In a significant ruling protecting the rights of homebuyers, the Delhi State Consumer Disputes Redressal Commission has directed Sanchar Nest Sahkari Awas Samiti Ltd., a Ghaziabad-based cooperative housing society, to refund more than ₹79 lakh along with interest to two purchasers who did not receive possession of their flats even after nearly 16 years.
The Commission also awarded ₹4 lakh as compensation for mental agony and harassment and ₹1 lakh towards litigation expenses, reinforcing the principle that buyers cannot be left waiting endlessly for promised homes.
Background of the Case
The complaint was filed by Pramod Kumar Mahotra and Mahender Singh Bisht, who became members of the cooperative housing society in 2010 after being promised residential flats in a project located on NH-24, Noida.
Initially, the flats were expected to be delivered by 2012. However, due to disputes concerning the original project land, the society shifted the buyers to another project named Palm Wood Enclave at Wave City, Ghaziabad, while also demanding additional payments.
Separate agreements for two 3BHK apartments measuring 1,599 square feet each were executed in July 2013.
Homebuyers Paid Over ₹79 Lakh but Possession Never Came
The complainants arranged funds through housing loans and continued making payments as demanded by the housing society.
According to the records:
- Total amount paid by both buyers: ₹79,43,099
- Allotment letters issued only in June 2019
- Physical possession was never handed over
The buyers alleged that despite collecting substantial payments, the society repeatedly delayed construction and continued raising fresh financial demands.
Are Cooperative Housing Society Members ‘Consumers’?
One of the primary objections raised by the society was that it functioned merely as a cooperative body and not as a commercial service provider.
The Commission rejected this argument and held that:
- Any person who hires or avails services for consideration qualifies as a consumer under the Consumer Protection Act, 2019.
- Since the complainants paid significant amounts for allotment and construction of flats, they were entitled to seek relief before consumer forums.
The ruling clarifies that cooperative housing societies providing housing services for consideration can be held accountable under consumer protection laws.
Housing Construction Is a ‘Service’ Under Consumer Law
The Commission observed that construction and allotment of residential units constitute a service under consumer legislation.
Accordingly:
- Failure to deliver possession within a reasonable period amounts to deficiency in service.
- Homebuyers have the right to seek compensation and refund for such delays.
- Consumer remedies continue to exist even after the enactment of the Real Estate (Regulation and Development) Act, 2016 (RERA).
Complaint Not Barred by Limitation
The housing society argued that the complaint was filed beyond the prescribed limitation period.
However, the Commission rejected this contention and held that:
- Failure to hand over possession creates a continuous and recurring cause of action.
- As long as possession remains undelivered, homebuyers retain the right to approach consumer forums.
- Since the flats had still not been handed over, the complaint was legally maintainable.
This observation provides significant relief to buyers trapped in long-delayed projects.
Consumer Forums Can Entertain Cases Despite RERA Registration
The society also contended that because the project was registered under RERA, consumer proceedings were barred.
The Commission disagreed and clarified that:
- Remedies available under the Consumer Protection Act are additional remedies.
- Registration of a project under RERA does not exclude or bar the jurisdiction of consumer forums.
- Homebuyers are free to choose the appropriate legal remedy available to them.
This finding reinforces the parallel jurisdiction of consumer commissions alongside RERA authorities.
Covid-19 Not Accepted as Justification for Delay
While examining the merits of the dispute, the Commission noted that the society failed to produce any document establishing the promised possession date.
Even assuming a reasonable construction period of 42 to 48 months, the project remained incomplete well beyond that timeframe.
The Commission further observed that delays had already occurred years before the Covid-19 pandemic, making it impossible for the society to rely on the pandemic as a valid excuse for non-delivery.
Refund and Interest Ordered by the Commission
Holding the housing society guilty of deficiency in service, the Commission directed refunds as follows:
For Pramod Kumar Mahotra
- Refund of ₹39,08,865
For Mahender Singh Bisht
- Refund of ₹40,34,234
The Commission further ordered:
- Interest at 8.25% per annum, corresponding to the applicable home loan interest rate.
- If payment is not made by August 8, 2026, the interest rate will automatically increase to 11.25% per annum until realization.
Additional Compensation Awarded
Apart from the refund and interest, the Commission awarded:
- ₹4 lakh for mental agony and harassment suffered by the complainants.
- ₹1 lakh towards litigation costs.
The order recognises the financial burden and emotional distress faced by buyers who remain deprived of their homes despite making substantial payments.
Significance of the Judgment for Homebuyers
The ruling sends a strong message that developers and cooperative housing societies cannot indefinitely delay possession while continuing to collect money from buyers.
The decision reiterates several important legal principles:
- Homebuyers remain consumers under the Consumer Protection Act.
- Housing construction is a service subject to consumer protection laws.
- Consumer forums retain jurisdiction even if a project is registered under RERA.
- Delayed possession constitutes a continuing cause of action.
- Builders and housing societies cannot rely on prolonged delays or the pandemic to justify years of inaction.
Conclusion
The Delhi State Consumer Disputes Redressal Commission’s decision reinforces the rights of homebuyers who suffer due to excessive project delays. By ordering a refund exceeding ₹79 lakh, along with interest, compensation, and litigation costs, the Commission has reaffirmed that purchasers cannot be forced to wait indefinitely for possession of their homes.
The judgment also strengthens the legal position that consumer remedies remain available alongside RERA, offering homebuyers multiple avenues to seek justice against delayed housing projects.