Consumer Forum Orders Galaxy Homes to Refund Sale Consideration For Lack of Valid Permits

Consumer Forum Orders Galaxy Homes to Refund Sale Consideration For Lack of Valid Permits

Also, directs it to compensate the buyer by paying Rs.50,000

The Ernakulam Bench of the District Consumer Disputes Redressal Commission (DCDRC) has ordered compensation along with a refund of Rs.2,25,000 at an interest rate of 9.5 percent to a homebuyer aggrieved by a lack of a valid building permit.

The Bench comprising DB Binu (president), Ramachandran V (member), and Sreevidhia TN (member) stated that the building construction company was liable for deficiency in service and unfair trade practices.

It held, “The opposite parties had inadequately performed the service as contracted with the complainant. Hence, there is a deficiency in service, negligence, and failure on its part in failing to provide the desired service. It has caused mental agony and hardship, and financial loss to the complainant.”

The complainant, Jeko Antony booked a 2-bedroom apartment with a construction company Galaxy Homes Private Limited by paying an advance amount of Rs.25,000. Later, he paid a sale consideration of Rs.7 lakh. The developer assured having all valid permits for the construction of nine floors.

However, the loan application of the complainant’s son was rejected by the bank stating that Galaxy Homes did not have the requisite permits for constructing the eighth floor. Thereafter, the developer refunded Rs.5 lakh to the complainant. But Rs.2,25,000 remained pending.

The complainant approached the DCRDC for the return of the balance amount under Section 35 of the Consumer Protection Act, 2019.

The complainant’s counsel contended that the construction company cheated him by falsely claiming to have valid permits and agreements for the construction of nine floors. He averred that after his loan application was rejected, the developer agreed to refund the full amount paid by the complainant. But despite several requests, the balance amount was still pending.

The Commission referred to the decision of the Supreme Court in the 2019 Wg. Cdr. Arifur Rahman Khan and Aleya Sultana & Ors. vs DLF Southern Homes Pvt. Ltd case, wherein it was ruled that homebuyers were entitled to compensation for delayed handing over of possession and for the failure of the developer to fulfill the promised amenities.

The DCDRC observed that the construction company was liable for deficiency in service and unfair trade practices. The complainant had paid the sale consideration believing that the developer had valid permits. But despite the rejection of the loan application of the complainant due to lack of a valid building permit, it did not refund the amount. This amounted to the complainant’s mental agony and financial loss.

The Commission stated, “The homebuyers are increasingly concerned about falling victim to dishonest builders due to the rising number of cheating and fraud cases. The uncertainty faced by the less-fortunate homebuyers, after making payments to the builders, extends to both timely property allocation and its quality. Smart buyers should be aware of available remedies to assist them in times of difficulty.”

It added, “The government has recognized the challenges faced by homebuyers and implemented appropriate measures for their protection. However, some buyers, especially those with limited means, may not be fully aware of their legal rights. Owning a beautiful home is a cherished dream for many, but it can be shattered by unscrupulous builders. The Commission cannot remain a passive spectator against such builders.”

Thus, the Commission ordered a refund of the balance amount along with interest to the complainant. An amount of Rs.50,000 was to be paid as compensation for failure to provide services and for causing mental agony, and Rs.10,000 was to be paid as litigation cost.

Since no one appeared on behalf of the construction company, the order was passed ex parte.