In a significant judgment, the Consumer Disputes Redressal Commission, Chandigarh, has directed the Estate Office to withdraw a demand notice of Rs 43,00,416 towards conversion charges and Rs 2,32,555 towards GST, issued to a city resident after more than a decade.
The commission also directed the Estate Office to accept the conversion charges strictly as per the original allotment letter, sanction the revised building plans of a commercial showroom, and pay Rs 20,000 as compensation for harassment and litigation expenses.
The complainant, Kanwarjit Kaur, alleged that the Estate Office had arbitrarily demanded Rs 43,00,416 as conversion charges along with Rs 2,32,555 GST. She stated that the original balance principal amount payable wad Rs 6,87,298 and, even with applicable interest, the total payable amount as per the Estate Office's letter dated April 20, 2012, was Rs 10,74,078.
She contended that the escalation from Rs 6,87,298 to Rs 43,00,416 was excessive, unreasonable, and more than seven times the original liability, without any explanation.
In its defence, the Estate Office argued that delay in payment of instalments attracts interest at 18 per cent annually, compounded annually, which justified the demand.
The complainant further stated that she had applied for conversion of the first and second floors of a Shop-cum-Flat (SCF) to Shop-cum-Office (SCO) on March 27, 2012. The Estate Office had permitted the conversion subject to payment of Rs 7,63,798, out of which Rs 76,500 had already been paid.
The remaining amount was to be paid in equated instalments of Rs 1,19,342 each, inclusive of 10 per cent interest. She paid three instalments as required. However, despite receiving the payments, the Estate Office failed to sanction the revised building plans.
In 2025, the Estate Office raised a fresh demand of Rs 43,00,416 towards conversion charges and Rs 2,32,555 towards GST.
After hearing the arguments, the commission observed that the Estate Office failed to provide any detailed calculation or justification for the escalation of the amount to more than seven times the principal. Although it referred to Clause 9 of the notification dated July 17, 2002, which provides for penal interest at 18 per cent compounded annually, it neither demonstrated the exact calculation nor justified the prolonged delay.
The commission held that a demand raised after more than a decade-without periodic notices, reminders, or calculations-and without adjudicating the pending application for building plan sanction, cannot be sustained in its present form.
It further noted that the Estate Office's inaction in sanctioning the revised building plans significantly contributed to the delay, and the complainant cannot be made to suffer for the same.
The commission also ruled that the undertaking by the complainant to pay enhanced charges does not grant the Estate Office unfettered power to raise arbitrary and disproportionate demands without transparency or justification.