Pun­ish­ment for non-ful­fill­ment of prom­ises

If the developer sells a pro­ject on the ba­sis of cer­tain fea­tures but fails to de­liver those ser­vices, buy­ers have the right to seek le­gal re­course

HT Estates - - HTESTATES - Su­nil Tyagi

Many peo­ple in In­dia dream of own­ing a farm­house.While many pre­fer in­vest­ing in apart­ments for fear of issues with re­gard to land etc, there are some “brave hearts” who go ahead with the lav­ish pur­chase of a farm­house. In an in­ter­est­ing case con­cern­ing farm­houses, the Na­tional Con­sumer Dis­pute Re­dres­sal Com­mis­sion, granted com­pen­sa­tion to the farm buy­ers in ad­di­tion to im­pos­ing puni­tive dam­ages against the developer who did not ful­fill his prom­ise of con­struct­ing a coun­try club within the pro­ject.

The Na­tional Con­sumer Dis­pute Re­dres­sal Com­mis­sion in its judge­ment of 2012 fol­low­ing a pe­ti­tion filed by the Farm Own­ers & Res­i­dents Wel­fare As­so­ci­a­tion ( ‘As­so­ci­a­tion’) ac­knowl­edged the author­ity of the as­so­ci­a­tion to file a con­sumer com­plaint and held that it would be cov­ered within the mean­ing of “Per­son” as de­fined under the Con­sumer Pro­tec­tion Act, 1986.

The dis­pute arose from a scheme pro­moted by a developer in the late 1970s for de­vel­op­ment of in­di­vid­ual farms on which the developer had pro­posed to build farm­houses for in­di­vid­ual buy­ers. The pro­ject de­tails in­cluded de­vel­op­men­tal works like roads, wa­ter sup­ply, elec­tri­fi­ca­tion, sewage dis­posal etc. The scheme also con­tem­plated main­te­nance of com­mon ar­eas, com­mon fa­cil­i­ties and other ser­vices by the main­te­nance com­pany. One of the prom­i­nent and well-ad­ver­tised fea­tures of the scheme was the con­struc­tion of a coun­try club com­pris­ing a swim­ming pool, ten­nis/bad­minton courts, sauna, steam bath and other modern fa­cil­i­ties.

How­ever, the developer did not con­struct the coun­try club, a fa­cil­ity agreed to be pro­vided and com­mu­ni­cated to the farm buy­ers. The farm pur­chasers were told that the con­struc­tion of the coun­try club would not take place at all. The de­ci­sion was taken by the developer uni­lat­er­ally.

An im­por­tant is­sue that came up for con­sid­er­a­tion was whether the de­ci­sion of the builder/ developer not to pro­vide a coun­try club after mak­ing the farm buy­ers wait for such a long time amounted to de­fi­ciency in ser­vice.

The Na­tional Com­mis­sion d e c i d e d i n f avo u r o f the As­so­ci­a­tion and granted com­pen­sa­tion to the f ar m pur­chasers in ad­di­tion to im­pos­ing puni­tive dam­ages against the developer. The Na­tional Com­mis­sion held that the uni­lat­eral de­ci­sion of the developer to drop the plan of con­struct­ing a coun­try club was un­fair to the farm pur­chasers. It held that the club was a spe­cial part of the scheme and the builder’s uni­lat­eral de­ci­sion to elim­i­nate it from the scheme was un­jus­ti­fi­able, un­fair and tan­ta­mount to “de­fi­ciency of ser­vice”.

The Com­mis­sion also ob­served that the club was the high­light of the pro­ject, a marketing strat­egy used by the developer to at­tract buy­ers. Had there been no club, not only would there have been less buy- ers but the price of the farm­houses would have also been lower. Not con­struct­ing the club was a big set­back to the farm buy­ers.

Ser­vice providers and in most cases, the de­vel­op­ers, should make it a point to keep all the com­mit­ments made by them to the con­sumers. If there was a fa­cil­ity promised to a buyer which in­flu­enced his de­ci­sion to buy that prop­erty and if it is not pro­vided later, the buyer could seek re­course through an ap­pro­pri­ate fo­rum.


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