Delhi State Consumer Commission Holds Emaar MGF Liable for Delayed Flat Possession

July 20, 2024

The Delhi bench of the State Consumer Disputes Redressal Commission, chaired by Justice Sangita Dhingra Sehgal (President) and Mr. J.P. Agrawal (Member), found ‘Emaar MGF Land Ltd.’ responsible for inadequate service due to their failure to deliver possession of a flat within the agreed timeframe. Emaar MGF Land Ltd. was also held accountable for unilaterally cancelling the flat bookings and forfeiting the payments made by the buyers.

Summary of Events

The Complainants reserved a flat in the ‘Gurgaon Green/Group Housing Colony’ project developed by Emaar MGF Land Ltd. (“Builder”). Despite a nearly 15-month delay from the application date, a Builder Buyer’s Agreement was eventually signed between the Complainants and the Builder. According to the agreement, the Builder committed to delivering possession of the flat by or before 31st December 2018. However, the Builder did not fulfill this commitment and offered multiple explanations for the delay

Later, a representative of the Builder informed the Complainants that they could expect to receive the Occupation Certificate by the end of May 2019, a date that was subsequently extended to August 2019. Throughout this period, the Complainants diligently adhered to the payment schedule outlined in the Agreement, totaling Rs. 14,67,574/-, with the balance of Rs. 78,52,107/- due upon notification of possession. Despite this, the Builder persistently postponed possession on various grounds while making unwarranted demands from the Complainants.

The Complainants sought to terminate the Builder Buyer’s Agreement and issued a legal notice to the Builder requesting a refund of Rs. 14,67,574/-, but received an unsatisfactory response. Disappointed by this, the Complainants filed a consumer complaint with the State Consumer Disputes Redressal Commission, Delhi (“State Commission”). In its defense, the Builder argued that the Complainants lacked a valid cause of action and asserted there was no deficiency in its service.

Findings of the Commission:

The State Commission cited Section 24A of the Consumer Protection Act, 1986, which stipulates that a complaint must be lodged within two years from the date of the cause of action. In this instance, the Builder had committed to providing possession of the flat by 31st December 2018 but failed to do so within the specified timeframe. Referring to the precedent set in Mehnga Singh Khera and Ors. vs. Unitech Ltd. [I (2020) CPJ 93 (NC)], the State Commission recognized that the failure to deliver possession constitutes a continuous breach, establishing a recurring cause of action. Therefore, the Commission upheld that the Complainants were justified in pursuing legal action against the Builder.

Moreover, the State Commission referenced the ruling in Arifur Rahman Khan and Ors. vs. DLF Southern Homes Pvt. Ltd. and Ors. [2020 (3) RCR (Civil) 544], which affirmed that a developer’s inability to deliver a flat within the agreed-upon timeframe constitutes a deficiency in service. The Commission examined Clause 7 of the Builder Buyer’s Agreement, which guaranteed possession within 60 days from the issuance of the Occupation Certificate, not later than 31st December 2018. However, the Occupation Certificate was only issued on 16th July 2019, a delay exacerbated by the Builder’s application for it in February 2019, a month after the promised possession date. The State Commission emphasized that this delay, coupled with the Builder’s failure to provide adequate explanation or documentation, clearly indicated a deficiency in service.

Additionally, the State Commission reviewed Clause 7(b) of the Agreement, which afforded the allottees the right to terminate the agreement if possession was not tendered by the stipulated date. The Complainants exercised this right by formally requesting termination and a refund via email. Despite this, the Builder unilaterally cancelled the flat booking and forfeited the amount paid.

Regarding the refund amount, the Builder’s account records revealed that the Complainants had disbursed Rs. 14,45,830/-. Consequently, the State Commission directed the Builder to reimburse this amount along with 6% interest. In addition, the Builder was ordered to pay Rs. 1,00,000/- for mental anguish and harassment, as well as Rs. 50,000/- towards litigation costs.

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