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Builder Emaar MGF penalised for delay, deceptive practice

Real Estate builder Emaar MGF has been penalized by the National Consumer Disputes Redressal Commission for “deceptive practice” for “mischievously and cleverly” not giving a fixed delivery date before taking 11 lakhs from the customer for plot in Mohali.

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The Commission found that Emaar MGF had induced its customer to pay more than Rs 11 lakhs for a villa plot even before entering into a plot sale agreement with them. After the money was paid, the customer was asked to sign a contract that, according to the customer, was unduly favorable to the builder.

“This act of the appellants (builder) in asking the respondents to pay a sum of Rs 5 lakh as booking amount and Rs 5.78 lakh as part payment towards the provisional allotment in the year 2011, without giving them any firm date of handing over of the possession of the plot is a “Deceptive Practice” which falls within the meaning of “unfair trade practice” as defined under the Consumer Protection Act, 1986,” Justice VB Gupta noted.

“The appellants (Emaar MGF), mischievously and cleverly had not given any date of handing over of the possession of the plot to the respondents at the time of taking booking amount as well as at the time of issuance of the provisional allotment,” it observed.

“By not indicating the true picture with regard to their project to the respondents, the appellants induced them to part with their hard earned money, which also amounts to unfair trade practice,” it noted, telling Emaar MGF to

According to the original complainants, Harmeek Singh and Karnail Singh, the builder had promised that they would provide them with a plot of 250 sq yards in sector 104, Mohali, Punjab.

In February 2011, Emaar promised the two that development activity at the site was in full swing and if they booked the plot, the possession thereof complete in all respects would be handed over to them, within a period of 18 months, from the date of execution of the Plot Buyer’s Agreement.

The problem, however, was that after taking the initial amounts, the developer delayed the inking of the Plot Buyer’s Agreement. As a result, the 18 month count-down could not start.

Instead of a “few days,” Emaar MGF took months to enter into the Plot Buyer’s Agreement.

By June, 2011, a total amount of Rs.22.3 lakhs had already been paid by the purchasers, but the Plot Buyer’s Agreement, was still not executed.

“Ultimately, appellants (builder) sent a copy of the Plot Buyer’s Agreement, in respect of the said plot, with a direction to return the same, after signing it, within 30 days.

“On going through the terms and conditions of the Plot Buyer’s Agreement, respondents were shocked to see that the same were favourable to the appellants Party only and their rights had been totally ignored.

“Thus, respondents had no option but to sign the said Agreement, so as to avoid cancellation of the plot and forfeiture of 15% of the total sale consideration. Accordingly, on 22.11.2011, respondents signed the Plot Buyer’s Agreement and sent the same to the appellants,” the court noted.

In all, the buyers paid over 62 lakhs, or more than 95% of the plot value, but were still not given the plot, even after 18 months had passed from the date of the signing of the agreement.

The court ordered a refund of the entire amount with interest at 12% per year, and the builder was told to pay Rs 2 lakhs for causing mental agony and Rs 20,000 as cost of litigation.

Later, when Emaar MGF appealed the verdict, the National Commission imposed a further penalty of Rs 5 lakhs on the company for abusing the law.

“The present appeal is nothing but gross abuse of process of law and same is required to be dismissed with punitive damages. Accordingly, present appeal stand dismissed with punitive damages of Rs.5,00,000…. Appellants are directed to deposit a sum of Rs.2,50,000/-(Rupees Two Lacs Fifty Thousand only) by way of demand draft in the name of ‘Consumer Leal Aid Account’ of this Commission within four weeks from today and balance amount of Rs.2,50,000/-be deposited in equal share in the name of both the respondents (purchasers).”

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