Consumer Rights and Builder’s Liability: Supreme Court’s Verdict on Property Dispute

The case of Kusum Agarwal & Anr. vs. M/s Harsha Associates Pvt. Ltd. revolves around a dispute regarding a commercial property in Harsha Commercial Complex, Gazipur, Delhi. The appellants, a husband and wife, had applied for a shop in the complex, paying Rs. 2,05,000 as an advance towards the total consideration of Rs. 4,80,000. However, the shop was never delivered to them.

Background of the Case

In December 2004, the respondent, M/s Harsha Associates Pvt. Ltd., wrote to the appellants stating that the shop was ready and demanded the remaining Rs. 2,75,000 plus additional maintenance charges. The appellants, ready to make the payment, later discovered that the shop had already been sold to someone else before this communication was made.

The appellants approached the District Consumer Disputes Redressal Forum, Delhi, which ruled in their favor, directing the respondent to hand over possession upon payment of the balance amount with 18% interest. However, the possession was not delivered, leading the appellants to escalate the matter.

Appeal Proceedings

The respondent challenged the ruling before the State Consumer Disputes Redressal Commission, which directed a refund of Rs. 2,05,000 without interest. Dissatisfied, the appellants approached the National Consumer Disputes Redressal Commission, which dismissed the petition on the grounds that the appellants were not consumers as the space was commercial.

The Supreme Court, upon review, found that the National Commission had erred in its decision, as the respondent had never raised the issue of the appellants not being consumers in earlier proceedings.

Supreme Court’s Judgment

The Supreme Court, led by Justices Madan B. Lokur, S. Abdul Nazeer, and Deepak Gupta, ruled in favor of the appellants. The Court found that the respondent had acted in bad faith by offering a shop that had already been sold to another buyer. The Court ordered the respondent to refund Rs. 2,05,000 along with damages of Rs. 50,000, totaling Rs. 2,55,000, with 18% interest from December 6, 2004, until the full payment is made.

Key Takeaways

• Builders and developers must ensure that properties sold to buyers are not fraudulently resold.
• Consumer courts have the authority to award compensation and interest for wrongful actions by builders.
• The Supreme Court protects consumer rights, even in cases where commercial properties are involved.

This judgment reinforces the importance of transparency in real estate transactions and strengthens the legal recourse available to consumers in case of builder malpractice.

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Download Judgment: Kusum Agarwal & Anr. vs Ms Harsha Associate Supreme Court of India Judgment Dated 12-10-2017.pdf