The Maharashtra State Consumer Disputes Redressal Commission has ordered Bombay Realty and The Bombay Dyeing & Manufacturing Co Ltd to refund approximately Rs 4.09 crore to two homebuyers after a dispute over a delayed apartment in the Two ICC project at Island City Centre, Dadar East, Mumbai.
The amount includes the buyers’ principal deposit of Rs 1.95 crore, interest at 9 percent annually from the respective dates of payment, Rs 1 lakh in compensation for mental agony, harassment and deficiency in service, and Rs 50,000 towards litigation costs. The commission directed the companies to make the payment jointly and severally.
The case was filed by Jamshedpur-based buyers Raj Kumar Agarwal and Rahul Agarwal in August 2022. They had booked Flat No 801, along with two car parking spaces, for Rs 9.94 crore. The first payment of Rs 25 lakh was made on August 29, 2014, and an allotment letter was issued on October 6 that year under a 30:70 payment plan.
According to the buyers, construction was delayed by more than a year despite their compliance with the initial payment milestones. Discussions followed over replacing the original payment structure with a construction-linked plan. The buyers alleged that the developers instead issued demands under the earlier arrangement and later sent a pre-termination letter on September 6, 2016, threatening cancellation and forfeiture.
The buyers cancelled the booking in October 2016 and sought a refund with interest. The developers subsequently refused to return the deposited amount, according to the complaint. The dispute therefore extended beyond a delayed possession issue to questions about the retention of substantial buyer funds after cancellation of the booking.
The developers argued that the complaint was time-barred because the alleged cause of action arose in 2016. They also contended that an arbitration clause in the booking documents prevented the consumer commission from hearing the matter. Their further argument was that the cancellation resulted from the buyers’ payment defaults and that the agreed terms allowed the companies to forfeit part of the amount paid.
The commission rejected those objections. It held that a flat purchaser cannot be compelled to wait indefinitely for possession and is entitled to seek a refund of the principal amount with reasonable interest when a builder fails to deliver within a reasonable time. It described the retention of buyers’ funds without delivery as unjust enrichment and held that such conduct could amount to deficiency in service and an unfair trade practice.
The commission also held that the arbitration clause did not remove its jurisdiction. Referring to Sections 3 and 100 of the Consumer Protection Act, it said consumer remedies are available in addition to remedies under other laws. The order stated that a developer cannot rely on an arbitration clause or technical limitation objections while retaining substantial public funds without handing over possession.
The buyers had initially pursued criminal proceedings against the developers in Jamshedpur. The Jharkhand High Court quashed those proceedings on December 9, 2021, and the Supreme Court dismissed a Special Leave Petition on May 13, 2022. The Supreme Court, however, preserved the buyers’ right to pursue civil remedies for monetary recovery. After a fresh demand letter from the developer on January 3, 2022, the buyers filed the consumer complaint.
The ruling places the focus on the obligations of developers when project delays, payment schedules and cancellation disputes overlap. The commission’s directions require Bombay Realty and The Bombay Dyeing & Manufacturing Co Ltd to refund the ordered amount with applicable interest and compensation.
