NCDRC Holds Jupiter Infrastructure, Partner Entities Liable For Failure To Deliver Possession , Initiates Refunds

Brief Facts:

M/s Jupiter Infrastructure launched and marketed a housing project named 'Commanders' Gateway' in collaboration with M/s Valji Gokuldas & Sons and M/s Laxmi Enterprises, sister concerns of M/s Thakkar Realties (collectively referred to as “Developers”). Several buyers booked apartments, row houses and plots in the said project by making advance payments amounting to 20% of total sale consideration. Valji Gokuldas and Laxmi Enterprises issued standard allotment letters for the buyers but did not execute a formal sale agreement. The allotment letter mentioned that the possession of the units would be delivered by March 2015. However, two years after the said deadline, Valji Gokuldas and Laxmi Enterprises informed the buyers that the project remained unfinished due to a lack of necessary approvals, which were pending. The buyers further discovered that as per the state government's notification, CIDCO (NAINA) was authorized to approve projects within 25 km of Navi Mumbai Airport. However, the Developers misrepresented the status of the approval from CIDCO and failed to commence construction timely. Through multiple emails between 2014-2015, Jupiter Infrastructure kept assuring the buyers that the construction would begin soon. It cited force majeure (act of the god) conditions due to delays in obtaining government approvals. In November 2015, Jupiter Infrastructure sent an email to the buyers, showing them alternative locations in Pune, Goa, Bangalore and Mumbai and offered them to shift their allotment. In August 2016, it again offered an alternative project to the buyers after informing them that it had been unable to obtain necessary approvals from CIDCO.

Thereafter, several buyers approached Valji Gokuldas and Laxmi Enterprises for refunds. The proprietor of these entities offered partial refunds to some buyers and pacified everyone. A few more buyers submitted written requests for a refund. They were then requested to provide a declaration of cancellation on an affidavit along with the reason for cancellation and allotment details. Valji Gokuldas and Laxmi Enterprises provided refunds via post-dated cheques to some buyers who complied with the formalities. However, these cheques were dishonoured upon deposition. Several buyers also initiated proceedings under Section 138 of the Negotiable Instruments Act, 1881. A complaint with the Economic Offenses Wing (Navi Mumbai) and an FIR were also lodged against the Developers. As a result, the directors of Developer entities were arrested. The Bombay High Court denied anticipatory bails to two of the arrested directors. The sole proprietor of the aforementioned entities was released on regular bail on medical grounds.

The buyers formed an association in the name of 'Commander's Gateway Homebuyers Welfare Association', registered under the Societies Registration Act, 1860. Aggrieved by the conduct of the Developers, the buyers' association filed a consumer complaint before the National Consumer Disputes Redressal Commission (“NCDRC”), New Delhi.

Contentions of the Developers:

Jupiter Infrastructure failed to appear for the proceedings. Therefore, it was proceeded against ex-parte. On the other hand, Valji Gokuldas, Laxmi Enterprises and Thakkar Realties contended that the buyers concealed the fact that the construction began on 18th October 2019. Further, they were engaging in 'forum-shopping' by approaching the NCDRC, while the FIR against their sole proprietor was pending. Several buyers had already availed refunds and some buyers purchased the units for rental purposes, disqualifying them as 'consumers' under the Consumer Protection Act, 2019 (“the Act”). There was also a discrepancy in the number of buyers in the complaint's main content and the annexure to the complaint. Since the sole proprietor of these entities passed away during the pendency of the proceedings, his legal heirs filed their reply and contended that they were not concerned with the functioning of these entities.

Observations of the NCDRC:

The NCDRC referred to its decision in Kavita Ahuja vs Shipra Estates [I (2016) CPJ 31] and held that the burden of proving that the complainants were not 'consumers' under the Act lies with the opposite parties. Valji Gokuldas, Laxmi Enterprises and Thakkar Realties failed to prove that the buyers did not qualify as consumers under the Act.

It was further observed that the buyers had opted for a construction-linked payment plan, wherein they had to make payments as per the construction schedule. However, the Developers failed to start the construction as per the schedule, despite collecting a substantial share of the consideration. The Developers failed to obtain necessary approvals before commencing the project and misrepresented its status at the time of sale. The documentary evidence proved that the Developers were fully aware of the CIDCO requirement. However, they failed to act with due diligence. This constituted unfair trade practice and a deficiency in service on their part.

The Developers also breached their contractual obligations by refusing to initiate refunds to several buyers. It was held that a buyer cannot be made to wait indefinitely for the possession of units, especially when 10-12 years had already passed from the date of booking. The NCDRC perused the allotment letters issued to the buyers and observed that the legal heirs of the late sole proprietor were contractually bound to settle the debts of the buyers on his behalf. Reliance was placed on Vinayak Purshottam Dube (Deceased) Through LRs vs Jayashree Padmakar Bhat and Ors. [(2024) 9 SCC 398], wherein the Supreme Court held that a deceased's legal heirs are liable for monetary obligations to the extent of the estate inherited from the deceased. Hence, the NCDRC held that the legal heirs of the sole proprietor were obligated to refund the booking amounts from the inherited estate, as this case did not require any personal expertise or skill.

Considering the aforementioned observations, the NCDRC directed the Developers to refund the collected amounts to the buyers with an interest of 9% per annum from the date of deposit till the date of actual refund, within 6 weeks of the date of the order. The interest rate of 9% per annum was also applied to the partial amount already refunded to the buyers from the respective dates of deposits till such payment. In case of failure to refund the amount within 6 weeks, an interest of 12% per annum was held to be imposed for the same period. The Developers were also directed to pay Rs. 1,00,000/- as compensation for litigation costs to the buyers association.

Case Title: Commander's Gateway Homebuyers Welfare Association vs M/s Jupiter Infrastructure (Bangalore) Pvt. Ltd. and Ors.

Case No.: Consumer Complaint No. 450 of 2019

Advocates for the Complainant: Mr Sahil Sethi, Ms Arushi Mann and Mr Vikash Kumar

Advocate for the Opposite Party: Mr Satal Singhai, proxy for Mr Vikramaditya Singh

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