Mumbai Builder Sells Flat Twice Couple Get Rs 1 05 Crore Refund

A bench of presiding member Poonam V Maharshi and member Dr Nisha Amol Chavhan was hearing a consumer complaint filed by one Mohamed Jalil Abdulla Harnekar and his wife Asger Shabnam Mohamed Jalil Harnekar against two developers and their associated firms over the non-delivery of a residential flat despite receiving the entire sale consideration.

“A builder or developer accepting the entire sale consideration, failing to construct the project, failing to register the statutory agreement, selling the allotted flat to a third party, and subsequently issuing bogus cheques towards an admitted refund liability constitutes a case of deficiency in service and severe unfair trade practice,” said the commission on June 17, adding that the conduct of the developers went far beyond a simple delay in handing over possession.

According to the complaint, the dispute began in 2013 when the couple was approached by the developers regarding a residential project at Dongri in south Mumbai.

The builders allegedly represented that construction would commence in November 2013 and possession would be delivered within 36 months after obtaining the required approvals. Relying on these assurances, the complainants booked a 660 sq ft flat for Rs 60 lakh. An allotment letter was executed on November 28, 2013.

However, despite collecting Rs 40 lakh, the developers failed to complete the project and later admitted that they had not obtained the necessary permissions.

Instead of refunding the money, the developers proposed adjusting the amount paid towards another housing project called ‘Bay View’ in Mazgaon.

The builders also assured the complainants that they would receive Rs 10 lakh as compensation for the failed Dongri project, taking the adjusted amount to Rs 50 lakh. The couple agreed to the arrangement after being left with little choice.

Under the revised agreement, they were promised flat number 503 in the project. The total consideration for the flat was eventually fixed at Rs 90 lakh, with Rs 50 lakh adjusted from the earlier project and the remaining Rs 40 lakh paid between January 2016 and September 2018.

The commission found that despite receiving the entire amount, the developers failed to execute and register an agreement for sale as required under the Maharashtra Ownership Flats Act.

In September 2019, the developers acknowledged that they could not deliver possession of the Mazgaon flat either.

According to records before the commission, they offered to refund Rs 90 lakh along with Rs 25 lakh as compensation, admitting a total liability of Rs 1.15 crore through a written communication dated September 7, 2019.

Three cheques aggregating Rs 1.15 crore were subsequently issued. But when the complainants presented them for encashment, all three were dishonoured because of insufficient funds.

The developers later executed a Memorandum of Understanding on June 29, 2021, acknowledging liability of Rs 1.25 crore and issued another set of cheques. Those cheques were also dishonoured.

The commission noted that the repeated acknowledgements of liability, followed by issuance of cheques that bounced, established a continuing pattern of unfair conduct.

The complainants eventually discovered that flat, despite being allotted to them and paid for in full, had been transferred to a third party.

The commission said this made it impossible to grant possession and left the buyers with no option except seeking a refund.

“When a developer accepts the full consideration but fails to construct the flat or unlawfully sells it to a third party, the consumer is left with no viable remedy other than to seek the return of their hard-earned money,” the commission said.

The ruling reinforces that developers cannot indefinitely retain buyers’ money while failing to deliver promised homes.

It also underscores that repeated written acknowledgements of liability, bounced refund cheques and sale of an allotted flat to a third party can expose builders to substantial refund orders, interest liabilities and findings of unfair trade practices under consumer law.

Consumers facing similar grievances may contact the consumer helpline in their respective states (Maharashtra contact: 022 22821810, 22821770) or dial the National Consumer Helpline at 1915 for assistance.

Vineet Upadhyay is an Assistant Editor with The Indian Express, where he leads specialized coverage of the Indian judicial system. Expertise Specialized Legal Authority: Vineet has spent the better part of his career analyzing the intricacies of the law. His expertise lies in "demystifying" judgments from the Supreme Court of India, various High Courts, and District Courts. His reporting covers a vast spectrum of legal issues, including: Constitutional & Civil Rights: Reporting on landmark rulings regarding privacy, equality, and state accountability. Criminal Justice & Enforcement: Detailed coverage of high-profile cases involving the Enforcement Directorate (ED), NIA, and POCSO matters. Consumer Rights & Environmental Law: Authoritative pieces on medical negligence compensation, environmental protection (such as the "living person" status of rivers), and labor rights. Over a Decade of Professional Experience: Prior to joining The Indian Express, he served as a Principal Correspondent/Legal Reporter for The Times of India and held significant roles at The New Indian Express. His tenure has seen him report from critical legal hubs, including Delhi and Uttarakhand. ... Read More