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No house cost escalation after dues paid, possession taken

By:  Tupaki Desk   |   21 May 2013 4:47 AM GMT
A builder cannot seek additional money from a house allottee who has paid all dues and taken possession on the ground that the cost calculated at the time of handing over the property was tentative, the top consumer court has ruled.

National Consumer Disputes Redressal Commission Presiding Member V.B. Gupta and Member K.S. Chaudhari said if the builder failed to justify the need for demanding extra money, a house owner could not be forced to shell out the additional amount even if he had given an affidavit to the builder agreeing to accept a cost escalation in the future.

The commission gave the consumer-friendly interpretation of the law while dismissing the Ghaziabad Development Authority's (GDA's) appeal in a case related to Satya Narayan, a house owner in Indirapuram.

"The price could have been escalated only on the ground of increase of payment of compensation for the land acquired but learned counsel for the GDA admitted that compensation has not been increased. In such circumstances, there was no occasion to increase the price of the house," the consumer court said in a recent order.

"No doubt an affidavit was given by Narayan on April 15, 1997, stating that if in future the cost of the house is increased, he will deposit the same in accordance with the rules. Learned counsel for the GDA could not show any rule on whose basis the price was increased," said Gupta.

The GDA moved the national commission while challenging an order of the Uttar Pradesh consumer commission in favour of Satya Narayan, who sought a refund of the additional money demanded by the authority and deposited by him under protest.

The national commission said: "It is an admitted fact that the house was allotted to Narayan at the estimated cost of Rs.5.50 lakh. This amount was to be deposited by him in instalments up to Oct 15, 1998, whereas he deposited the entire amount by July 15, 1997, and obtained possession of the house."

Narayan complained that after three years and three months of the house allotment, the GDA asked him to deposit an additional Rs.1.95 lakh, stating that the price at the time of allotment was only tentative.

The national commission said: "The state commission has not committed any error in dismissing the appeal of the GDA and in such circumstances, revision petition is liable to be dismissed. Consequently, revision petition filed by the GDA is dismissed with no order as to cost."

For the GDA, an appeal against the national commission's decision now lies in the Supreme Court.

Narayan said in his complaint that after giving him the possession of the house, the GDA "neither fixed a brick nor put a nail in the premises but demanded money and, under compelling circumstances", he deposited the money.

He then filed a complaint in the district forum seeking the refund of the additional amount of over Rs.1.95 lakh that he had deposited under protest.

The forum ruled in favour of the house owner and the decision was upheld by the state consumer commission Oct 20, 2010.

The GDA took the defence that as per the affidavit given to it by Narayan, he was bound to deposit the increased cost of the house.

It claimed that the district forum and the state consumer commission erred in allowing refund of the over Rs.1.95 lakh to Narayan.