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Supreme Court cautions Unitech homebuyers: Consumers Don’t Expect to Profit from Your Loss

The dispute between homebuyers and real estate players has now skewed in favour of homebuyers, thanks to various Supreme Court judgements. The apex court acknowledges the suffering that homebuyers are going through for not receiving the possession of their flats. At the same time, it is important to know that while the consumer courts are consumer-friendly, they will not let any buyer make profit out of the interest in refund or compensation. The courts entertain matters that are modest in nature and where the claims are not exaggerated. Where they have evidence that the opposite party has made undue delay in providing service and the consumer has been really harassed, courts grant relief by way of compensation. Such is a case between a home buyer and Unitech Residential Resorts Ltd, where the consumer was reprimanded by Supreme court for undue claims.

Unitech vs. homebuyer

Recently, buyers had approached National Consumer Disputes Redressal Commission and filed a case against Unitech after the company failed to deliver their flats on time. The homebuyers claimed for the entire principal amount along with interest, and demanded Rs 200,000 each as compensation for mental agony and harassment. This was opposed by Unitech’s counsel, who argued that they had already got their principal amount and interest. The Commission ordered Unitech to repay the principal amount with interest @ 14 per cent, which the company complied with.

Later the homebuyers approached Supreme Court and filed Unitech Residential Resorts Ltd vs Atul Gupta. By an order dated 20 September 2017, in these appeals there was no dispute that homebuyers had already received the principal sum and the 14 percent interest. However, homebuyers filed an appeal to get some amount towards mental agony and litigation costs. The bench consisting of three members – Justice Dipak Misra, Justice Amitava Roy and Justice AM Khanwilkar – allowed the appeal and directed Unitech to pay a sum of Rs 80,000 to each homebuyer (much less than the claim) to whom the principal amount along with interest had been paid, within a period of eight weeks from the date of order.

Further, directions were issued to homebuyers to return the original documents along with the NOC from the concerned bank/financial institution within four weeks from the date of order. The court further said that the present order was passed in special circumstances and the amount that had been granted should be treated as compensation because of the delay on the part of Unitech.

The fact of the matter is that while the court understands the agony and financial burden homebuyers are going through, only complaints with actual and genuine grounds are being taken into consideration.

Not all claims by hmebuyers are OK

We can also refer to the recent judgement passed by the National Commission in Consumer Case No. 927 of 2016 against Unitech. The complaint was filed due to non-delivery of possession after the stipulated time even though the consumer had paid a total sum of Rs 5,978,355 to the company. The consumer filed a complaint seeking various directions including the following ones against Unitech:

  1.  To deliver the possession of the flat
  2. To  pay the delay charges as per clause 4.c. (ii) of the allotment letter @ Rs 5 per sq. ft per month of super area
  3. To pay Rs 25,000 per month towards rental/loss of income as rental
  4.  To refund the entire amount of Rs 5,978,355 with an interest of 18 per cent from the date of receipt till the date of realisation
  5. To pay a sum of Rs 22.26 lakh paid to Citibank as interest on housing loan
  6. To pay an amount of Rs 2,000,000 as compensation for mental and physical trauma
  7. To pay damages of Rs 2,000,000 for indulging in unfair trade practice
  8. To pay Rs 100,000 towards the cost of  legal and miscellaneous expenses

While deciding the quantum of compensation, the counsel for Unitech referred to clause 4.c. (ii) of the builder–buyer agreement and submitted that as per the agreement between the parties, the company was liable to pay Rs 5 per sq. ft per month as compensation for delay in delivery of possession of the flat. The other party argued that the percentage of interest should be @ 18 per cent. For its part, the court relied upon another clause according to which the complainant was entitled to get the refund amount with simple interest @ 10 percent per annum.

Finally, the Commission ordered Unitech to repay the entire amount of Rs 5,978,355 along with compensation of simple interest @ 10 per cent per annum. The court further ordered Unitech to pay Rs 10,000 as litigation cost. All other claims were not accepted.

Lesson for Real Estate Consumers  

The courts want to help aggrieved consumers provided they are claiming a genuine and reasonable amount of compensation. In both the above cases, we have noticed that the court ordered for repaying the principal amount. However, when it comes to awarding interest on principal amount and compensation, the court looks into each and every factor as well as terms and conditions of the builder–buyer agreement. The motive is that no party should suffer through injustice as also to dismiss inflated and frivolous claims designed to make profit on the pretext of being a victim of injustice. If the court finds out that the claim is not as per the loss or harm done, it can backfire on the consumer because in many cases courts also impose fine on consumers for exaggerated claims. The claim you are making should be only up to the amount of actual damage/loss suffered to avoid any such situation. A consumer should not hope to profit from their loss or injury by making exaggerated claims.

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