Monday, February 17, 2014

‘No consideration for consumer’s personal issues’

Subject: Service provider is not concerned with consumer’s personal problems

Sometimes, a consumer cannot make timely payment due to genuine and unexpected personal difficulties. But this does not entitle him to any special consideration as recently held by the national commission.

Case Study: Meenu Aggarwal had booked a flat in a building being constructed by JMD Ltd at Gurgaon in Haryana. As per an agreement dated April 1, 2006, the flat was to be sold for Rs 28,59,375, payable in instalments. Out of this, Meenu paid three instalments of Rs 12,67,723 by cheque, and Rs 5,70,000 in cash to the builder’s representatives. Thereafter, Meenu’s mother fell ill, was hospitalized and ultimately expired. Due to this sudden medical problem, Meenu could not pay the subsequent instalments in time, despite reminder. So the builder cancelled the allotment.

Since the agreement provided that delay in payment of the instalments would attract interest at 18%, Meenu urged the builder to accept the remaining instalments along with interest. The builder failed to respond, so she sent a legal notice. When nothing worked, Meenu filed a complaint before the Haryana state commission. The builder contested the complaint, saying Meenu had failed to pay instalments as per the payment schedule and that the refund had been sent by a pay order along with a letter cancelling the flat allotment.

After that, the flat was sold to some other party and possession too had been handed over to it. The builder contended that the complaint was time-barred and ought to be dismissed.

The state commission directed the builder to accept the remaining instalments with 18% interest and allot the flat. Cost of Rs 11,000 were also awarded. Aggrieved, the builder appealed to the national commission. While the builder justified the cancellation, Meenu argued that the nonpayment of instalments in time was due to her mother’s illness and death. As this was a genuine difficulty, the builder ought to accept the payment with interest and allot the flat rather than cancel the booking.

The national commission noted various clauses of the agreement. Timely payment of the instalments was the essence of the agreement. Failure to do so would entail forfeiture of the earnest money and cancellation of the agreement. The builder, after refund of the amount subject to deduction of the earnest money, would be entitled to sell the flat to any other purchase. In Meenu’s case, the builder had sent reminder and then cancelled the allotment by sending the refund amount along with the cancellation letter. This could not be termed deficiency in service.

As regards the clause providing payment of interest of 18% on delayed instalments, the commission observed this clause vested the builder with the discretion to condone the delay by accepting the instalments along with interest, but did not confer any right on the purchaser to compel the builder to accept the money with interest in case of delayed payment. It was the sole prerogative of the builder whether to accept the delayed payment with interest or cancel the booking by following the procedure stated in the agreement. The commission observed that the legal position would not change merely because of Meenu’s mother’s hospitalization and death. Moreover, Meenu’s complaint for possession of the flat was untenable as the flat had already been sold to some other person. Meenu then contended that the cash component had not been refunded, but the commission held there was no evidence to show the cash payment was made to the builder’s representatives.

Accordingly, the national commission, in its February 7 order delivered by Justice K.S. Chaudhari along with Dr B C Gupta, held that there was no deficiency in service. It set aside the state commission’s order and dismissed Meenu’s complaint.

A trader or service provider is not concerned with his consumer’s personal problems. The terms of a contract have to be construed strictly.
Jehangir B Gai
(The author is a consumer activist and has won the government of India’s national youth award for consumer protection. His email address is

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