Case at a Glance
Six family members paid ₹1,96,75,547 for a ground-floor commercial unit in ‘Sushma Pristine’, Zirakpur, with possession promised by 6 February 2029 and a separate MoU promising assured returns. The builder paid returns for only six months, offered to waive half the arrears and shift the investment to another project, and construction allegedly stopped. Although possession was not yet due, the State Commission held that the builder’s cumulative conduct justified termination under the agreement and ordered a full refund with 12% interest from each deposit, plus ₹75,000 compensation and ₹35,000 costs.
The complainants bought Commercial Unit No. 17/GF in ‘Sushma Pristine’, Zirakpur, paying ₹1,96,75,547 between 17 December 2023 and 12 January 2024. The allotment letter and Agreement to Sell dated 6 February 2024 promised possession by 6 February 2029; Clause 9 gave the allottee a right to terminate and seek a refund within 90 days on default by the promoter. A separate MoU dated 7 February 2024 promised assured returns.
The builder paid ₹2,22,645 (after TDS) as assured returns for January to June 2024 and then stopped. It offered to waive 50% of the arrears and shift the investment to another project, ‘Sushma Belvedere’, which the complainants refused. The project registration, granted in 2019 and revised in 2021, was valid only up to 7 June 2024 and no renewal was produced; photographs indicated construction had stopped. A refund demand of 15 July 2025 was refused. The builder’s companies filed no written arguments or documents, and some opposite parties were ex parte.
The Key Question Before the Court
Can a buyer terminate and seek a full refund before the promised possession date when the builder stops assured returns, abandons construction and tries to shift the buyer to another project?
Default Shown by Conduct, Not Just by the Calendar
On consumer status, the Commission accepted the unrebutted plea that the commercial unit was bought for self-employment through a cloth retail outlet: “The test is not merely the nature of the property purchased but the actual purpose for which it was acquired.” It accepted that possession was not yet due, so non-delivery alone was not a breach. The breach rested on cumulative conduct: stopped MoU payments, abandoned construction and no proof of regulatory compliance. On the offer to move the investment, it held: “A promoter cannot unilaterally substitute the subject matter of an agreement.” On registration, it noted that mere expiry does not by itself establish illegality, but the builder produced no extension.
Relying on Fortune Infrastructure v. Trevor D’Lima, (2018) 03 SC CK 0021 and Pioneer Urban Land and Infrastructure Ltd. v. Govindan Raghavan, (2019) 04 SC CK 0173, the Commission held the complainants justified in terminating under Clause 9. It refused the 24% interest claimed and, following Vidya v. Parsvnath Developers Ltd., (2024) 07 SC CK 0056, awarded 12% per annum from each deposit date. Assured returns after 1 July 2024 were refused as overlapping with refund and interest, and the ₹2,22,645 already paid was ordered to be adjusted.
What the Court Actually Held
- A commercial unit bought for self-employment does not take the buyer outside the definition of ‘consumer’; the purpose of purchase is decisive.
- Even before the possession date, stopped assured returns, abandoned construction and no proof of compliance amount to promoter default justifying termination.
- A builder cannot unilaterally shift a buyer to a different project.
- The builder must refund ₹1,96,75,547 with 12% interest from each deposit (15% on delay), without TDS, plus ₹75,000 compensation and ₹35,000 costs within 30 days, adjusting ₹2,22,645 already paid.
Why This Judgment Matters
- Buyers need not wait until the possession date when a project has visibly stalled and the builder is in default.
- It protects small business buyers of commercial units who buy for their own livelihood.
- It warns builders against pressing buyers to swap projects or accept waivers of arrears.
What Should Advocates Take Away From the Judgment?
For Homebuyers and Shop Buyers
- Keep receipts, the agreement, MoU and photographs of stalled construction.
- Plead and prove the self-employment purpose if the unit is commercial.
- You can refuse an offer to shift to another project.
For Counsel
- Plead cumulative default where the possession date has not arrived.
- Rely on Vidya v. Parsvnath Developers Ltd. for interest from each deposit date.
- Avoid claiming both assured returns and refund with interest for the same period.
Key Takeaways
- Purpose of purchase decides consumer status for commercial property.
- Stalled work and stopped assured returns can justify early termination.
- Unilateral substitution of a project is not permitted.
- Refund with 12% interest; 15% if payment is delayed.
Frequently Asked Questions
Can I get a refund before the builder’s possession deadline?
In this case, yes. The Commission held that the builder’s cumulative conduct (stopping assured returns, abandoning construction and failing to show compliance) was a default justifying termination even though possession was not yet due.
Is a buyer of a shop a ‘consumer’?
Yes, if it is bought for earning a livelihood by self-employment. Here the unrebutted plea of running a cloth retail outlet was accepted.
Do I get assured returns as well as interest?
No. The Commission refused assured returns after 1 July 2024 as overlapping with refund and interest, and adjusted the returns already paid.
Conclusion
The order shows that consumer forums will look at a builder’s conduct as a whole, not just the possession date in the agreement. A project that has stalled, with assured returns stopped and buyers pushed to another project, can be exited with a full refund and interest.
Practical takeaway: Where a builder has visibly defaulted before the possession date, invoke the termination clause, document the stalled work and seek a refund with interest from each deposit date.
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