Burden of Proof on Developer to Disprove Disputed Receipts; Police Reports Can Corroborate Admissions: Gujarat State Consumer Commission - 2025-01-09

Reliable Legal Information.

Developer Who Sold Flat to Third Party Ordered to Refund Full Amount with Interest, Gujarat Commission Holds

Ahmedabad : In a significant ruling reinforcing consumer rights in real estate transactions, the Gujarat State Consumer Disputes Redressal Commission has held that the burden lies on the developer to disprove the authenticity of payment receipts they claim are fabricated. The Commission directed Rudra Developers to refund the full consideration of ₹6,00,000 to the homebuyers after the developer sold their booked flat to another party.

The bench, presided over by Member Archnaben V. Raval, allowed the appeal filed by the legal heirs of the original complainant, Bharatiben K Shah, while dismissing the cross-appeal from the developer. The Commission modified the District Commission's order, directing the developer to refund the disputed cash payment of ₹1,25,000 in addition to the previously awarded ₹4,75,000, along with 9% annual interest.

Case Background

The dispute originated in 2012 when Bharatiben K Shah booked Flat No. 103 in the 'Rudra Palace' project in Junagadh, developed by Rudra Developers, for a total sum of ₹6,00,000. According to the complainant, the entire amount was paid through a series of cheque and cash payments by August 2012.

However, the developer failed to deliver possession by the promised deadline of October 2013. The complainant later discovered that the developer had fraudulently sold the very same flat to a third person. After a legal notice went unheeded and a criminal complaint was filed, the complainant approached the District Consumer Disputes Redressal Commission in Junagadh.

The District Commission, in its 2016 order, found a deficiency in service and directed the developer to refund ₹4,75,000 (the amount paid via cheque) with 9% interest. It, however, did not grant relief for the ₹1,25,000 paid in cash. This led to both parties filing appeals before the State Commission: the developer sought to quash the order entirely, while the complainant sought a refund of the remaining cash amount.

Arguments Before the State Commission

Complainant's Arguments: The counsel for the complainant argued that the entire sum of ₹6,00,000 was paid, and receipts were issued for all transactions, including the cash payment of ₹1,25,000. They contended that when the developer accepted the validity of receipts for cheque payments, there was no reason to doubt the receipt for the cash payment, which bore the signature of one of the partners. They further pointed to admissions made by the developer's partner in a police investigation report, where he had confessed to receiving the full ₹6,00,000.

Developer's Arguments: The developer's counsel claimed that the transaction was not for a flat but was part of an informal financial arrangement due to friendly relations. They alleged that the payment receipts, particularly the one for the cash amount, were fabricated and did not bear the signature of the authorized partner. They also argued that statements made to the police are not admissible as evidence and the consumer forum lacked jurisdiction to hear a case involving allegations of fraud.

Commission's Findings and Reasoning

The State Commission meticulously examined the evidence and arguments, arriving at a decisive conclusion in favor of the consumer.

On the Burden of Proof

The Commission established a crucial legal principle regarding disputed documents. It observed that since the complainant had produced payment receipts, a prima facie case was established. The onus then shifted to the developer to prove their claim that the receipts were forged.

"If the opposite party (developer) claims that these receipts were not issued by them or were not signed by them and the money for these receipts was not received, then the responsibility to prove it lies with the one making the statement, i.e., the opposite party. The opposite party has not produced any evidence to prove that these receipts are not theirs or are fabricated."

The Commission noted that the developer had made a mere "general statement" without substantiating it with forensic evidence or expert opinion on the signatures.

Corroborative Value of Police Reports

While acknowledging that statements made to the police are not typically treated as primary evidence, the Commission found that they could be used for corroboration. The court took into account a police report submitted to a superior officer which documented the developer's partner admitting to receiving ₹6,00,000 from the complainant. This admission, coupled with the consistency in signatures on different receipts, convinced the Commission of the veracity of the cash payment.

"The Commission found that the signature on the disputed cash receipt for ₹1,25,000 was identical to the signature on another acknowledged receipt. Therefore, there is no reason not to believe this receipt."

Final Judgment and Implications

Based on its findings, the State Commission concluded that the complainant had successfully proven the payment of the entire ₹6,00,000. It dismissed the developer's appeal (No. 217/2016) and allowed the complainant's appeal (No. 569/2016).

The final order directs Rudra Developers to: 1. Pay the complainant ₹1,25,000 along with 9% annual interest from the date of complaint filing (June 17, 2014) until realization. 2. This payment is in addition to the ₹4,75,000 already ordered by the District Commission, effectively ensuring a full refund of the principal amount with interest.

This judgment serves as a strong deterrent against unfair trade practices by developers and clarifies that they cannot evade liability by simply denying the authenticity of documents without providing concrete evidence to support their claims.