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STATE CONSUMER DISPUTES REDRESSAL COMMISSION
Mukesh V. Sharma, Member, Poonam V. Maharshi, Member
Arun Chhabria – Appellant
Versus
Shubh Enterprise – Respondent
Consumer Complaint No. CC/18/724
For the Appellants/Petitioners: Anand Patwardhan
For the Respondents: Arun Panickar
A developer's failure to execute a sale agreement and deliver possession after receiving full consideration constitutes deficiency in service under the Consumer Protection Act; a cooperative housing society cannot unilaterally retain such premises against a third-party purchaser without legal authority.
Headnote:(A) Consumer Protection Act, 1986 - Section 2(1)(d), 2(1)(g) and 2(1)(r) - Maharashtra Ownership Flats Act, 1963 - Section 4 - Deficiency in service - Failure to execute sale agreement and hand over possession despite full payment of consideration by consumers - Complainants purchased a shop for self-employment. (Para 15, 19)
(B) Pecuniary Jurisdiction - Determination based on value of goods/services plus compensation claimed - Complaint maintainable before State Commission despite objection regarding valuation. (Para 17)
(C) Limitation - Cause of action is continuous and recurring in cases where possession is not delivered to the purchaser - Complaint not barred by limitation. (Para 16)
(D) Necessary Party - Cooperative Housing Society claiming lien over the property without legal basis made a necessary party to ensure delivery of possession to rightful owners. (Para 20)
Facts of the case:
Complainants paid the full consideration of Rs. 12,04,000/- for a shop to the developer (Opponent No. 1-4). Despite payment, the developer failed to execute the agreement for sale under MOFA or hand over possession. The premises were later claimed by the Cooperative Housing Society (Opponent No. 5) citing dues against the builder, though no court order authorized such possession.
Findings of Court:
The Commission found the developers guilty of deficiency in service and unfair trade practice. It held the complainants qualify as consumers as the purchase was for self-employment. The Commission rejected the limitation and jurisdiction plea of the society, directing the developer to register the agreement and hand over possession, and ordered the society to release the premises.
Issues: Whether the complainants are consumers, whether the complaint is barred by limitation, whether the Commission has pecuniary jurisdiction, whether there was deficiency in service by the developers, and whether the society is a necessary party.
Ratio Decidendi: Where a developer accepts full consideration but fails to execute a statutory agreement and hand over possession, it constitutes a clear deficiency in service. A housing society cannot unilaterally retain possession of a unit sold to a third party without a legal decree, even if there are disputes with the developer. Result : Complaint allowed with directions to execute sale deed and deliver possession.
| Table of Content |
|---|
| 1. summary of facts involving non-delivery of possession by developers. (Para 1 , 2 , 3 , 4 , 5 , 6 , 7) |
| 2. opposite party contentions regarding jurisdiction, limitation, and privity of contract. (Para 8 , 9 , 10 , 11 , 12 , 13) |
| 3. court findings on consumer status, limitation, jurisdiction, and deficiency in service. (Para 14) |
JUDGMENT
(14-10-2025)
Per: Hon’ble Ms. Poonam V. Maharshi, Member
1. The present consumer complaint is filed by the Complainants alleging deficiency in service and Unfair trade practice against the Opposite Parties under Consumer protection act 1986. Short Facts leading to filing of the Complaint may be narrated as under :-
2. The three Complainants Mr. Arun Chhabria, Mrs. Mehak A. Chugh and Mr. Anil N. Chugh who are related to each other as brother, sister and brother-in-law. Opponent No.1, M/s. Shubh Enterprise, is a partnership firm engaged in development and construction activity, and Opponents Nos.2 to 4 are its partners jointly responsible for the business operations. Opponent No.5 is D.N. Nagar Manmandir Co-operative Housing Society Ltd., the society formed for the said building project “Shubh Manmandir”. It is the case of the Complainants that they have jointly contributed their lifetime savings to purchase one shop from the Opponent builder for their respective self-employment and livelihood purposes. Initially, Complainant No.1 had booked Shop No.11 admeasuring 150 sq. ft. for a total consideration of Rs.6,00,000/–, while Complainants Nos.2 and 3 had booked Shop No.8 admeasuring 112 sq. ft. for Rs.4,48,000/–, both in the same building “Shubh Manmandir”. Receipts were issued and allotment letters dated 19.12.2006 and 19.10.2006 respectively were issued by the Opponent no. 1 to 4.
3. Subsequently, Opponents Nos.1 to 4 informed that the plans were revised, and the shop sizes and corresponding consideration were increased. As the enhanced cost was beyond the Complainants’ means, it was mutually agreed that the two families would jointly purchase one larger shop. Accordingly, a fresh allotment letter dated 08.01.2009 was issued in joint names for Shop No.9 admeasuring 301 sq. ft. built-up area on the ground floor of the same building for a total consideration of Rs.12,04,000/– payable as per construction progress. The earlier payments of Rs.2,62,000/– were appropriated towards the new allotment. The builder promised completion and possession by 31.12.2009.
4. The Complainants had contended that they had paid the entire consideration of Rs.12,04,000/– through cheques and has filed receipts and ledger extract issued by the Opponent no 1 to 4. Despite payment in full, the Opponent no.1 to 4 failed to execute the statutory agreement for sale as mandated under Section 4 of the Maharashtra Ownership Flats Act (MOFA), and also failed to hand over possession of the shop.
5. It is submitted by the Complainants that in 2016, the Opponents called upon the Complainants to pay stamp duty for registration of agreement, which was duly paid by them on 04.10.2016 amounting to Rs.3,70,000/–. However, the agreement was never executed as the partners of the Opponent firm were later arrested and taken into custody. The Complainants thereafter sought refund of stamp duty to avoid lapse. The Complainants had also sent a letter dtd 14/10/2016 to the opposite Party no.1 to 4 though duly served they failed to reply the same.
6. Subsequently, when the Complainants followed up after the Opponents’ release, the Opponent no.1 to 4 avoided the matter and started demanding more money. In the meantime when the Complainant visited the premises they were shocked to see the shop shutter painted with the words “IN POSSESSION OF MANMANDIR CHS”. On inquiry, it was learnt that the Opponent Society (No.5) had purportedly taken possession claiming dues against the builder, though without any court order or authority.
7. The Complainants have therefore contended that despite payment of entire consideration, the Opponent no.1
