Marketing Partner's Disclaimer No Shield Against Liability For Misleading Ads Under S. 2(28) Consumer Protection Act: Consumer State Commission - 2025-07-29

Developer and Marketing Agent Held Jointly Liable for Project Delay; Disclaimer No Excuse for Misleading Ads, Rules Commission

Mumbai, July 29, 2025 – The Consumer State Commission has delivered a significant ruling in favour of a homebuyer, holding both the developer and its marketing partner jointly and severally liable for prolonged delays and unfair trade practices. The Commission, comprising Presiding Member Mukesh V. Sharma and Member Poonam V. Maharshi, ordered the developer to hand over the flat with interest for the delay and held that a marketing agent cannot escape responsibility for misleading promotions simply by issuing a disclaimer.

Case Background

The complaint was filed by Vivek Saxena against ERA Realtors Pvt. Ltd. (Promoter), the landowner, and a real estate agent associated with the "Omkar Alta Monte" project in Malad, Mumbai. Mr. Saxena booked a flat in 2017 for an agreed price of ₹1.67 crore and paid nearly 80% of the amount, totaling over ₹1.42 crore.

Despite promises of possession by March 2018, the date was unilaterally postponed multiple times, eventually to December 2020 on the RERA website, without the buyer's consent. The complainant alleged that the developer failed to execute a formal Agreement for Sale, changed the main contractor from L&T to a local firm compromising quality, and left the structure exposed for years, raising safety concerns.

Arguments from Both Sides

Complainant's Arguments: Mr. Saxena’s counsel argued that the developer was guilty of a continuous "deficiency in service" and "unfair trade practice" under the Consumer Protection Act, 2019 . Key arguments included: * Unilateral Delays: The promised possession date was shifted without the buyer's consent. * Misleading Promotions: The initial brochure and marketing materials, which induced the purchase, were not honoured. The change of contractor from the reputed L&T was cited as a prime example. * RERA vs. Agreement: The developer could not hide behind a revised RERA project completion date, as the possession timeline is governed by the agreement between the buyer and builder. * Liability of Agent: The marketing agent, who introduced the project via email, was also liable for the misleading information provided, including the initial possession date.

Developer's and Agent's Defense: The developer (Opposite Parties 1 & 2) attributed the delays to force majeure events, including: * A 1,245-day delay in securing environmental clearance due to the dissolution of the State MOEF Committee. * The COVID-19 pandemic, which caused labour shortages and supply chain disruptions. * Alleged payment defaults by other buyers, leading to a shortage of funds in the escrow account.

The Real Estate Agent (Opposite Party 3) argued for its dismissal from the case, stating there was no direct contract with the homebuyer. It claimed to be merely a "marketing partner" and pointed to a disclaimer in its promotional email to absolve itself of any liability.

Commission's Landmark Findings

The Commission systematically rejected the developer's and agent's arguments, establishing clear principles for homebuyer protection.

On Delay and Force Majeure : The court found that the force majeure* claims did not justify a delay of nearly five years. It noted that the original possession date was December 2018, well before the COVID-19 pandemic began. The Commission cited the Supreme Court's ruling in M/s Imperia Structures Ltd. vs. Anil Patni***, emphasizing that a developer's RERA registration validity date does not override the possession date promised in the buyer's agreement.

> "Merely because the registration under the RERA Act is valid till 31.12.2020, does not mean that the entitlement of the concerned allottees to maintain an action stands deferred," the Commission quoted.

On the Liability of the Marketing Partner: In a crucial finding, the Commission held the marketing agent accountable despite its disclaimer. The judgment noted that the promotional email from the agent introduced the project to the complainant and played a material role in the purchase decision.

> "It is a settled principle that a person or entity engaged in marketing, promotion or advertisement of a project cannot absolve itself of responsibility merely by issuing a disclaimer, when the promotional material forms the basis of a consumer’s decision to purchase. The said promotional email... falls within the ambit of a 'misleading advertisement' as defined under Section 2 (28) of the Consumer Protection Act," Member Poonam V. Maharshi wrote in the judgment.

This establishes that marketing partners who induce sales through promotional materials share responsibility for the promises made.

The Final Verdict

The Commission ruled the complaint "partly allowed" and issued the following directives: 1. Possession and Agreement: ERA Realtors Pvt. Ltd. must execute a registered Agreement for Sale and hand over possession of the flat with an Occupancy Certificate and all promised amenities within two months. 2. Interest on Delay: The developer must pay interest at 8% per annum on the amount paid by the complainant (₹1,42,25,627) from April 1, 2018, until the actual date of possession. 3. Joint Compensation: The developer and the marketing agent are jointly and severally directed to pay ₹1,00,000 as compensation for mental agony and ₹25,000 for litigation costs.

The complainant is required to pay any outstanding balance at the time of taking possession. This judgment reinforces the rights of homebuyers and extends accountability to all parties involved in the promotion and sale of real estate projects.