NCDRC's Landmark Interim Order: Strengthening Consumer Rights in Real Estate Disputes

May 19, 2024

National Commission Orders Interim Relief in Villa Dispute, Impleads State
Bank of India & New Purchaser

NCDRC’s Landmark Interim Order: Strengthening Consumer Rights in Real Estate Disputes

New Delhi, April 30, 2024 — In a recent ruling by the National Consumer Disputes Redressal Commission (NCDRC), Consumer Case No. 172 of 2023 has garnered significant attention, setting a new precedent for interim relief in consumer disputes. Presided over by Hon’ble Mr. Justice A. P. Sahi, the case involves a dispute between Mr. S. Abhishek Kaushik, the complainant, and Viannar Infra LLP, the opposite party, over the cancellation of an agreement for the sale of a property.

The case, represented by a team of competent legal counsels including Mr. Sulaiman Bhimani, Mr. Mayank Sapra, and Ms. Lalima Das for the complainant, and Mr. Raghavendra Singh and Ms. Smirti Arvind for the opposite party, revolved around the unilateral termination of the sale agreement by the opposite party. Alleging deficiency in service and failure to deliver the promised property, Mr. Kaushik sought various reliefs, including:

Declaration that the termination of the agreement to sell dated December 8, 2021, was illegal.

Handover of the possession of Villa No. 10 in the “La Zorita” project, Anjuna, North Goa.

Compensation of ₹15,00,000 for mental harassment.

Reimbursement of ₹3,00,000 for litigation costs.

Key Developments and Orders

Delay Condonation: The Commission condoned a two-day delay in filing the written version of the complaint, ensuring that the complainant’s submissions were considered on record.

Interim Injunction: The complainant requested interim relief to restrain Viannar Infra LLP from creating third-party interests in the villa. Despite the opposite party’s knowledge of the ongoing proceedings, they negotiated the sale of the villa to Mr. Sudershan Malik on December 28, 2023, and executed a sale deed on March 14, 2024.

NCDRC’s Interim Order

Justice A. P. Sahi, in his detailed order, referenced the relevant provisions of the Consumer Protection Act, 2019, and cited the doctrine of lis pendens, emphasizing the Commission’s authority to grant interim relief in the interest of the parties involved. The judge noted, “the Commission can grant interim orders which, in the present case, deserve to be considered due to the transactions swiftly executed.”

This is necessary inasmuch as in a Complaint under the Consumer Protection Act, 2019 the Commission has been given the power to grant such reliefs as are available in Section 39 of the Act coupled with additional power to annul any contract under Section 59(2) and also to pass an interim order under Section 38(8) read with Section 59(1) in the interest of the Parties. The Commission therefore can grant interim Orders which in the present case deserves to be considered due to the transactions swiftly executed as mentioned above on the doctrine of lis pendens. Learned Counsel for the Opposite Party has urged that the cancellation of the booking being valid and keeping in view the reliefs prayed for such an order is not needed and he opposes the grant of an interim relief.

The judge highlighted the swift negotiation of the property with Mr. Sudershan Malik after the initiation of the complaint proceedings. Despite the opposite party’s contention that the cancellation of the booking was valid, the judge ruled in favor of the complainant, stressing the need to maintain equity and secure the interests of both the complainant and the bank involved in the loan transaction.

Interim Arrangement: The Commission mandated the following:

Viannar Infra LLP to remit the amount received from the subsequent sale to the State Bank of India, securing the complainant’s liability towards the loan within three weeks.

Any remaining amount beyond the loan settlement to be deposited with the NCDRC to secure the complainant’s interests.

Implications and Future Proceedings

The NCDRC’s interim order underscores the critical role of consumer protection in real estate transactions. It also highlights the judiciary’s capacity to impose equitable remedies to prevent unjust enrichment and protect consumers’ financial investments. The case is scheduled for the next hearing on October 9, 2024, where further developments will be closely monitored.

This interim order serves as a precedent for handling similar disputes, ensuring that developers cannot exploit consumers through unilateral terminations and subsequent sales of disputed properties. The inclusion of the bank as a respondent further exemplifies the comprehensive approach required in such multifaceted disputes.

Conclusion

The NCDRC’s interim order in Mr. S. Abhishek Kaushik vs. Viannar Infra LLP represents a landmark decision in consumer protection law. It affirms the Commission’s commitment to safeguarding consumers’ rights against unfair trade practices in the real estate sector. As the case progresses, it will be pivotal in shaping future legal standards and practices in real estate transactions.

For more detailed updates and analysis on consumer rights and real estate laws, stay tuned to our blog.

Case Name: MR. S. ABHISHEK KAUSHIK Vs. VIANNAR INFRA LLP

Case No.: CONSUMER CASE NO. 172 OF 2023 WITH IA/16479/2023 (Injunction), IA/16480/2023 (Exemption from dim documents)

Bench: Justice A. P. Sahi, President

Order Dated: April 30, 2024

This article aims to provide an in-depth analysis of the NCDRC interim order and its implications for consumer protection in real estate transactions. It highlights the critical role of legal intervention in safeguarding consumer interests against malpractices by developers.

Link to the article published in Law Trend