TNN | Feb 24, 2014,

The national commission’s interpretation of cause of action makes builders accountable

Background: Law provides a period of limitation for filing of legal proceedings for enforcement of rights. Under the Consumer Protection Act, the period prescribed is two years from the date of “cause of action”. If action is not taken in the stipulated time, the case would be considered to be time-barred, so the litigant would lose the right to get his grievance redressed.

In the case of housing construction, there are often enormous delays in carrying out construction, during which time consumers keep waiting for their dream homes. Only when the hope is dashed do the consumers contemplate legal action. In such circumstances, how is the limitation period to be computed? This question has been decided by theMaharashtra state commission in favour of the consumer and upheld by the national commission in the Ravi Developers and its partners v/s Jayantibhai Ranka & Anr case.

Case study: Jayantibhai Ranka and Arunaben Kapadia had jointly booked and contributed monies for a bungalow in “Gaurav Enclave” project launched by Ravi Developers. An allotment letter dated January 20, 1995, was issued on paying an advance amount. But the agreement for sale was not executed. Whenever the flat purchasers inquired about the project status, vague answers were given without disclosing that a technical objection had been raised by the local authorities.

In 2002, the builder refunded Rs 1 lakh to Arunaben. Later, when Jayantibhai came to know about this, he issued a legal notice to the builder, who replied that the deal had been cancelled and the allotment terminated by a letter dated March 23, 1996. This was surprising as certain instalments had been accepted by the builder even after the purported date of cancellation.

The flat purchasers then filed a complaint before the Maharashtra state commission stating that they had not received the cancellation letter, and sought a direction to the builder to hand over possession of the booked bungalow which had been booked, or any other suitable bungalow/flat in the same area. Alternatively, they claimed that the amount of Rs 3,32,000 paid by them should be refunded with 24% interest.

Since the complaint was filed in 2013, the flat buyers applied for condoning the delay of 6,019 days (over 16 years) in filing the complaint. The builder opposed this application on the ground that the allotment had been cancelled on March 23, 1996, for default in making balance payment and the complaint filed in 2013 was grossly time-barred.

The state commission observed that the builder had accepted various instalments from time to time. The cause of action would be a continuing one as possession of the bungalow had not been given. Hence, it held that the complaint seeking possession was within limitation.

The builder challenged this order in a revision petition. The national commission observed that the allotment letter stated the total consideration to be Rs 11,26,250, of which the advance was Rs 31,000, and the balance was payable after execution of the agreement. It noted that the builder had failed to explain why a regular sale agreement hadn’t been executed and why the bungalow had not been allotted. Also, there was no explanation on why further instalments had been accepted after the date of the purported cancellation. The panel concluded that the builder had acted in a malafide manner.

Relying on earlier decisions, the commission interpreted that the cause of action would continue either till allotment of the site, or refund of money on refusal to allot. Accordingly,

In its February 18 judgment, delivered by Justice V B Gupta for the bench along with Rekha Gupta, the national commission held that the complaint was in time as Ravi Developes had neither handed over possession nor refunded the money.

Impact: Flat buyers waiting for years for their house can now get justice in old disputes where the builder has neither given possession nor refunded money.

(The author is a consumer activist and has won the government of India’s national youth award for consumer protection. His email address is [email protected]))

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