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Karnataka Consumer Forum Orders ₹75 Lakh Refund with Interest for Deficient Service by Citi Green Farms

The Karnataka State Consumer Disputes Redressal Commission, Bangalore, recently delivered a significant judgment in Complaint No. 131/2013. The case involved a dispute between Rishikesh Borkotoky, represented by his father and General Power of Attorney holder D.C. Borkotoky, and M/s. Citi Green Farms Pvt. Ltd., regarding the non-completion of a villa project under the CG Garden Villas scheme in Chikkaballapur district.

Case Overview

The complainant alleged that Citi Green Farms Pvt. Ltd. failed to honor their contractual obligations after receiving ₹75,00,000 as partial payment for a villa in the CG Garden Villas project. The villa, bearing No. 180 and measuring 80 x 55 feet, was priced at ₹2 crore. Despite repeated follow-ups, the construction of the villa never began, leading to allegations of deficiency in service.

Key Allegations by the Complainant

1. The complainant entered into an agreement of sale on September 16, 2010, and paid ₹75,00,000 via cheque and cash as per the agreement terms.
2. Citi Green Farms failed to initiate construction despite receiving approximately 40% of the total sale consideration.
3. The complainant sent multiple reminders and a legal notice dated August 9, 2013, but the opposite party did not respond or commence construction.
4. The complainant sought a refund of ₹75,00,000 along with 12% annual interest, ₹1,00,000 as compensation for mental agony, and ₹25,000 as litigation costs.

Defense by Citi Green Farms Pvt. Ltd.

1. The opposite party admitted receiving ₹75,00,000 and executing the agreement but alleged that the complainant failed to pay the remaining balance as per the agreed payment schedule.
2. It claimed that 80% of the villa construction was complete and that the complainant was liable to pay the balance before taking possession.
3. The opposite party argued that it was the complainant who committed a breach of contract by not paying the remaining amount.
4. Citi Green Farms presented documents such as an encumbrance certificate, conversion order, and a no-objection certificate to prove the project's legitimacy.

Findings of the Commission

Failure to Commence Construction:

• The commission found that the villa's construction had not begun, as evidenced by photographs submitted by the complainant showing the site as barren land.
• Citi Green Farms failed to produce evidence supporting its claim that 80% of the villa construction was complete.

Deficiency in Service:

• The commission concluded that the opposite party's failure to commence construction after receiving substantial payment constituted deficiency in service.

Refund with Interest:

• The complainant's demand for a refund was deemed valid, as the opposite party failed to fulfill its obligations.

Order

The Karnataka State Consumer Forum issued the following directives:

1. Refund: Citi Green Farms Pvt. Ltd. must refund ₹75,00,000 to the complainant.
2. Interest: The refund amount will carry an interest of 12% per annum from the date of receipt until payment.
3. Compensation: ₹1,00,000 as compensation for mental agony caused to the complainant.
4. Litigation Costs: ₹25,000 to cover the complainant’s legal expenses.
5. Deadline: The total amount must be paid within 8 weeks from the date of receipt of the order.

Implications

This ruling reinforces the principle that real estate developers must honor their contractual commitments. The judgment highlights that failure to commence construction or deliver promised services after receiving payment amounts to deficiency in service, entitling buyers to refunds, compensation, and interest.