for a refund of money along with interest, but the purchasers had never sought a refund. On the contrary, the purchasers had subsequently paid the stamp duty and registration charges on November 27, 2017. Later, maintenance and electricity charges were paid on January 24, 2018. Hence the Commission concluded that the buyers were not entitled to seek a refund.
 

The Commission further held that the builders were entitled to be compensated for breach of contract by the flat purchasers. It noted that even though the agreement provided for forfeiture of 20 per cent of the sale price, the amount being forfeited should be reasonable to compensate for damage due to such breach of contract. Since the flat remained with the builders upon cancellation, the Commission observed that no loss or damage had been caused to them. So, the Commission held that forfeiture of 10 per cent of the basic price of the flat would be reasonable.
 

Accordingly, by its order of February 3, 2023, delivered by the Bench of Ram Surat Ram Maurya and Inder Jit Singh, the National Commission allowed 10 per cent of the price to be forfeited. The balance amount, excluding stamp duty and registration charges, was ordered to be refunded along with 9 per cent interest upon return of the original sale documents.

The writer is a consumer activist