Ashok Dewan & Anr. vs Harpreet Dewan

Deepa Sharma, J

The admitted facts in the present complaint are that the opposite party had floated a project called "Ireo Gurgaon Hills". The complainants applied for an apartment in the said project and paid booking amount of Rs.35,00,000/- and an allotment letter dated 15.05.2013 was given to them. An agreement was entered between the parties on 11.06.2013 for allotment of residential apartment no. C-15-31 on 14th Floor in Tower-C, having super area of 4786.83 sq. ft. for total consideration of Rs.5,78,62,052/-. As per the demands from the opposite party, the complainants till 01.07.2015 had paid a total sum of Rs.3,43,51,582/-. After receiving the revised payment schedule, on 09.07.2015 the complainants informed the opposite party their inability to pay the future instalments and had shown their inclination to surrender the property to the opposite party and asked for the response of the opposite party. The opposite party informed the complainants that in the event of cancellation of allotment of flat, 20% of BSP with brokerage paid and interest on account of delayed payment would be forfeited. The complainants, thereafter, requested the opposite party to refund the balance money after making the necessary deductions. Vide letter dated 13.07.2015, the opposite party after deducting 20% of BSP with brokerage and interest on account of delayed payment informed the complainant that as per the tentative calculations done by them, a sum of Rs.2,03,91,473/- was refundable and it was subject to approval. Vide email dated 23.07.2015, the complainants again asked the opposite party to consider their request for cancellation of the allotment of the premises and refund their money. Thereafter, they also sent several letters for cancellation of their allotment and for refund of their deposited money. However, the opposite party did not cancel the allotment and vide letter dated 14.09.2015 informed the complainants that their request for cancellation was rejected. Thereafter, the complainants received letter for payment of a sum of Rs.92,19,703.77/-. On 14.12.2015 the complainants sent an email to the CEO of the opposite party expressing their difficulty in making the payment of the demand and also requested for allotment of some other flat in some other project within the amount already paid by them. The contention of the complainants is that despite several requests for cancellation of allotment and refund of money with necessary deductions, the same was not done by the opposite party and that it amounted to deficiency in service. Refund of the deposited amount of Rs.3,43,51,582/- has been sought by the complainants vide the present complaint.

In the written statement, the opposite party took the stand that agreement between them never permitted the complainants to seek cancellation of the allotment. It is submitted that complainants are defaulters as they had not only shown their inability to make the further payment of instalments but had not actually made any payment even after receiving the demand letters. An amount of Rs.1,46,89,290/- is still due against them. It is submitted that since complainants are wilful defaulters, they are not entitled for any relief. It is submitted under clause 23 of the agreement that allottee only have limited right of cancellation. It can seek cancellation of agreement where there is violation of warranties by the opposite party or where contract is frustrated. In such cases, complainants are entitled for refund of their money only with interest @ 8% p.a. which is not the case here. It is prayed that complaint be dismissed.

Parties led their evidences. We have heard the arguments and perused the relevant record.

The admitted facts are that complainants did not make any payment beyond 01.07.2015 and by this date they had deposited a total sum of Rs.3,43,51,582/-. The total consideration amount of flat was Rs.5,78,62,052/-. By sending several mails, complainants had shown their inability to make further payment of the instalments and asked for the refund of their deposited money. Various emails clearly show that the opposite party had agreed to refund all the money after deducting 20% BSP, brokerage etc. However, subsequently the request for cancellation of allotment was rejected by the opposite party. Thereafter, even after receiving the demand letters, the complainants did not pay the instalments and they are termed as wilful defaulters. In fact the complainants have failed to bring to our notice any clause in the agreement which permits them to withdraw from the contract and ask for refund. Clause 22 of the agreement, however, confers the right on the opposite party to terminate the agreement in case of violation of terms and conditions of the agreement by the allottee. In terms of clause 22 of the agreement, the company has a discretion to cancel the allotment and terminate the agreement. The relevant clauses are reproduced as under:

TIME IS ESSENCE; TERMINATION AND FORFEITURE OF EARNEST MONEY

"22.1. Notwithstanding anything contained in this Agreement, timely performance by the Allottee of all its obligations under this Agreement, including without limitation, its obligations to make timely payments of the Sale Consideration, maintenance charges and other deposits and amounts including any interest, in accordance with this Agreement shall be of essence under this Agreement. If the Allottee neglects, omits, ignores, or fails in the timely performance of its obligations agreed or stipulated herein for any reason whatsoever or to pay in time to the Company any of the instalments or other amounts and charges due and payable by the Allottee by respective due dates or in case of default by the Allottee as described in Clause 7.7., the Company shall be entitled to cancel the allotment and terminate this Agreement in the manner described hereunder:

22.1.1 In case any breach committed by the Allottee is incapable of rectification or is in the opinion of the Company unlikely to be rectified by the Allottee or where the Allottee is a repetitive defaulter or such default is continuing despite the Allottee being given an opportunity to rectify the same, then this Agreement may be cancelled by the Company with immediate effect at its sole opinion by written notice ( Notice of Termination) to the Allottee intimating to the Allottee the decision of the Company to terminate the Agreement and the grounds on which such action has been taken.

22.1.2 xxxxxxxxxxxxxxxxxxxx the Company may proceed to terminate this Agreement in the manner set out in the manner set out in Clause 22.1.1. above and to the same effect.

Clause 23.1 of the agreement confers the right on the allottee to seek cancellation, where there is default on the part of the opposite party of the nature which frustrates the agreement. In the present case, the complainants have failed to point out any such violation of the terms of the agreement by the opposite party which could lead to frustration of the agreement. Rather, it is the complainants who have defaulted in making the payments and had shown their inability to make any further instalment. Clause 23.1 of the agreement is reproduced as under:

LIMITED RIGHT OF CANCELLATION BY THE ALLOTTEE

23.1 Except to the extent specifically and expressly stated elsewhere in this Agreement allowing the Allottee to withdraw from this Agreement, the Allottee shall only have the very limited right to cancel this Agreement solely in the event of the clear and unambiguous failure of the warranties of the Company / Confirming Party that leads to frustration of this Agreement on that account. In such case, the Allottee shall be entitled to a refund of the instalments actually paid by it along with interest thereon at the rate of 8% per annum, within a period of 90 days from the date of a determination to this effect. No other claim, whatsoever, monetary or otherwise shall lie against the Company and / or the Confirming Party nor shall be raised otherwise or in any manner whatsoever by the Allottee.

Although clause 22 gives authority to the opposite party to terminate the contract in case of default by the allottee, the agreement was not terminated by the opposite party. The opposite party ought to have exercised this right given to them under relevant clause 22 of the agreement. However, since the facts of the case clearly establishes that not only there is default of payment of instalments by the complainants but the complainants have also shown their inability to pay instalment. The allotment agreement stands frustrated and cannot be effectively executed. We can say that for all practical purposes the agreement stands terminated on account of default on the part of the complainants. In such a situation it is clause 22.3 which determines the rights and entitlement of the parties. Clause 22.3 of the agreement reads as under:

"22.3 The Allottee understands, agrees and consents that upon such termination, the Company shall be under no obligation save and except to refund the amounts already paid by the Allottee to the Company, without any interest, and after forfeiting and deducting the Earnest Money, brokerage/commission/charges, service tax and other amounts due and payable to it including any interest accrued on delayed instalments and late payment charges only after resale of the said Apartment. Upon termination of this Agreement by the Company, save for the right to refund, if any to the extent agreed hereinabove, the Allottee shall have no further right or claim against the Company and / or the Confirming Party which, if any, shall be deemed to have been waived off by the Allottee and the Allottee hereby expressly consents thereto. The Company shall henceforth be free to deal with the said Apartment in any manner whatsoever, in its sole and absolute discretion and in the event that the Allottee has taken possession of the said Apartment, then the Company shall also be entitled to re-enter and resume possession of the said Apartment and everything whatsoever contained therein and in such event, the Allottee and / or any other person/occupant of the said Apartment shall immediately vacate the said Apartment and otherwise be liable to immediate ejectment as an unlawful occupant/trespasser. This is without prejudice to any other rights available to the Company against the Allottee."

This clause thus permits the opposite party to deduct the earnest money, brokerage/Commission/charges, service tax and other amounts due and payable to it including any interest accrued on delayed instalments or late payment charges. Although this clause says that such refund is to be made only after resale of the apartment, but it is harsh on the allottees. The opposite party cannot be permitted to retain the money of the complainants indefinitely. Earnest money has been defined in clause 6 of the agreement, which reads as under:

"6. Earnest Money

The Company and the Allottee hereby agree that 20 percent of the Basic Sales Price of the Apartment shall be deemed to constitute the "Earnest Money"

The earnest money, therefore, constitutes 20% of the BSP and under the agreement, the opposite party is entitled to deduct the earnest money. It is an admitted fact that the opposite party was ready to refund the money after making such deductions and complainants agreed to it. Despite this, the opposite party has not refunded them the money. The opposite party is, therefore, directed to refund the money as agreed between them.

The complainants have claimed for interest on this amount alleging that under clause 23.1 of the agreement the allottees are entitled to claim interest @ 8% p.a. on termination of the agreement.

In view of the fact that the opposite party did not refund the money though they had initially agreed to do so, interest @ 8% p.a. is also awarded to the complainants on the amount so payable by the opposite party to them, from the date of filing of complaint till realization.

In view of the above, consumer complaint stands disposed of.