Danvir Nandal and Anr vs. Parsvnath Developers Ltd.

Facts:

• Parties Involved: The complainants, Mr. Danvir Nandal and Mr. Deepak Nandal, who lived in Jawahar Nagar, Sonepat, Haryana, made a deal with the Delhi-based real estate firm Parsvnath Developers Ltd. The commercial store in Sonepat’s “Parsvnath City Centre” development is at the heart of the conflict.
• Reservation Information: The complainants reserved a store (SF-39) on September 25, 2008, for their own use with the goal of running a company to make ends meet. They chose a down payment plan, which meant that 95% of the entire sale consideration had to be paid within 60 days of the booking price, with the remaining 5% being paid when the item was delivered. In 2008, they paid Rs. 14,81,371/-, according to the Opposite Party’s receipts.
• Terms of the Agreement: A Shop Buyer Agreement was signed, which stated that the shop’s construction would be finished within 36 months of the relevant block’s construction beginning. The timeframe is unclear, though, because no official Builder Buyer Agreement was signed that would have specified a precise date of possession. The Shop Buyer Agreement has unfair clauses that favoured the developer, according to the complainants.
• Inaction and Delay: The project experienced considerable delays in spite of the predetermined schedule. During one of their sporadic visits to the site in December 2016, the complainants saw that development was still ongoing and significantly behind schedule.
• Complaint and Grievance: The complainants, frustrated by the protracted delay and lack of progress, wanted an interest-bearing refund of their cash, which the Opposite Party disregarded. On March 9, 2017, they consequently filed a consumer complaint, claiming unfair commercial practices and a lack of service. They requested a reimbursement of Rs. 14,81,351/-, interest at 18% or 24% annually (totaling Rs. 22,92,581/-as compensation till December 2016), litigation expenses, and any other relief the commission thought fit.

Issues:

1. Do the complainants qualify as “consumers” under the Consumer Protection Act, 1986, or was the shop purchased for commercial purposes, excluding them from consumer protection?
2. Does the Delhi State Consumer Disputes Redressal Commission have the authority to adjudicate this complaint, or does it involve complex factual and legal questions better suited for a civil court?
3. Do the complainants have a valid cause of action to seek a refund due to the extended delay in project completion?
4. Has the Opposite Party demonstrated a deficiency in service by failing to complete the construction and deliver possession of the shop?
5. What remedies, if any, are the complainants entitled to, considering the financial and emotional impact of the delay?

Law:

• Consumer Protection Act, 1986:
  • Section 2(1)(d): Defines a “consumer” as any person who purchases goods or services for consideration, including deferred payment systems, but excludes those acquiring goods for resale or commercial purposes. An exception exists for goods or services used exclusively for earning a livelihood through selfemployment, which qualifies as non-commercial.
  • Section 2(1)(g): Defines “deficiency” as any fault, imperfection, shortcoming, or inadequacy in the quality, nature, or manner of performance of a service, whether required by law or promised in a contract.
  • Section 2(1)(o): Defines “service” broadly to include any service made available to potential users, explicitly encompassing facilities related to housing construction and real estate development.

• Indian Contract Act, 1872:
  • Section 46: Provides that when a contract does not specify a time for performance and no application by the promisee is required, the promisor must perform the promise within a reasonable time. The determination of “reasonable time” depends on the specific circumstances of each case, making it a factual question.

Analysis:

Issue 1: Consumer Status

The complainants argued that they booked the shop to operate a business for their livelihood, which falls under the self-employment exception in Section 2(1)(d) of the Consumer Protection Act. The Opposite Party claimed the purchase was for commercial profit but failed to provide evidence that the complainants were engaged in property trading. The commission noted that the burden of proving commercial intent rested with the Opposite Party, which it did not satisfy. Given the intent to earn a livelihood and the absence of any speculative motive, the complainants were considered consumers.

Issue 2: Jurisdiction of the Commission

The Opposite Party contended that the complaint involved complex legal and factual questions appropriate for a civil court and was essentially a recovery suit disguised to avoid court fees. The commission rejected this argument, stressing that the Consumer Protection Act is meant to address grievances related to deficient services, including those from developers. The failure to deliver the shop constituted a straightforward consumer dispute, which could be addressed based on the pleadings and affidavits submitted. The commission affirmed its authority to adjudicate such matters.

Issue 3: Cause of Action

The significant delay—over 14 years since the shop was booked—constituted a continuous cause of action. Repeated visits by the complainants, particularly in December 2016, confirmed that construction had stalled. The Opposite Party’s refusal to refund the amount paid reinforced the complainants’ grievance. The absence of a Builder Buyer Agreement and the incomplete state of the project highlighted the persistent nature of the failure, justifying the complainants’ claim under the Consumer Protection Act.

Issue 4: Deficiency in Service

The Opposite Party’s failure to complete construction within a reasonable timeframe amounted to a deficiency under Section 2(1)(g). Even considering a loosely defined 36-month delivery period in the Shop Buyer Agreement, the delay far exceeded acceptable industry norms of 24– 48 months. The lack of a formal Builder Buyer Agreement further contributed to the deficiency by leaving delivery timelines vague and failing to protect the complainants’ interests. Additionally, the one-sided terms of the agreement favored the developer. The claim that delays were due to a global recession was dismissed, as no specific external factors—like strikes, disasters, or government bans—were cited as justifiable causes.

Issue 5: Entitlement to Relief

In view of the excessive delay, the complainants were not bound to accept possession at such a late stage. Their demand for a refund was reasonable, as the Opposite Party retained their funds without delivering the promised shop. The commission ordered a refund of Rs. 14,81,341/- with interest at 6% per annum from the dates of payment until 23 December 2022, increasing to 9% if unpaid by 23 February 2023. Additionally, Rs. 1,00,000/- was awarded for mental agony due to prolonged uncertainty and financial stress, and another Rs. 1,00,000/- was granted towards litigation costs, recognizing the effort and expense involved in pursuing the case. The relief aimed to provide fair compensation and deter similar conduct.

Conclusion

The Delhi State Consumer Disputes Redressal Commission ruled in favor of Mr. Danvir Nandal and Mr. Deepak Nandal, holding Parsvnath Developers Ltd. liable for deficiency in service due to its failure to deliver the shop within a reasonable timeframe, extending over 14 years from the 2008 booking. The complainants were affirmed as consumers under the Consumer Protection Act, 1986, as their intent was to earn a livelihood, not to engage in commercial speculation. The commission’s jurisdiction was upheld, as the case involved clear consumer grievances, not complex civil disputes. The Opposite Party’s inaction, coupled with the absence of a Builder Buyer Agreement and one-sided contract terms, justified the complainants’ claim. The commission ordered a refund of Rs. 14,81,341/- with interest (6% until 23 February 2023, then 9% if unpaid), plus Rs. 1,00,000/- each for mental agony and litigation costs. This judgment highlights the accountability of developers for timely delivery and the robust protections available to consumers facing undue delays in real estate projects.