Atul Kumar Agarwal vs Krrish Shalimar Projects Pvt. Ltd

R.K. Agrawal, J. President

The present Consumer Complaint has been filed by the Complainants Under Section 21(a)(i) of the Consumer Protection Act, 1986 (for short "the Act") against the Opposite Party, M/s. Krrish Shalimar Projects Pvt. Ltd. (hereinafter to be referred to as "the Developer") seeking refund of the deposited amount with interest and compensation as the Builder has failed to deliver the vacant physical possession of the booked Apartment in terms of the Apartment Buyer's Agreement.

It has been, inter alia, averred in the Complaint that the Complainants had booked a Residential Flat with the Developer for a total Sale Consideration of 3,13,76,660/- and they were allotted Apartment No. A-1101, Tower A, Ibiza Town, Surajkund, Faridabad, Haryana admeasuring 4000 Sq. Ft. The Apartment Buyer's Agreement (hereinafter to be referred to as the "Agreement") was executed between the parties on 28.12.2012. In terms of Clause 3.1 of the Agreement, the Developer was under an obligation to complete the construction and hand over the possession of the booked Apartment within a period of 36 months (with a grace period of 9 months) from the date of signing of the Agreement, i.e. latest by 30.09.2016 which was subject to Force Majeure conditions and reasons specified in Clause 10 of the Agreement. According to the Complainants, they paid to the Developers a sum of 2,77,95,968/- out of which 26,80,050/- was paid by the Canara Bank from which the Complainants availed of Housing Loan facility. It is stated by the Complainants that all the payments were made to the Developer with the hope and anticipation that the Developer shall hand over the possession on time specified in the Agreement, however, the Developer could not complete the construction and deliver the possession within the stipulated period,

Vide email dated 22.12.2016, the Complainant called upon the Developer to pay 40,000/-towards delayed compensation @ 10 per sq. ft. in terms of the Agreement. Complainants wrote another email dated 16.02.2017 asking the Developer to compensate them for the delayed possession but in vain. The same was the fate of another email dated 04.05.2017.

Since, the Complainants did not want to wait indefinitely for handing over the possession of allotted Flat, finally, vide letter dated 10.06.2017, they requested the Developer to refund the entire deposited amount with interest @ 18% p.a. Vide email dated 15.06.2017, the Developer informed to the Complainants that on their verbal instructions they are seeking to shift their Flat to either Tower B or C. However, the Complainant denied the said instructions either in writing or verbal. It is further averred by the Complainants that they have invested their hard-earned money with the Developer but despite having received the hefty amount of 2,77,95,968/-, the Developer has committed a contractual default by not handing over the possession of the booked Flat as promised and they are liable to refund the deposited amount with interest @12% p.a in terms of Clause 2.10 of the Agreement. Hence, alleging deficiency in service, the Complainant filed the present complaint with the following prayers:-

(i) direct the Opposite Party to refund an amount of 2,77,95,968/- (principal amount) along with 1,11,32,992/- (being the interest amount calculated @12% p.a. from the date of deposit upto the date of filing of the complaint) along with future and pendent lite interest @ 12%;

(ii) direct the Opposite Party to pay an amount of 29,14,964/- which the Complainant has paid to the Canara Bank from where the Complainant had availed the Housing Loan for the said apartment along with future and pendent lite interest;

(iii) direct the Opposite Parties to pay an amount 50,00,000/- as to compensation to the Complainant for mental agony, torture and damages;

(iv) direct the Opposite Party to pay an amount of 5,00,000/- to the Complainant towards the cost of the present litigation;

(v) award any additional compensation to the Complainant which this Hon'ble Commission may deem fit and proper;

The Developer filed its Reply admitting to the booking, Allotment, receipt of amount of 2,77,95,968/-, execution of the Agreement dated 28.12.2012 and to Clause 3.1, wherein the Developer has agreed to deliver the possession of the Apartment within 36 months from the date of execution of the Agreement with 9 months grace period and this Clause was subject to force majeure conditions. It is averred by the Developer that the Complainants are not the "Consumers" as defined under Section 2 (1) (d) of the Act and are speculative investors as they have purchased the Apartment only to gain profits by resale of the Apartment booked and that there was a delay in making the payment by the Complainants. However, as a goodwill gesture, the interest was waived off on the delayed payment and after availing waiver, the Complainants cannot claim any interest or compensation for the delayed period of possession. The period of 36 months to complete the construction and hand over the possession of the Apartment to the Complainants was tentative and even if there was some delay it was for the reasons beyond its control and they cannot be held liable to compensate the Complainants in terms of Clause 3.3 of the Agreement. An offer, vide email dated 22.12.2016, was made to the Complainants for alternative allotment in the Tower which was ready for possession but the Complainants rejected the said offer. The superstructure at the Project Site is complete and the Project is in its final stage of completion with the finished works being carried out in full swing. As per Clause 12.4 of the Agreement, the Complainant cannot unilaterally cancel/withdraw or surrender the Agreement after the Developer has begun the construction work. It is stated that the Agreement contains Arbitration Clause, which clearly states that all disputes arising out of the said Agreement shall be referred to Arbitration.

All other averments made in the Complaint have been specifically denied by the Developer and prayed dismissal of the Complaint with exemplary costs. The Complainants filed their Rejoinder denying all the rival contentions raised by the Developer in its Reply and reiterating the averments made in the Complaint.

We have heard the Learned Counsel for the parties at some length and also perused the material available on record as well as the judgments relied upon by the parties.

In brief, it is the case of the Complainants that they had paid about 90% of the total Sales Consideration of the allotted Apartment No. A-1101, Tower A, Ibiza Town, Surajkund, Faridabad, Haryana to the Developer. As per Clause 3(1) of the Agreement, the possession of the Apartment was to be delivered to the Complainants within 36 months from the date of execution of Agreement dated 28.12.2012 that means by 27 th December, 2015. The grace period of 9 months also expired on 30.09.2016. However, the Developer has miserably failed to hand over the possession within the stipulated time and hence they are entitled for reasonable interest, compensation and costs.

With regard to the preliminary objection taken by the Developer that due to existence of Arbitration Clause in the Agreement, this Commission has no jurisdiction to entertain 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 contention of the Learned Counsel for the Developer that the Complainants are not the 'Consumers' as they have booked the Apartment for earning profits and for investment purpose, is completely unsustainable in the light of the judgement of this Commission in Kavita Ahuja vs. Shipra Estates - I (2016) CPJ 31, in which the principle laid down is that the onus of establishing that the Complainant was dealing in real estate i.e. in the purchase and sale of plots/flats in his normal course of business to earn profits, shifts to the Opposite Party, which in the instant case they had failed to discharge by filing any documentary evidence to establish their case. Therefore, we are of the considered view that the Complainants are 'Consumers' as defined under Section 2 (1)(d) of the Act.

The main contention of the Learned Counsel appearing for the Developer is that the construction of the Apartment was affected due to default on the parts of the Complainants in making the payments of instalment in times and the reasons which were beyond their control. The delay in completion of the Project by the Developer cannot be justified on such bald allegation without substantiating the same by hard evidence. The Developer has completely failed to substantiate that what were the reasons which were beyond their control and how they affected the construction of the Project. With regard to the plea taken by the Developer that delay in construction of the Apartment has occurred due to default on the parts of the Complainants in making the payment of instalments in time, it is admitted by the Developer that they have charged the interest on the delayed payment and now they cannot take shelter under this excuse and in case there was default in making payments by the Complainant, the Developer was at liberty to cancel their booking. So far as, the defence taken by the Developer that the Complainants were made an alternative offer and in terms of Clause 12.4 of the Agreement, the Complainant cannot unilaterally cancel/withdraw or surrender the Agreement after the Developer has begun the construction work, is concerned, we are of the considered view that it is devoid of any merit. Recently, the Hon'ble Supreme Court in the case of Ireo Grace Realtech Pvt. Ltd. Vs. Abhishek Khanna & Anr. - { (2021) 3 SCC 241 } has held that:-

" The Developer made an alternate offer of allotment of apartments in Phase 1 of the project. The allottees are however not bound to accept the same because of the inordinate delay in completing the construction of the Towers where units were allotted to them. The Occupation Certificate is not available even as on date, which clearly amounts to deficiency of service. The allottees cannot be made to wait indefinitely for possession of the apartments allotted to them, nor can they be bound to take the apartments in Phase 1 of the Project. The allottees have submitted Inthat they have taken loans, and are paying high rates of interest to the tune of 7.9% etc. to the Banks.

Consequently, we hold that the allottees in Chart B are entitled to refund of the entire amount deposited by them."

We find it a fit case to place reliance on the judgment of this Commission in Emmar MGF Land Ltd. & Ors. vs. Amit Puri - [II (2015) CPJ 568 NC], wherein it was laid down that after the promised date of delivery it is the discretion of the Complainant whether he/she wants to accept the offer of possession, if any, or seek refund of the amounts paid with reasonable interest. In our view the Complainants cannot be made to wait indefinitely for the delivery of possession and the act of the Developer in relying on Force Majure Clause while retaining the amounts deposited by the Complainants, is not only an act of deficiency of service but also of Unfair Trade Practice, especially in light of the view and the fact that the Developer charges interest @ 18% p.a. for any delay in the payments made by the flat purchasers and pays compensation for delayed possession only at 10/- per sq. ft. per month. 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.

Further, the Hon'ble Apex Court in Pioneer Urban Land & Infrastructure Ltd. Vs. Govindan Raghavan,- II (2009) CPJ 34 (SC) , 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."

This judgment squarely applies to the facts and circumstances of the present case for all the aforenoted reasons.

A reliance can also be placed on the judgment 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."

It would be seen that in terms of Clause 3 (1) of the Agreement, the possession of the Apartment to the Complainants was proposed to be delivered till 27.12.2015 from the date of execution of the Apartment Buyer's Agreement. Even if, the benefit of the grace period of nine months is given to the Developer, the possession of the Apartment, complete in all respects, therefore, ought to have been delivered to the Complainants by 30.09.2016. On 21.09.2021, the Developer filed an Interim Application No.6877 of 2021 seeking permission to bring on record some additional documents. In the said Application, it has been stated by the Developer that the Occupation Certificate in respect of Tower A where the Apartment of the Complainant was situated, has been issued by the District Town & Country Planning, Haryana, Chandigarh on 15. 09.2021 which establishes the fact that till 15.09.2019 the Apartment was not ready to be handed over to the Complainants and the Complainants were justified in demanding the refund of the deposited amount vide their letter dated 10.06.2017. For the aforesaid discussions, we are of the considered view that the Complainants are entitled for refund of the principal amount with reasonable interest.

Now, the question which arises for our consideration is how much interest/compensation is to be paid to the Complainants on the amount deposited by them with the Developer. Though, it is the Complainant's case that in the event of failure on the part of Developer to hand over the possession of the allotted Apartment, they are liable to pay interest on refund @ 12% p.a in terms of Clause 2.10 of the Agreement but having regard to the fact that the Banks have lowered the interest rate and the Hon'ble Supreme Court has been awarding interest keeping in view the current market situation and the recent decline in the cost of borrowing and return on the investments made with the Banks, we are of the opinion that simple interest @ 9% p.a. would meet the ends of justice. Hence, while partly allowing the Complaint, we direct the Developer to refund the deposited amount to the Complainants with simple interest @ 9% p.a from the respective dates of deposit till the actual date of payment, within a period of six weeks from the date of passing of this order failing which the amount shall attract the interest @ 12% p.a for the same period. The Developer shall also be liable to pay 50,000/- to the Complainants towards the costs of litigation.