NCDRC Holds Eros City Developers Accountable for Delayed Possession Delivery

August 17, 2024

The National Consumer Disputes Redressal Commission (NCDRC), led by Justice Ram Surat Maurya and Justice Bharatkumar Pandya, found Eros City Developers responsible for inadequate service due to delays in handing over possession to the complainant. The Commission determined that buyers should not be kept waiting indefinitely for possession, establishing a reasonable timeframe of three years.

Case Background

In 2004, the complainant booked a shop in a Ghaziabad project by Eros City Developers, intending to establish a women’s clothing store. An agreement was signed, and a substantial amount was paid by 2012. Although possession was offered in 2010, the complainant found the mall in a poor state, contrary to initial promises. Despite numerous complaints and meetings, the developer failed to complete the project as agreed. By 2014, a partial completion certificate was issued, but the project remained incomplete, with inflated charges and non-functional facilities. This led the complainant to file a case with the Delhi State Commission. The Commission ordered the developer to refund the deposited amount with 6% annual interest, plus ₹10,000 for mental agony and ₹50,000 for litigation costs. Dissatisfied, the developer appealed to the National Commission.

Developer’s Arguments

The developer acknowledged the shop booking, agreement, and deposits but argued that the project’s completion was delayed and that the complainant had been informed of potential delays. The developer disputed any commitment to a specific possession date or promises regarding water connections. They claimed the mall was functional by 2008-2009, with necessary certifications obtained by 2014 and 2016. The developer rejected the claims of poor conditions and excessive charges, asserting that the complainant had taken possession in 2010 after approving the construction quality. They also argued that the complaint was time-barred and that the complainants, being commercial buyers, were not considered consumers under the Act. The developer alleged that the complainants sought to exit the contract due to speculative value increases.

Observations by the National Commission

The National Commission noted that while the complainant acknowledged that possession was offered, it was deemed ‘paper possession’ due to the incomplete state of the building and the lack of a Completion Certificate. The Commission emphasized that the complaint was not time-barred, referencing Supreme Court rulings such as Lata Construction vs. Dr. Ramesh Chandra Ramaniklal Shah, Meerut Development Authority vs. Mukesh K. Gupta, and Samruddi Cooperative Housing Society Limited vs. Mumbai Mahalaxmi Construction Pvt. Ltd. These cases affirmed that builders must deliver a fully completed unit. The developer admitted the shop booking, agreement, and deposits, justifying the complainant’s demand for a refund due to the extended delay. According to Supreme Court precedents, including Pioneer Urban Land & Infrastructure Ltd. vs. Govindan Raghavan, a reasonable possession period is three years, and indefinite delays are unacceptable. Additionally, the Commission noted that while the State Commission had awarded 6% annual interest on refunds, the Supreme Court in Experion Developers Private Limited vs. Sushma Ashok Shiroor had deemed 9% interest as fair compensation.

The National Commission upheld the State Commission’s decision with modifications and dismissed the developer’s appeal.

Posted and reproduced in Public Interest by

Adv. Sulaiman Bhimani Legal Consultant

Expert in RERA & Consumer Matters, Co-operative Scty Matters,

Deem Conveyance, Family Matters, and Property Disputes.

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