Redevelopment delay: National Consumer Disputes Redressal Commission awards over Rs 3.91cr to Mumbai family

“This computation is found to be reasonable, supported by evidence, and in consonance with the contractual and statutory principles governing compensation for deficiency in service,” the January 27 order said.

Final directions

• Rs 3,91,72,189.50 payable to the complainants.
• With the interest of 6 per cent per annum from the date of filing of the complaint.
• Payment of Rs 50,000 as litigation costs to the complainants.
• Amount to be paid within eights weeks, failing which interest at the rate of 8 per cent per annum would apply
• The complaint against opposite parties 2 and 3 was dismissed for lack of contractual liability.

Findings

• The deficiency in service flows independently from the admitted delay, failure to obtain approvals, and subsequent alienation of the promised alternate flats.
• The relief now being sought for compensation arising from an admitted breach and deficiency in service.
• The complainants, having surrendered their tenanted premises and paid consideration for the additional 50 square feet, clearly fall within the definition of consumer.
• The obligations assumed by the developer are squarely amenable to scrutiny under the Consumer Protection Act.
• The very execution of this deed constitutes an admission of delay and non-compliance by the opposite party number 1 (Sahaj Ankur Realtors),
• The obligations were expressly made time-bound, with time being of the essence.
• Sale during the subsistence of the indemnity arrangement and without the consent of the complainants, constitutes a clear and fundamental breach of the undertaking.
• The only appropriate, fair, and equitable relief is to award monetary compensation equivalent to the value of the flat that the complainants were entitled to receive in the year 2015-16.
• Taking the circle rate of 2015–16 (Rs 19,829 per square feet) as the basis, rather than current market value, the commission calculated the value of the flats at Rs 3.13 crore.
• It added 25% compensation as agreed under the indemnity deed.

Background

• The dispute traces back to a registered permanent alternate accommodation agreement (PAAA) dated September 20, 2013, under which the complainants, tenants of flats numbers 3 and 4 in Madhav Baug, Andheri (East), Mumbai agreed to vacate their premises for redevelopment.
• A PAAA is a legally binding contract between a developer and a property owner/tenant in a redevelopment project, ensuring the latter receives a new, permanent home in exchange for vacating their old premises.
• It acts as the legal guarantee for the owner’s rights, covering the new flat’s details, parking, transit rent, and possession timelines, usually executed before demolition.
• Under the agreement, Sahaj Ankur Realtors undertook to allot the complainants flat number 801 measuring 700 square feet carpet area.
• The company also promised a podium parking, within 24 months of issuance of the commencement certificate, with a grace period of six months.
• Of this, 650 square feet was free, while 50 square feet was chargeable at Rs 22,800 per square feet.
• However, due to persistent delays, the developer executed a ‘deed of indemnity-cum-undertaking’ on January 10, 2015, acknowledging non-compliance.
• A deed of indemnity-cum-undertaking in real estate is a legal document where a party (often a buyer, seller, or owner) promises to protect another party (such as a developer, bank, or society) against future claims, liabilities, or losses related to a property transaction.
• It acts as a safety mechanism to ensure the indemnifier covers financial damage, legal issues, or outstanding dues.
• The developer assured that if approval for flat number 801 was not obtained within six months, the complainants would be allotted two alternative flats- 301 and 302, free of cost.
• Vacant possession was handed over by the complainants on January 12, 2015.

Allegations by complainants

• The developer failed to obtain approvals for the promised flat within the stipulated time.
• Stopped paying agreed transit rent and escalation amounts.
• Did not pay the balance Rs 2.5 lakh dislocation compensation.
• Changed building plans without consent.
• Fraudulently depicted flat number 801 as a refuge area in approved plans.
• Sold the alternative flats (301 and 302), which were kept as security, to a third party on October 17, 2017.
• The complainants sought either allotment of the alternative flats or market-value compensation with 25% additional compensation, along with interest and arrears of rent.

Developer’s defence

• Opposing the complaint, Sahaj Ankur Realtors argued that the complainants were not consumers as the dispute related primarily to tenancy.
• The deed of indemnity was unenforceable due to non-registration.
• Flat number 801 was completed by June 2021, with an occupancy certificate issued on August 15, 2021.
• The complainants had refused possession despite inspection in October 2021.
• Compensation claims were exaggerated to invoke NCDRC’s pecuniary jurisdiction.
• Joint venture partners (Opposite parties 2 and 3) denied liability, citing absence of contractual privity.