Unfair trade practices by real estate firms

CONSUMER PROTECTION
JEHANGIR B GAI
Naren and Sudha Sheth booked a
residential flat in a housing-cumcommercial project known as Lodha
Luzuria at Thane, being constructed
by Sri Sainath Enterprises, belonging to the Lodha Group. The price of
the flat, measuring 1,118 square feet
carpet area on the second floor,
was ~1.04 crore.
Out of the agreed consideration,
Seths paid ~1.02 crore in instalments
from September 27, 2010, to
November 2, 2010. The remaining

amount of ~2.6 lakh was to be paid at

the time of possession. To pay for the
purchase of this flat, Seths had to
break their fixed deposits, losing
~3 lakh towards interest and
other charges.
The builder avoided executing
the agreement for sale. No heed was
paid to the correspondence made by
the Seths in this regard. On
December 22, 2010, the builder
demanded an additional sum of
~3.96 lakh for car parking. The Seths
questioned this demand. Since no
heed was paid to their e-mail, they
had a legal notice issued. In response,
the builders representative informed
them that they would have to pay for
parking, else execute an indemnity
bond that they did not want the facility and would not park their vehicle
in the premises. Seths e-mail protest
was ignored.
In January 2011, the builder
sent a letter for executing an interim agreement, and telephonically
threatened the Seths that the flat
allotted to them would be can-

celled if they failed to sign on the

dotted line. The Seths finally filed
a complaint before the National
Commission.
The builder contested the complaint. According to the builder, the
complaint was not maintainable as
the Seths had several properties and
they were investors, not consumers.
The Seths were blamed for noncompliance with the terms and conditions set out in the application
form for allotment of the flat, due to
which the allotment was cancelled
and an amount of ~91.66 lakh had
been refunded. The flat was later sold
to another buyer, Monish Jain,
through a registered agreement.
The Commission considered
Seths clarification that they owned
only two small flats, which were
inadequate for their family that comprised themselves and their three
daughters. The Commission accepted this explanation, and held the
complaint to be maintainable.
The Commission observed the
concept of an interim agreement

was completely illegal, arbitrary and

unacceptable. It also observed that
the allotment letter set out the
schedule of payment for the flat,
along with two parking places.
There was no reference to any additional amount payable towards car
parking. Yet, the builder attempted
to deprive the Seths of the car parking through execution of an interim
agreement, where parking space
was stated as nil. Besides this, the
Commission observed that most of
the clauses of the interim agreement were arbitrary and against the
interests of the flat purchasers.
The interim agreement was
silent in respect of completion of
the project and execution of conveyance deed. It also provided for
payment of advance maintenance
charges for two years, which was in
contravention of MOFA which mandates that a society must be formed
within four months.
The Commission indicted the
builder for his arbitrary, high-handed and capricious character.

However, the subsequent buyer,

Monesh Jain, could not be ousted
as he was a bonafide purchaser and
could not be made to suffer.
The Commission noted that even
though Seths had paid ~1.02 crore,
the builder had issued refund
cheques for ~91.66 lakh, and no interest was paid even though the money
was lying with them for five years.
The Commission condemned
the builder for pulling a fast one
over the Seths and making havoc
with the hard-earned money.
Accordingly, by its order of May 5,
2016, delivered by Justice J M Malik
for the bench with S M Kantikar,
the Commission ordered Shree
Sainath Enterprises to refund the
entire amount of ~1.02 crore, along
with annual interest at 18 per cent
from the date of its deposit.
Additionally, ~1 lakh was awarded
as compensation to be paid within
90 days and pay nine per cent interest if delayed.
The author is a consumer activist