Amit Soni & Anr vs M/S. Umang Realtech Private Limited & Anr

M. Shreesha, J

This Complaint has been filed under Section 21 (a) (i) of the Consumer Protection Act, 1986 (in short "the Act") against M/s. Umang Realtech Pvt. Ltd., having its office at B-72, 7th Floor, Himalaya House, Kasturba Gandhi Marg, New Delhi-110001 and M/s. Janpriya Buildestate Pvt. Ltd., having its office at S-39A, Panchsheel Park, New Delhi, seeking the following reliefs:

Direct the O.P. to refund the entire amount collected from the complainants towards the consideration of the house along with interest @ 18% p.a. on the amount paid by them from the date of collection of the each of the amounts till it is actually returned to the complainants i.e. for the entire period the builder retained the amount from the buyers

Direct the O.P. to pay a sum of Rs.5,00,000/- (Rupees Five Lakhs only) towards mental agony and harassment and towards cost of litigation to the complainant.

Any other order(s) as may be deemed fit and appropriate may also kindly be passed.

The brief facts as set out in the Complaint are that the first Opposite Party after obtaining license No. 67 of 2011 dated 16.07.2011 from the Director, town and Country Planning Haryana, launched a project by the name of "Winter Hills 77" in Sector 77, Tehsil and District Gurgaon, Haryana. It is stated that the project was widely advertised and lured by the advertisements, the buyers/ allottees approached the office of the first Opposite Party to inquire about the project and on the basis of the representations and promises made by the officials of the first Opposite Party, on 11.06.2012, one Mr. Rajendra Bareto applied for an Apartment in the project. An Apartment Buyer's Agreement was entered into between the original allottee, Mr. Rajendra Bareto and the Opposite Parties on 17.08.2012 for Apartment No. 1004, 10th Floor in Tower E of 1735 sq. ft. of the project for a total sale consideration for Rs. 90,33,125/-. It is averred that the promised date of delivery as per Buyer's Agreement was 36 months from the date of Agreement. It is averred that the Complainants in search for a house for the purpose of residence after seeing the lucrative advertisements approached the desk office of the first Opposite Party. The officials of the first Opposite Party introduced them to brokers who informed the Complainants about the houses for resale by original allottees. The Complainants approached the first Opposite Party seeking information about the status of the construction and the Opposite Party assured that the construction will be completed within time and the houses will be ready within the promised time as per Buyer's Agreement. On the assurances, the Complainants decided to purchase the Apartment and paid the sale consideration to the original allottee. On 05.07.2013, the first Opposite Party was informed about the transfer who acknowledged the same and after payment of transfer charges transferred the subject Apartment in the name of the Complainants.

It is averred that the Complainants paid regular instalments including service tax and interest on delay payment @ 15% to 18% p.a. It is averred that some clauses of the Agreement are one-sided. It is averred that as per Clause 7.1 of the Apartment Buyer's Agreement, the possession was to be delivered by 31st December, 2015 but till the date of filing of the Complaint, the same was not delivered. It is averred that the Complainants have paid a sum of Rs. 83,09,860/- as per demands made by the first Opposite Party from time to time. It is pleaded that despite collecting substantial amounts from the Complainants and despite repeated requests through letters, emails, phone calls and personal visits, the Opposite Parties have failed to deliver the possession of the house till the date of filing of the Complaint. It is further averred that the Complainants had purchased the Apartment for specific purpose of residence for their family and themselves and are suffering severe financial losses and mental agony.

It is pleaded that as per Clause 4.5 of the Agreement, interest @ 18% p.a. was liable to be charged in case of any delay in payment of any amount from the allottees. Therefore applying the same parity, the Opposite Parties should refund the amounts collected with the same rate of interest. It is averred that the Complainants have fulfilled their side of commitment by paying all the demands raised by the first Opposite Party but the Opposite Parties have failed to fulfil their part of obligations of delivery of possession by 31.12.2015.

Vexed with the attitude of the Opposite Parties, the Complainants approached this Commission seeking the aforenoted reliefs, as the value of all goods and services is more than Rupees one crore and attracts the Pecuniary Jurisdiction of this Commission.

The first Opposite Party filed its reply admitting to the booking of an Apartment, execution of the Apartment Buyer's Agreements dated 17.08.2012 and relied on Clause 7.1 of the Apartment Buyer's Agreements dated 17.08.2012, wherein the first Opposite Party has agreed to complete the construction and apply for the Completion Certificate by 31.12.2015. It is averred that as per this Clause the Opposite Party is entitled for a grace period of six months and this Clause was subject to force majeure circumstances. It is averred that this Commission has no jurisdiction to entertain the instant Complaint as Clause 14.6 of the Agreement dated 17.08.2012 provides that any dispute between the parties shall be adjudicated under the provision of the Arbitration and Conciliation Act, 1996. It is stated that the delay in possession is to be dealt with as per clause 7.9 of the Apartment Buyer's Agreement dated 17.08.2012, according to which the first Opposite Party would pay a sum of Rs. 5/- sq. ft. per month, provided that the delay is not on account of existence of any force majeure event. It is averred that this Commission lacked jurisdiction to entertain the instant Complaint as matter involves complex question of facts and law and required detailed evidence and hence only the Civil Court has the jurisdiction. It is stated that the handing over of possession is delayed due to acts and omission of Investment (Mauritius) Ltd. i.e. shareholder of the first Opposite Party. Mr. Anoop Sethi, nominee of Investment (Mauritius) Ltd. was appointed as Director of the first Opposite Party with effect from 21.12.2007 and thereafter he was appointed as Managing Director of the first Opposite Party from 01.08.2008 till 09.09.2016. It is averred that during that period the construction at various project sites came to a halt as Mr. Anoop Sethi unethically used the manpower and resources of the first Opposite Party for personal projects. It is further averred that the delay in giving possession was directly attributed to the reasons which are beyond the control of the first Opposite Party such as global recession, which affected the real estate sector and there was financial crunch, delay in getting approvals from the civic and other authorities, lack of adequate sources of finance, shortage of labour approvals and procedural difficulties, etc. All the other averments made in the Complaint have been denied. It is submitted that several allottees of the project have defaulted in making payments of instalments or cancelled the booking due to which problem of liquidity of funds was faced by the first Opposite Party and the construction was delayed. It is pleaded that the project has not been abandoned and possession will be handed over as soon as possible after obtaining the Completion. Therefore, there is no deficiency of service on their behalf and prayed for dismissal of Complaint with exemplary costs.

The Second Opposite Party filed its reply stating that the there is no cause of action against the second Opposite Party in the present Complaint and that the Complaint is liable to be dismissed at the threshold. It is stated that the second Opposite Party is the landowner of the land where the first Opposite Party is developing the project "Winter Hills 77"; that a Collaboration Agreement was executed between the second Opposite Party and the First Opposite Party; that as per the Collaboration Agreement, the second Opposite Party has given the vacant physical possession of the land to the first Opposite Party for development of the project at its own cost after obtaining necessary approvals; that the first Opposite Party; that as per the Collaboration Agreement the first Opposite Party has the sole right to market, allot, assign, transfer etc. of the entire or any part of the project to the prospective buyers; that as per Clause 14.3 of the Collaboration Agreement it was agreed that the first Opposite Party shall indemnify the second Opposite Party against any losses, liabilities, claims, costs actions, proceedings or third party claims etc.; that in view of the Clause 14.3 of the Collaboration Agreement the second Opposite Party has no liability towards any party with regard to the project and prayed for dismissal of Complaint qua them.

The Complainants filed their Affidavit by way of Evidence and marked Ex- CW 1/1 (copy of Builder Buyer's Agreement) and Ex-CW-1/2 (copy of details of payment made) on their behalf.

The first Opposite Party filed its Affidavit by way of Evidence and marked Exhibit OP 1/1 (copy of the Board Resolution), Exhibit OP-1/2 (copy of the Letter dated 29.08.2017) and Ex.OP-1/3 (colly) (list of contractors engaged and photographs of the project) on its behalf.

The second Opposite Party filed its Affidavit by way of Evidence and marked Exhibit OP-2/1 (copy of the Board Resolution) and Exhibit OP-2/2 (copy of the collaboration agreement dated 09.04.2011) on its behalf.

Heard counsel for the parties at length.

In brief, it is the case of the Complainants that despite paying an amount of Rs. 83,09,860/- out of the total sale consideration of Rs. 90,33,125/- for Apartment No. 1004, in Tower E of the project and executing a Builder Buyer Agreement on 17.08.2012, with the promised time for delivery of possession 31.12.2015, till date, the Opposite Party did not complete the construction nor offered possession and hence they seek for refund of the amount paid with interest @ 18% p.a. together with compensation and costs.

The objection raised by the Learned Counsel for the Opposite Parties that the clause of Arbitration bars this Commission from entertaining the Complaint. The Hon'ble Supreme Court in M/S Emaar MGF Land Limited vs. Aftab Singh - I (2019) CPJ 5 (SC), has laid down the law that the Arbitration clause in the Agreement does not bar the jurisdiction of the Consumer Fora to entertain the Complaint.

The stand taken by the Opposite Party is that the project was delayed solely by Force Majeure Events. Except for stating that there was global recession, which affected the real estate sector, shortage of manpower and resources and there was financial crunch experienced by the first Opposite Party which led to the delay, which submissions, viewed from any angle, cannot be said to be a "Force Majeure Event" as the Opposite Party has not filed any material on record to prove that the reasons were beyond their control.

Learned Counsel appearing for the Opposite Parties also relied on Clause 7.9 of the Apartment Buyers' Agreement and submitted that the liability of the second Opposite Party on account of delay is limited only to that extent. For better understanding of the Clause, the same is reproduced as hereunder:

"7.9 Subject to force majeure event as detailed in clause 7.2 in case there is delay/ default in compliance of the clause 7.1 regarding construction and possession, the Company shall be liable to pay a sum of Rs.5/- per square foot of super area of the said Apartment per month as penalty."

As per this clause, the first Opposite Party is liable to pay a sum of Rs. 5/- per sq. ft. of super area of the said Apartment per month as penalty. This Compensation is for the period of delay provided the Complainant accepts possession. But in the instant case, the Complainants are seeking refund of the amount paid and there was no Completion Certificate as on the date of filing of the Complaint.

The Complainants do not want to take delivery of possession of the subject Apartment because of the delay in completion of the Project and further because it does not have the Occupancy Certificate. On a pointed query from the Bench to the Learned Counsel appearing for the first Opposite Party as to whether the Occupation Certificate was obtained, he replied stating that it was applied for only in the month of April 2019 and brought to the notice of this Bench the said Application. On perusal of the same it is seen that the Application is dated 02.04.2019 and it is a request made by the first Opposite Party for part Occupation Certificate. Having regard to the fact that there is no committed date on behalf of the first Opposite Party with respect to the Occupation Certificate, we are of the considered view that the principle laid down by the Hon'ble Supreme Court in a catena of judgements that delivery of possession without the Occupancy Certificate does not construe legal possession, we hold that the Act of the Opposite Parties in not adhering to the stipulated date of delivery of possession, amounts to deficiency in service.

It is also an admitted fact that the Opposite Party charged interest @ 18% p.a. for any delayed payments made by the purchasers and there is no justification in offering a meagre Rs. 5/- per sq. ft., which comes to approximately 1.4% p.a. which is only a paltry percentage of what the Opposite Party are charging for any delayed payments. Clause 7.9 in our opinion does not apply to the facts of this case because the Complainants on account of the delay on the part of the Opposite Parties in completing the construction are no more interested in the Apartment, which is a subject matter of the Agreement and seek refund of the amounts paid. This Commission in Emmar MGF Land Ltd. & Ors. vs. Amit Puri [II (2015) CPJ 568 NC], has laid down that once the promised date of delivery of possession is exhausted, it is the discretion of the Complainant to exercise his choice to take refund or wait for the delivery of possession. This ratio has attained finality and in the instant case, the Complainants have sought for refund of the amount paid with interest @ 18% p.a.

In any case, such a Clause (7.9), where the seller, in case of default on the part of the buyer seeks to recover interest a 18% p.a. but offers only Rs. 5/- per sq. ft. for any delay in delivery of possession, amounts to 'unfair trade practice' since it gives an unfair advantage to seller over the buyer. We are of the view that such terms in Clauses are extremely unfair and one-sided and fall within the definition of 'unfair trade practice' as defined under Section 2(r) of the Act. At this juncture, we find it a fit case to place reliance on the recent judgement of the Hon'ble Apex Court in Pioneer Urban Land & Infrastructure Ltd. Vs. Govindan Raghavan, II (2009) CPJ 34 (SC), wherein the Apex Court has observed as follows:

"6.7. A term of a contract will not be final and binding if it is shown that the flat purchasers had no option but to sign on the dotted line, on a contract framed by the builder. The contractual terms of the Agreement dated 08.05.2012 are ex-facie one-sided, unfair, and unreasonable. The incorporation of such one-sided clauses in an agreement constitutes an unfair trade practice as per Section 2 (r) of the Consumer Protection Act, 1986 since it adopts unfair methods or practices for the purpose of selling the flats by the Builder.

In view of the above discussion, we have no hesitation in holding that the terms of the Apartment Buyer's Agreement dated 08.05.2012 were wholly one-sided and unfair to the Respondent - Flat Purchaser. The Appellant - Builder could not seek to bind the Respondent with such one-sided contractual terms."

For all the aforenoted reasons, this judgement squarely applies to the facts and circumstances of this case.

We find it a fit case to place reliance on the judgement of the Hon'ble Supreme Court in Kolkata West International City Pvt. Ltd. Vs. Devasis Rudra, II (2019) CPJ 29 (SC), in which the Hon'ble Apex Court has observed as hereunder:

"..........It would be manifestly unreasonable to construe the contract between the parties as requiring the buyer to wait indefinitely for possession. By 2016, nearly seven years had elapsed from the date of the agreement. Even according to the developer, the completion certificate was received on 29 March 2016. This was nearly seven years after the extended date for the handing over of possession prescribed by the agreement. A buyer can be expected to wait for possession for a reasonable period. A period of seven years is beyond what is reasonable. Hence, it would have been manifestly unfair to non-suit the buyer merely on the basis of the first prayer in the reliefs sought before the SCDRC. There was in any event a prayer for refund.

In the circumstances, we are of the view that the orders passed by the SCDRC and by the NCDRC for refund of moneys were justified."

In the instant case also the Complainants cannot be made to wait indefinitely for possession of the unit, as the construction is yet to be completed even after a period of more than 7 years has lapsed from the date of Agreement. Therefore we are of the considered view that the Complainants are entitled for refund of the principal amount with reasonable interest.

The next question which arises for consideration is how much interest is to be paid to the Complainants on the principal amount. Logically, if the seller is charging interest from the buyer @ 18% p.a., we should have no hesitation in awarding the same rate. Having regard to the fact that Banks have lowered the interest rate and the Hon'ble Supreme Court has been awarding interest keeping in view the current market situation and considering the recent decline in the cost of borrowing and return on the investments made with the Banks, we are of the view that interest @ 12% p.a. would meet the ends of justice, together with compensation of Rs. 1,00,000/- and costs of Rs. 25,000/-.

Now we address ourselves to the liability of the second Opposite Party. Learned counsel for the second Opposite Party argued that the second Opposite Party is only the owner of the land and an Collaboration Agreement entered into between both the Opposite Parties according to terms of which the rights to sell, transfer and receive payments has been assigned to the first Opposite Party and therefore the second Opposite Party cannot be made liable to refund any amounts received. The contention of the learned counsel that the second Opposite Party should be deleted from the array of parties and no liability can be fastened upon them is totally unsustainable, keeping in view that the Apartment Buyers' Agreement which is subsequent to the Collaboration Agreement is a Tripartite Agreement signed by the first Opposite Party, the second Opposite Party and the Complainant. It is pertinent to note that the second Opposite Party was defined as the 'Confirming Party' in the Apartment Buyer's Agreement dated 17.08.2012, it is relevant to mention that a consideration of Rs. 24,81,00,000/- towards non-refundable security deposit was paid by the first Opposite Party to the second Opposite Party towards the subject land. For better understanding of the revenue shared by both the Opposite Parties, Clauses 4.1 of the Collaboration Agreement are reproduced as hereunder:

"4.1 In consideration of the contribution of the Project Land by the Land Owner for execution of the Project and granting the rights to the Developer for development of the Project Land and the Developer bearing the costs, expenses and responsibility of execution of the Project including discharge of the respective obligations by the Parties under this Agreement and UHPLand the Land Owner agreeing to the suppression of the Original Agreement, the Gross Revenue received/ realized shall be shared between the Parties in the ratio mentioned herein below:

Land Owner: 12.5%

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At the cost of repetition, having signed the Tripartite Agreement as a Confirming Party and when the Collaboration Agreement is mentioned in the Apartment Buyers' Agreement, we are of the considered view that both the Opposite Parties are jointly and severally liable to pay the amounts received. Any other arrangement is only inter se between the Opposite Parties and shall not bind the Complainants.

In the result, this Complaint is allowed in part directing the both the Opposite Parties jointly and severally to refund the principal amount with interest @ 12% p.a. from the respective dates of deposit till the date of realisation together with compensation of Rs. 1,00,000/- and costs of Rs. 25,000/-. This amount is directed to be paid within four weeks from the date of receipt of a copy of this order, failing which, the amount shall attract interest @ 14% p.a. for the same period.