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A Bengaluru-based property company and its six directors have been directed by the consumer disputes redressal commission to refund INR 15 lakh to a purchaser with 7.5% interest per annum from October 2018. The purchaser, Narender Kumar, had bought a flat in 2018 in the 'Five Rings' project but was subjected to indefinite construction delays. Although there was the promise of repayment in instalments in 2022, the company failed to meet this assurance, forcing Kumar to bring the matter as a complaint at the start of 2024. The company was held liable for unfair trade practice by the court and were asked to recover losses from Kumar in monetary form caused due to delay. It reflects more significantly wider problems on the part of real estate industries involving project delay as well as problems of protection to consumers.
A Bengaluru real estate company and its six directors have been directed by the consumer disputes redressal commission to refund INR 15 lakh to a buyer of a home, with 7.5% per annum interest from October 2018, the date of the first payment. The direction was passed after the company failed to hand over the flat and delayed in refunding the amount. The commission pointed out that customers cannot be kept waiting for possession forever and stressed the builder's duty to be transparent once a sale agreement is signed. Advertisement
Narender Kumar of Kadubeesanahalli had planned to buy a seventh-floor apartment in the 'Five Rings' project owned by EXD Projects Pvt Ltd. The project, on a 4-acre and 39-gunta property in Gudigattanahalli village, Sarjapur hobli, was marked at INR 41.4 lakh. Kumar paid a deposit of INR 17 lakh and signed the sale deed on October 27, 2018. But work never began, and the company was constantly delaying the progress with new excuses.
Kumar, annoyed with the delays, asked for a refund through mail, to which the company agreed in August 2022. They offered to refund the amount in instalments-the first 10% by September-end 2022, 20% by the end of October, 30% by the end of November, and the balance 40% by the end of December. But after refunding INR 2 lakh in September 2022, the company did not make any further disbursements.
Kumar served a legal notice in February 2023 seeking the balance amount, but nothing happened. He then approached the consumer forum with a complaint in January 2024. The firm was served notice but failed to turn up or appear for hearings, resulting in an ex parte order.
In its directive released earlier this month, the commission ruled that the company's inaction to refund the full amount as a deficiency in service and an unfair trade practice. It noted that developers have an obligation to meet commitments and ensure transparency. The company's lack of action resulted not only in huge delays but also monetary loss to Kumar, who could have earned returns had the amount been invested elsewhere.
The commission directed the company and its six directors to repay INR 15 lakh with 7.5% per annum interest from October 27, 2018, until realisation of the amount. It also granted INR 2,000 as costs of litigation. The forum reminded again that buyers cannot be expected to wait endlessly and emphasized protection of consumers' rights in such transactions.
This case highlights endemic issues in the Indian real estate industry, which has long been riddled with project delays and consumer complaints. Possession delays have emerged as one of the top reasons for litigation in consumer courts. With the rollout of the Real Estate (Regulation and Development) Act (RERA) in 2016, accountability and transparency have shown improvement. Yet, projects that began prior to RERA's implementation, like 'Five Rings,' tend to continue to struggle with compliance.
Bengaluru's property market, though prospering as a hub for the IT industry, has seen rampant issues, like delays due to inadequate land acquisition, financial mismanagement, and regulatory hurdles. Purchasers are often left carrying the cost burden of such delays, as they keep paying EMIs on property loans that remain undelivered. Such concerns heighten the need for consumer protection mechanisms like consumer forums and RERA in order to facilitate justice for concerned buyers.
The case points to the responsibility of real estate developers to uphold sale agreements and fulfill their commitments. The ruling of the consumer forum acts as a deterrent to unfair trade practices and reaffirms the importance of safeguarding homebuyers' interests. By directing a refund with interest, the court ensured that the financial loss incurred by the buyer was recognized and compensated. Besides, the case brings into focus the larger systemic problems of the real estate industry in Bengaluru, where there are delays in projects and consumer complaints rampant. Such judgments lead to increased accountability in the sector and highlight the need for punctuality and transparency in action from developers.
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