Builders can be arrested for not delivering: National Consumer Commission

The NCC held that it is for the presiding member of the consumer forum to choose either of the methods to ensure its orders are not breached.

Written by Utkarsh Anand | New Delhi | Updated: October 13, 2016 10:24 am
National Consumer Commission, Real estate, Real estate refunds, fraud, cheating, Nitishree Infrastructure Ltd, consumer protection act, India news The Punjab state consumer commission had in July ordered the arrest of the director and general manager of the real estate firm.

IN A stern message to all builders, the National Consumer Commission (NCC) has held that officials of real estate firms can be arrested for failing to hand over flats or make refunds on time.

Last week, the Commission bench, presided over by Dr B C Gupta, underscored this point when it paved the way for the arrest of the director and general manager of Nitishree Infrastructure Ltd, which failed to hand over an apartment to a buyer on time, and also failed to comply with the order to refund the money to the buyer.

The bench cited Sections 25 and 27 of the Consumer Protection Act, which empower a district consumer forum, a state consumer commission as well as the NCC to either order for attachment of properties of defaulters, or exercise its power as a judicial magistrate to seek their arrest. A person can be jailed for up to three years by a consumer forum under Section 27 for failing to comply with its orders.

The NCC held that it is for the presiding member of the consumer forum to choose either of the methods to ensure its orders are not breached. It also held that that a defaulter cannot question the nature of the order made under these provisions.

“Under the Consumer Protection Act, the compliance of the order passed by the consumer fora is made by following procedure under Section 25 or Section 27 of the said Act. It is not for the Judgment Debtor to choose which manner of execution is to be followed,” said the Commission while dismissing the appeal filed by Nitishree Infrastructure, formerly known as Shourya Towers Pvt Ltd.

Advocate Praveen Mahajan, who represented Nitishree before the Commission, told The Indian Express that the refund has since been made. “We have deposited the money with the district magistrate, Noida, after the appeal was dismissed on October 5 by the NCC. Hence, we are not in breach of any order as on date and officials of the company will not be arrested,” he said.

Mahajan said the district magistrate will now inform the Punjab state consumer commission, which had ordered the arrest.

The Punjab state consumer commission had in July ordered the arrest of the director and general manager of the real estate firm. For failing to deliver a flat in Jalandhar, Nitishree was ordered in April to refund around Rs 24 lakh with an annual interest at the rate of 12 per cent from 2008, when they had received the payment. The real estate firm had received 90 per cent of the cost of the flat but despite a delay of five years, the flat was not ready.

After damages were not paid within the deadline of 30 days, the state commission summoned the director and the general manager of the company. But they failed to appear, prompting it to have a notice of proclamation issued against them under the criminal procedure code. In the meantime, Nitishree moved an application seeking permission to hand over another flat to the complainant. This plea was rejected after the complainant turned down the offer and sought the refund along with interest.

As the two officers remained elusive and were declared proclaimed offenders, the state commission, on July 27, passed this order: “Now the file be put up after the arrest of those respondents, so as to take proceedings against them under Section 27 of the Consumer Protection Act.”

Nitishree challenged this order in the NCC, which noted that the real estate firm could not come up with an satisfactory explanation on why the two officers did not show up before the state forum.

“It was the duty of the judgment debtor, therefore, to put in an appearance before the state commission and state their viewpoint before them. There is no merit in the present appeal, therefore, and the same is ordered to be dismissed in limine. The order passed by the state commission is upheld,” ruled the apex consumer body.