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Judgment
Subhash Chandra, Presiding Member
This First Appeal under section 19 of the Consumer Protection Act, 1986 (in short, the Act) challenges order dated 03.04.2019 of the State Consumer Disputes Redressal Commission, Delhi (in short, the State Commission) in Complaint No. 197/2012 partly allowing the complaint and seeks enhancement of interest awarded as compensation @ 6% from 04.08.2008 till 13.05.2011 on account of delay in handing over possession of a house by the respondent in its project Sushant City in Ved Vyas Puri, Meerut, Uttar Pradesh (hereinafter, the Developer).
The brief facts, according to the appellant, are that it executed an Agreement to Sell on 04.08.2006 with M/s Gupta Iron & Steel Works Pvt. Ltd. relating to unit no. III C-41 admeasuring 376 sq yds and built up area of 1840 sq ft. which assigned the rights of the said seller in the property vide Agreement to Sell with the Developer dated 30.03.2007 to the appellant. As per the Agreement to Sell, possession of the house was not handed over by August 2010 by the Developer despite timely payments and several letters. On 22.10.2009 the Developer admitted delay in construction by a letter and assured early completion without committing a date. The appellant conveyed to the Developer on 11.11.2009 that he had to service huge pre-EMIs on the loan and that there was a drain (nala) through the main entrance of the township. On 06.09.2010 the appellant brought various defects in the constructed quality of the house to the notice of the Developer. On 13.05.20111, the Developer executed the Sale Deed although possession was handed over on 08.10.2011. Contending that the possession was to have been handed over within 2 years as per Clause 5 of the 04.08.2006 the appellant approached the State Commission alleging deficiency in service and unfair trade practices. The State Commission directed the Developer to pay interest @ 6% from 04.08.2008 till 13.05.2011 on the amounts deposited by the complainant/appellant herein. This order is impugned before us praying to:
(i) modify/set aside the impugned judgement and order dated 03.04.2019 passes by the Delhi State Consumer Disputes Redressal Commission in Complaint No. 197/2012; and
(ii) pass any other order deemed fit in the facts and circumstances of the case
We have heard the learned counsel for the parties and carefully considered the material on record. In the interest of justice, the delay of 15 days in preferring the First Appeal is condoned.
The counsel for the appellant argued that there was delay in handing over possession of the house and the State Commission had failed to appreciate the facts and awarded compensation of a mere 6% despite the Developer admitting delay vide its letter dated 22.10.2009. Failure to comply with its contractual obligation was cited as a deficiency on account of which the appellant suffered financial loss due to pre-EMI interest paid on the loan, rent paid towards accommodation and loss of interest on savings account. The terms of the Agreement to Sell were stated to be one-sided since it provided penalty for delay in payment @ 18% whereas the rate of interest awarded was only 6%.
Reliance was placed on the judgment of the Honble Supreme Court in Pioneer Urban Land & Infrastructure Ltd. Vs Govindan Raghavan, (2019) 5 SCC 725 that such Clauses were unconscionable. Reliance was also placed on Supreme Courts judgments in Wg Cdr Arifur Rahman Khan Vs. DLF Southern Homes Pvt. Ltd. & Ors., (2020) 16 SCC 512 to argue that in cases of delay in offering possession, the jurisdiction of the Consumer Forum to award reasonable compensation cannot be foreclosed by a term of the agreement and in DLF Homes Panchkula Pvt. Ltd. Vs. D.S. Dhanda & Ors., (2020) 16 SCC 138 to aver that while courts would ordinarily hold parties down to a contractual bargain, they could not be oblivious to the one-sided nature of Buyers Agreements.
It was contended that a deficiency under Section 2(1)(g) included defects in the quality of construction of the house which the Developer had failed to rectify and that the jurisdiction of the consumer forum to remove deficiency in service included a direction to rectify/remove defects before and after handing over of the house which the State Commission failed to consider and since no evidence of such rectification had been brought on record, the Developer had admitted to not complying. It was contended that as per Wg Cdr Arifur Rahman Khan (supra), it had been held that the Developer must be held accountable to its representation and that allowing him to escape his obligation would put a premium on false assurances. On the strength of this Commissions order in Charan Homes Pvt. Ltd. & Anr. Vs. Jai Prakash Rai, (2102) SCC Online NCDRC 818 it was also argued that inherent in the undertaking to construct a house or flat was the obligation to construct as agreed and that failure to do so would be a denial of service.
Regarding the quantum of compensation awarded, it was argued as per Supreme Courts judgment in Lucknow Development Authority Vs. M.K.Gupta, (1994) 1 SCC 243 that interest @ 24% on the deposited amount was a just compensation along with other charges such as Service Tax, PLC, Holding Charges, etc. whereas the State Commission had awarded only 6%.
On behalf of the Respondent/Developer, preliminary objection was taken that there was delay in filing of the appeal. IA 13169/2019 was therefore considered at the outset. The reason advanced for seeking condonation of delay was that the State Commission delivered the impugned order on 03.04.2019. The certified copy of the judgment was received on 01.06.2019 and the limitation period for filing the appeal expired on 01.07.2019. Appellants counsel was not available during court vacation and could only be approached on 01.07.2019. Thereafter, he prepared the draft appeal and documents were also translated which took two weeks time. The appeal was then sent to the appellant on 14.07.2019 and he came to Delhi on 15.07.2019 for signing and completing the formalities. Thereafter the appeal was filed before this Commission on 16.07.2019. For the reasons stated, the delay is condoned.
On merits, it was argued that the appellant was a subsequent Buyer, he is estopped from contending that the terms of the Agreement to Sell were one-sided. It was stated that no PLC was applicable as the price was inclusive of External Development Charges, that the appellant was liable to pay any statutory taxes or levies and that the possession date was 2 years from the date of commencement of construction on receipt of sanctioned plans and that the appellant was aware that the construction had not commenced on the date of the Agreement to Sell. The previous allottee had paid only 3 instalments i.e. 30% (Rs 10,45,671/-). Hence, the offer of possession was subject to payment of necessary dues and the Sale Deed was executed thereafter on 13.05.2011. Possession was offered on 21.09.2010 on which date the appellant was a defaulter; however, appellant delayed taking over possession alleging that the work was incomplete and there were defects which was a frivolous argument on the basis of minor issues.
According to the Developer, possession offered on 21.09.2010 was only after a delay of one and a half years and not two years as alleged when calculated from the date of transfer of interest by the original allottee to the appellant. It was argued that the issue was one of delay compensation and not of refund and that this Commission had followed the principle laid down by the Honble Supreme Court in various judgments. Reliance was placed on Supreme Courts judgments in HUDA Vs. Raje Ram, (2008) 17 SCC 407 and Wg Cdr Arifur Rahman Khan (supra) and reiterated in Laureate Buildwell Pvt. Ltd. Vs. Charanjeet Singh in Civil Appeal No. 7042 of 2019, that in case of delay in the case of a subsequent purchaser, the delay shall not be calculated as in the case of the original allottee. It was argued, per D.S. Dhanda (supra) that for refund in case of a transferee, the interest rate would be payable from the date of expiry of 3 years from the date of agreement or from the date of transfer, whichever was later. Finally, it was argued that as held by the Honble Supreme Court in NBCC Vs. Shri Ram Trivedi, (2021) 5 SCC 273 dated 08.03.2021 held payment of interest @ 10% to be excessive in light of the prevailing market condition while modifying rate of interest to 7% and set aside the compensation of Rs 2 lakhs awarded in addition.
From the foregoing it is manifest that the Developer offered possession on 21.09.2010 as against the stipulated date of 04.08.2010. Sale Deed was, however, executed on 13.05.2011 while possession was taken over on 08.10.2011. The State Commission vide the impugned order has directed payment of interest for delayed possession @ 6% p.a. from 04.08.2008, the date of Agreement to Sell, till 13.05.2011, the date of execution of the Sale Deed, on account of delay in handing over possession. In the light of the facts and circumstances of the instant case and the arguments and material on record, it is evident that the liability of compensation for delay would arise from the promised date of possession. In a catena of judgments, the Honble Supreme Court and this Commission have held that the liability for compensating an allottee/complainant would lie for the default of not offering possession as on the date stipulated in the Agreement to Sell/Buyers Agreement till such time as an offer of possession was actually made to the allottee by the Developer. The period to be reckoned for the offer of possession has to commence as per the Agreement itself and could commence either from the date of its execution or the date of receipt of approved building plans or requisite approvals for a firefighting scheme, etc. It has also been held that an offer of possession has to be legally valid in that there should be an Occupancy/Completion Certificate obtained from the competent authority. In the instant case the Agreement provides for the stipulated date of offer of possession to be 24 months, i.e., 2 years reckoned from the date of commencement of construction on receipt of sanctioned plans from competent authority. Accordingly, from the date that the appellant stepped into the shoes of the original allottee, i.e., 04.08.2006 this period was to expire on 04.08.2008. The offer of possession had admittedly been made on 21.09.2010. The appellant cannot expect to gain by delaying the taking over possession, as held by the Honble Supreme Court in Supertech Ltd. Vs. Rajni Goyal, (2019) 17 SCC 681. The contentions of the Appellant that the Developer had breached contractual obligations in delay in offer of possession cannot, therefore, be considered.
The other contention that compensation of 6% awarded was very meagre also does not warrant consideration. In cases of compensation for delay in possession, the Honble Supreme Court has held in Wg Cdr Arifur Rahman Khan (supra) that the allottee also stands to benefit due to the appreciation of the valuation of the flat/plot in cases of taking over possession of the property with compensation for delay in complying with contractual obligations by the Developer and hence the rate of interest @ 6% has been held as fair and just.
The State Commission has clearly erred in awarding compensation for the period from the date of the Agreement to Sell to the date of execution of the Sale Deed when there was an offer of possession dated 21.09.2010. It is not the case of the appellant that the offer was not valid in that the Developer failed to obtain an Occupation/Completion Certificate. It must therefore be considered that the offer was valid. The delay in not taking possession citing some issue of quality or work completion is now of no consequence as the appellant has taken possession. The only surviving issue is the compensation for delay and the quantum. In view of the fact that the Developer has not brought on record any document to prove the date of necessary approvals, the period of construction of 2 years needs to be reckoned from the date of the Agreement, i.e. 04.08.2008. Hence, as per the relevant dates of the case, the possession should have been offered on or before 04.08.2010 whereas it was offered on 21.09.2010.
For the foregoing reasons, the appeal is liable to succeed partially. The order of the State Commission dated 03.04.2019 in Complaint No. 197/2012 is accordingly modified. Respondent/Developer is directed to compensate the appellant @ 6% rate from 04.08.2010 till the date of offer of possession, i.e., 21.09.2010 on the amount paid as on the stipulated date of possession. This order shall be complied with within 8 weeks failing which the applicable rate of interest shall be 9% p.a. In addition, the Respondent/Developer shall also pay litigation cost of Rs 50,000/- to the appellant within the period of 8 weeks.
Pending IAs, if any, stand disposed of with this order.