KCCI’s Deficient Service Leads To Refund And Compensation Order By State Commission

KCCI’s Deficient Service Leads To Refund And Compensation Order By State Commission

The Thiruvananthapuram, Kerala bench of the State Consumer Disputes Redressal Commission, led by Ajith Kumar and Radhakrishnan K.R., found the Kerala Chamber of Commerce and Industry (KCCI) at fault for service deficiency. The KCCI was deemed responsible for the one-sided termination of the buyer’s agreement and for neglecting the buyer’s valid demands. Consequently, the commission ordered KCCI to return the remaining amount and awarded ₹1 lakh in damages to the complainant.

The customer secured a booking for a studio apartment at the Kerala Trade Centre, a venture by the KCCI, with an advance payment of ₹2,00,000. The then KCCI Chairman, EC Jose, promised that the construction would be completed and the property handed over by December 2009. Subsequently, KN Marzook, who was also serving as Chairman, affirmed the allocation of Apartment No. 4 on the 11th floor. The customer contributed ₹15,00,000, representing 25 per cent of the full price, based on the expectation of a forthcoming formal contract. When the customer later inquired about the necessary procedures to finalise the agreement, KCCI failed to provide any draft. Despite the slow pace of construction, KCCI faulted the customer for the lack of a formalised agreement, even though they had not sent any draft for such an agreement.

After multiple requests, KCCI provided a draft agreement that was inconsistent with previous commitments. The complainant proposed changes to the draft but did not receive any acknowledgement. In April 2013, the complainant was notified of the cancellation of their apartment allocation, leading to a plea for the reimbursement of the advance payment. While KCCI recognised this plea, they only returned part of the advance. The complainant subsequently insisted on the remaining sum plus interest, of which only a fraction was refunded. The outstanding balance, which was never settled, resulted in financial and emotional distress for the complainant. This prompted the filing of a consumer complaint with the State Consumer Disputes Resolution Commission.

The KCCI, along with its current Chairman, KN Marzook, argued that the filed complaint was inadmissible, stating that the reservation was made for business intentions, and the complainant was an investor rather than a consumer. They maintained that the complainant’s refusal to sign the contract resulted in the booking’s annulment, in line with the previously agreed terms, thus justifying their decision to retain part of the advance payment. Additionally, ES Jose, the former chairman, contended that the complaint was not valid due to the statute of limitations, and described the complainant as a commercial operator informed about the ongoing construction project. He refuted any claims of service deficiency or unethical conduct and requested the complaint’s dismissal.

The State Commission noted that the complainant had indeed paid ₹17,00,000 for a studio apartment, a fact acknowledged by both sides with a repayment of ₹15,00,000. Supporting evidence such as letters, receipts, and a floor plan corroborated these transactions. Despite the Complainant's willingness to meet the necessary commitments, the KCCI procrastinated in finalising the agreement, which led to the complainant seeking changes to the terms and ultimately, the cancellation of the booking.

The KCCI Manager claimed in court that the company could retain half of the advance payment if no contract was signed, as stated in the brochure and registration forms. Yet, KCCI failed to produce solid proof like board meeting records or the actual contract to back up this assertion. The complainant’s suggested changes to the contract were disregarded, and the apartment was sold to someone else, with no shown financial detriment to KCCI or its chairmen.

KCCI argued that the deal was a business transaction, which would place it outside the scope of the Consumer Protection Act. However, the context of the complaint made it clear that the dispute was over interest rates, not the transaction’s commercial nature, thus it remained a consumer dispute.

The State Commission ruled against KCCI and its chairpersons, past and present, for service deficiency due to neglecting valid requests and cancelling the contract without mutual consent. As a result, the complainant was awarded a refund of ₹5,00,000 plus 8 per cent annual interest, along with ₹1,00,000 for mental distress and ₹5,000 for legal expenses, due to the troubles caused by the abrupt termination of the agreement.