Original builder responsible for completion of housing project

Builder can't escape liability by merely assigning development rights to another developer

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C V Subramaniyen and his daughter, Ashwini, had booked a row house to be constructed by Superior Builders in a project called Friends CHS at Airoli in Navi Mumbai, on February 18, 1996, for Rs 20 lakh.

At the time of booking, the builder had given inspection of various documents executed by Friends CHS in its favour, such as plans approved by the City and Industrial Development Corporation, the commencement certificate, etc. The Subramaniyens paid the booking deposit and the subsequent instalments as demanded. A registered agreement was also executed for purchase of the row house. Even after paying the entire Rs 20 lakh, possession was not handed over by December 31, 1997, the previously agreed date.

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The builder attributed the delay to a dispute with other flat owners about payment terms and other issues. The builder also wanted to get extra Floor Space Index, for which a petition was pending in the Supreme Court. The builder later claimed another firm named Mishra Builders and Developers was involved in constructing the society's building, regarding which there was a dispute pending before the Additional Mumbai Suburban District Consumer Forum.

After waiting for 15 years, the Subramaniyens filed a complaint before the Maharashtra State Commission against Superior Builders and its partners, Laxman alias Kailash Khedkar and Jagannath Khedkar, in 2012. They asked either possession of the row house be given or the money refunded along with 18 per cent interest from the date of payment, plus compensation and costs.

Superior Builders contested the case, saying it was time-barred. It also contended the complaint was not maintainable as Mishra Builders and Developers had not been impleaded though necessary. Superior Builders also claimed it was no longer the developer and that it had sent the refund by cheque when its development rights were terminated by the society, but the Subramaniyens had not encashed it. It stated the agreement provided that no compensation or interest would be payable if the amount had to be refunded, and so the complaint should be dismissed.

The State Commission over-ruled these objections. It was held that the complaint was within limitation as the cause of action would be continuous when possession was not given. The Commission noted that the agreement for sale of the row house was executed between the Subramaniyens and Superior Builders, who had failed to disclose how Mishra Builders had got involved in the project. It could be that development rights were assigned by Superior Builders in favour of Mishra Builders. Indicting Superior Builders of withholding material documents and failing to disclose information within its knowledge, the Commission drew an adverse inference and held that the complaint against Superior Builders was maintainable without impleading Mishra Builders.

The Commission also observed that the builder had terminated the agreement after the Subramaniyens had a legal notice issued and filed a consumer complaint. Even the cheque for the refund was sent after it had expired. If at all the agreement had to be terminated, it should have been done in 2002 when Superior Builders claimed its development rights were taken away. It held that the termination of the agreement was invalid and illegal, and concocted to create a false defence.

Accordingly, by its order of January 27, 2016, delivered by Usha Thakare for the Bench with Narendra Kawde, the Commission directed Superior Builders to hand over possession of the row house within two months, pay compensation of Rs 5 lakh and costs of Rs 1 lakh. If compliance was delayed beyond two months, 18 per cent interest would be payable from the date of the order.

The author is a consumer activist