Receipt of cash is payment

As builder had not disputed payment of cash, amount can be treated as received, the Commission said

It is common for builders to take a certain percentage in cash while booking a flat. When a buyer seeks refund, this ‘black component’ is invariably lost as there is no proof of payment.

 

M Jayachandran had booked a villa in a project by Sri Renga Property Developers at Coimbatore by paying an advance of Rs 10 lakh in cash. Later, an agreement for sale was executed on March 25, 2010 according to which the villa, with a carpet area of 2,050 sq ft and super built up area of 2,600 sq ft, was to be sold for Rs 76.5 lakh. Subsequently, a sale deed for the land was executed on May 3, 2010 for sale of the flat for Rs 66.5 lakh.

 

Jayachandran obtained a housing loan which was paid by the bank directly to the builder. The rest of the amount was paid in instalments. The total amount paid was Rs 70.45 lakh, including the cash component. The balance of Rs 6.05 lakh, payable on possession, remained outstanding. As the housing project, including the villa sold to Jayachandran was not completed, the builder took a bank loan to complete the project. Despite this, the builder could not complete the project. The project was transferred to another builder, Vathithi Holdings. The payments made by Jayachandran for the villa was also transferred and the new builder took over the liability to complete the project. Even after that, there was considerable delay, due to which Jayachandran had to incur expense on renting alternative accommodation. So he filed a complaint before the Tamil Nadu State Commission against Vathithi Holdings, seeking a refund of the amount paid towards the purchase of the villa, along with interest, compensation and costs. The builder contested the complaint, contending that a claim for refund of money was not maintainable under the Consumer Protection Act. The builder claimed there was no deficiency in service and sought a dismissal of the complaint.

 

Overruling these objections, the State Commission ordered the builder to refund Rs 70.45 lakh, along with Rs 5 lakh as compensation and Rs 15,000 towards litigation costs. The builder challenged this order in appeal. It contended that the new builder could not be held liable to refund the cash component paid to the original builder. The National Commission observed that the crux of the dispute was in respect of the liability to refund the cash component of Rs 10 lakh. It observed that Jayachandran had clearly stated in his complaint the total amount paid for the villa, including the cash component. The entire amount paid by to the original builder was transferred to the new builder.

 

The builder was asked to produce his accounts, which showed that he had received the cash component of Rs 10 lakh, but the entry was reversed after more than 11 months to pass it off as a wrong entry. The National Commission refused to believe this excuse. The National Commission also observed that the builder had not disputed Jayachandran’s allegation about payment of the cash. So it would have to be treated as an admission that this amount had indeed been received in cash. Accordingly, by its order dated March 27, 2017 by

 

Justice K S Chaudhari, the National Commission dismissed the builder's appeal and upheld the order of the State Commission, including the liability to refund the cash component.

 

(The author is a consumer activist)