Consider consequences before stopping EMI

The National Commission observed that once proceedings before the Debt Recovery Tribunal were completed, Ahmed could file a fresh complaint if a deficiency in service existed

Nazeer Ahmed had booked a flat in a housing project undertaken by Kishorkumar Gokaldas at K G Marina Bay in Chennai. The understanding between the builder and the flat purchaser was that the total consideration would be Rs 8,987,263, which would include the price of the flat and common areas totalling 1,865 square feet (sq ft), a private terrace of about 475 sq ft, one “open sky parking”, as well as Rs 4,849,147 towards 788.41 sq ft as the undivided share in the land. It was agreed that possession would be given by July 27, 2008.
 

Ahmed took a loan of Rs 72 lakh from ICICI Bank for purchasing the flat. The loan amount was remitted by the bank to the builder on July 27, 2006. The remaining amount was paid by Ahmed to the builder. Even though the total consideration of Rs 8,987,263 was entirely paid, the builder failed to hand over possession by the agreed date.
 

The builder offered possession of the incomplete flat, but Ahmed found that he would be required to spend a considerable amount, such as Rs 12 lakh on completing the incomplete work, Rs 5 lakh towards Chennai Metropolitan Water Supply and Sewerage Board (CMWSSB) charges, and Rs 44,760 towards maintenance charges. Besides this, he would also be required to bear Rs 45,000 towards monthly rental charges for alternative accommodation. So, Ahmed stopped the payment of EMIs.

He also filed a consumer complaint before the National Commission in which he alleged that the builder and ICICI Bank had colluded with each other in disbursing the entire loan without considering the stage of completion of the construction.
 

Meanwhile, the bank declared the loan to have become a non-performing asset (NPA) and recalled it. Ahmed offered to settle the loan through a one-time, lump sum payment. The bank asked for Rs 9,358,749.61, which Ahmed found unacceptable. So, the bank filed a case under the Sarfaesi Act and repossessed the flat. Ahmed then approached the National Commission, seeking a direction to hand over possession of the flat along with the private terrace and open parking. He also sought compensation for harassment.

The complaint was contested. The bank argued that the consumer dispute was not maintainable as the Sarfaesi Act bars the jurisdiction of any other tribunal, including consumer fora. The bank also pointed out that there was no allegation of deficiency in service and so the complaint was not maintainable under the Consumer Protection Act. The bank stated there was a default 

in repayment of the loan and since the flat was mortgaged as collateral security, repossession was justified.
 

The National Commission observed that there was no document to show that the flat had been mortgaged as collateral security, but since the home loan had been obtained, the bank had first charge over the flat for default in repayment of the loan amount. It noted that the bank had followed the proper procedure by filing appropriate proceedings under the Sarfaesi Act and had legally taken repossession.
 

Since the proceedings before the Debt Recovery Tribunal were pending, the Commission observed that the complaint at this juncture was not maintainable. However, upon completion of the proceedings under the Sarfaesi Act, if it were  found that there was deficiency in service, Ahmed would have the liberty to file a fresh complaint.
 

Accordingly, by its order of January 29, 2024, delivered by Subhash Chandra, the National Commission dismissed Ahmed’s complaint.

The writer is a consumer activist