Bimla Dalmia & Anr vs Fantasy Buildwell Pvt. Ltd

This consumer complaint has been filed by the complainants Mrs. Bimla Dalmia & anr. against the opposite party.

It has been alleged in the complaint that the complainants have purchased the apartment from the original allottee under the project "Paras Quartier" Sector -2, Gurgaon, Haryana of the opposite party. On 22.12.2012, the opposite party issued letter of allotment in favour of the original allottee i.e. Hemant Kumar Bhagat. The complainants paid Rs.45,00,000/- to the first allottee and Rs.38,00,000/- to the opposite party vide cheque dated 27.12.2012. Through letter of endorsement on 28.1.2013, the opposite party endorsed the allotment to the present complainants. Then complainants paid further amounts on different dates. Finally, complainants had paid Rs.1,62,00,619/- as against the total consideration of Rs.4,01,25,000/- by 05.07.2014. It has been alleged that the building is being constructed on the encroachment over a drain (nala), therefore, the complainants are not interested in taking any flat which will be involved in dispute. The complaint has been filed for refund of the amount and in the alternative for the possession.

The complaint has been resisted by the opposite party by filing written statement on the ground that the complaint was premature as the period of construction was not over on the date of filing the complaint as per builder -buyers agreement signed between the parties. As per the builder-buyers agreement, the period of construction is for 42 months to be extended by six months and the complaint has been filed before this period. It was further stated that all the approvals and the site location was inspected by the complainants/allottees as is evident from Clause No.1 of the builder-buyers agreement. Moreover, it was also stated that there is no dispute over the land and the matter has been sorted out by the Municipal Authority. The land is clear from all encumbrances. It was requested to dismiss the complaint on the grounds mentioned in the written statement.

Both the parties filed affidavits of their evidence.

Heard the learned counsel for both the parties and perused the record. Learned counsel for the complainants stated that the opposite party has built the project on a drain, which is illegally occupied by opposite party. The matter was even reported in the local press also. Nobody would like to have such an apartment, which is built on the disputed land, therefore, the complainants want to pull out from this project as quickly as possible. It was further stated by the learned counsel that the matter was pending in National Green Tribunal and Hon'ble High Court, therefore, the complainants are not sure when the legal possession will be handed over. The builder-buyer agreement was executed on 10.09.2013. As per Clause 3.1 of the builder-buyer agreement the possession was to be handed over within 42 months from the date of agreement with a grace period of six months. Even if the grace period is included, the possession was due on 10.09.2017. Thus, now the complaint is not premature and the same can be decided. It was further requested by the learned counsel for the complainants that the complainants are finally not interested in taking the apartment as the apartment is being built on a disputed land and the complainants want only refund of the amount paid.

Learned counsel for the complainants further stated that the argument of the opposite party in respect of forfeiture of the earnest money is not justified as the opposite party was itself deficient in many ways. First of all the land is disputed, moreover, the construction was not proceeding as per the plan and the project was not ready for delivery of possession on the due date. In support of his arguments, learned counsel referred to CCNo.282 of 2015, Jasvinder Kaur Vs. Parsvnath Developers Ltd., decided 08.02.2017, (NC), wherein the following has been observed:-

"9. In my view, the OP could have cancelled the allotment and forfeited the earnest money only if it had got the layout plans and building plans approved and commenced construction as per the representation made to the complainant, but it could not have overlooked its own inability to get the said plans approved and commence the construction and cancel the allotment on account of failure of the complainant to pay the balance instalments. If one party to the agreement fails to perform his part of the contract, it cannot compel the other party to the agreement to perform its part which the other party is required to perform. The complainant booked a residential apartment believing that as per the representation made to her, the construction would commence soon. Since neither the construction commenced nor the plans were approved by the MCD which informed the complainant that no such plans had bene approved by it, the complainant was justified in refusing to pay the balance amount. It would not be unrealistic to expect a prudent person to wait at least for final approval of the building plans in such a disputed case before making the balance payment instead of blocking more amount with the builder, with no certainty of the date by which he would be able to get possession of the apartment booked by him. Cancellation of the allotment and forfeiture of the earnest money, therefore, would not be justified in the above-referred peculiar facts and circumstances of this case."

On the other hand, learned counsel for the opposite party stated that as per the builder-buyer agreement, the possession was not due before 10.09.2017 and the complaint was filed in the year 2016, clearly the complaint was premature and the same is liable to be dismissed as not maintainable. In support of his argument, the learned counsel cited the following judgment:-

" Pavel Garg Vs. Krrish Reality Nirman Pvt. Ltd., CC 1861 of 2016, MANU/CF/0704/2016. It has been held that:-

"Perusal of aforesaid clause makes it clear that OP was required to handover possession within 36 months with a grace period of 9 months from the date of commencement of construction or execution of this agreement or date of obtaining all licences or approvals for commencement of construction which is later. Thus, it becomes clear that even if it is presumed that possession of apartment was to be handed over within 36 months from the date of execution of agreement along with 9 months grace period, OP has a right to handover possession upto 18th June, 2017, whereas complaint has been filed by complainant on 11.11.2016, which is a premature complaint and till 18.6.2017, there cannot be any deficiency on the part of OP in not handing over possession of apartment.

Thus, it becomes clear that complaint being premature not maintainable till 18.6.2017 and in such circumstances, complaint is dismissed as premature."

Learned counsel further clarified that some notice was received from the Municipal Authority to stop the work and the same was stopped in compliance of the order. However, the matter has been sorted out and the work is in progress. There is no dispute over the land on which the project is being constructed. The complainants have not filed any document to prove that the land is disputed. The matter that came in the Press was only in respect of the notice issued by the Municipal Authority and that matter has already been sorted out. Thus, the project is a clear project and the status of the land is also clear and undisputed. The complainants have entered into the builder-buyer agreement on 10.09.2013 and they are bound by terms and conditions of the builder-buyer agreement. There is no provision for refund of the amount in the agreement and therefore, no refund can be made to the complainants.

Learned counsel for the opposite party further stated that in the transfer document dated 29.12.2012, the complainants have agreed to pay all dues/taxes pending/future raised against this unit with retrospective effect. It was further argued by the learned counsel that all the plans of the project etc. were shown to the complainants to their satisfaction as mentioned in the builder-buyer agreement at Clause-D which reads as follows:-

"D. The purchaser (s) has represented to the Seller as follows:

The seller has allowed the inspection of the License, the building plans as filed and approved by DTCP bearing Memo no.ZP-837/JD(BS)/2012/26344 dated 20-12-2012, various approvals granted by the Authorities (as hereinafter defined) with respect to the Project and all other documents relating to the title and rights of the Seller to construct, develop, market and sell the units in the Project. The Purchaser(s) has agreed that there shall be no further investigations/objections by him/her in this regard and that he/she is fully satisfied in all respects, with regard to the rights, title and interest of the Seller in the Project."

Based on the above agreement, now it is not open to the complainants to raise any objections in respect of the project plans or titled of the land. The complainants were defaulter as would be clear from the demand letter dated 30.5.2014 wherein outstanding demand of Rs.36,04,941/- was made. Last demand notice dated 05.11.2015 was sent for Rs.2,15,40,927/- The press cutting item appeared in Times of India dated 22.05.2015 also mentions the following:-

"When contacted, general manager of Paras Buildtech, Mahesh Joshi, told TOI, "We have cleared the debris from our project that had covered the natural drain. There is no encroachment by us on the drain."

It was argued that the position as itself being clarified in the press item that the debris was cleared and there was no obstruction on the natural nala. This further means that there was no construction over the land of the nala. Thus, the basic premise on which the complainants are seeking refund is itself not borne out from the press item itself. Hence, the complainants have no cause of action seeking refund. It was further argued by the learned counsel that the complainants have not paid instalments as per the construction linked plan and as per the demand notices issued by the opposite party and they seek refund, the opposite party is entitled to forfeit the earnest amount. Learned counsel for the opposite party asserted that the opposite party is entitled to forfeit 10% of the basic sale price as earnest money as per Clause 2.21 of the builder-buyer agreement, where it has been stated that if the purchaser fails to pay instalments with interest within a period of three months then the opposite party is entitled to cancel the allotment and forfeit the earnest money equivalent to the 10% of the basic sale price. In support of his argument, learned counsel relied upon the following judgments:

(1) Auro Sugar Pvt. Ltd. Vs. Emaar Mfg Land Ltd., I (2017) CPJ 50 (NC). It has been held that:-

"13. In the light of aforesaid judgments, it becomes clear that as complainant has not paid any subsequent instalments and committed default in making payments of instalments and also committed default in returning back duly signed agreement, OP had every right to forfeit amount of earnest money deposited by complainant and learned District forum committed error in allowing complaint and learned State Commission further committed error in dismissing appeal".

Hon'ble Apex Court in MANU/SC/5198/2006: I (2007) CPJ 4 (SC): IX (2006) SLT 254: 2006 (12) SCALE 531 - Saurabh Prakash Vs. DLF Universal Ltd. held that DLF, therefore, cannot be said to be wrong in exercising its right to forfeit the earnest amount. Same view was taken by Hon'ble Apex Court in MANU/SC/0489/1996: 1996 (SLT Soft) 2148 : 1996 (4) SCALE 327 - HUDA & Anr. Vs. Kewal Krishan Goel & Ors.

In the light of above discussion, it becomes clear that complainant does not fall within purview of consumer and on merits, OP has not committed any deficiency in cancelling allotment on account of default in payment of instalments and has not committed any deficiency in forfeiting earnest money. Balance amount after deducting forfeited earnest money has already been remitted by OP to the complainant in pursuance to order dated 2.3.2012 of this Commission. Consequently, Complaint filed by complainant is dismissed with no order as to costs."

(2) DLF Ltd. Vs. Bhagwanti Narula, I(2015) CPJ 319 9NC). It has been held that:-

"11. It was contended by the learned Counsel for the Petitioner Company that since the complainant had specifically agreed to deliver 20% of the sale price as earnest money, the forfeiture to the extent of 20% of the sale price cannot be said to be unreasonable, the same being inconsonance with the terms agreed between the parties. This was also his contention that so long as the Petitioner Company was acting as per the terms and conditions agreed between the parties, it cannot be said to be deficient in rendering services to the complainant. We, however, find ourselves unable to accept the aforesaid contention, since, in our view, forfeiture of the amount which cannot be shown to be a reasonable amount would be contrary to the very concept of forfeiture of the earnest money. If we accept the aforesaid contention, an unreasonable person, in a given case may insert a clause in Buyers Agreement whereby say 50% or even 75% of the sale price is to be treated as earnest money and in the event of default on the part of the Buyer; he may seek to forfeit 50% of the sale price as earnest money. An Agreement for forfeiting more than 10% of the sale price, in our view, would be invalid since it would be contrary to the established legal principle that only a reasonable amount can be forfeited in the event of default on the part of the Buyer. In Bharathi Knitting Company Vs. DHL Worldwide Express Courier Division of Airfreight Ltd.- (1996) 4 SCC 704, the Hon'ble Supreme Court accepted the contention that in an appropriate case, the Consumer Forum without trenching upon acute disputed question of facts may decide the validity of the terms of the contract based upon the fact situation and may grant relief, though, each case depends upon its own facts.

For the reasons stated herein above, we hold that (i) an amount exceeding 10% of the total price cannot be forfeited by the seller, since forfeiture beyond 10% of the sale price would be unreasonable and (ii) only the amount, which is paid at the time of concluding the contract can be said to be the earnest money. The Petitioner Company, therefore, was entitled to forfeit only the sum of Rs.63,469/-, which the complainant had deposited with them at the time of booking of the apartment. We, therefore, direct the Petitioner Company to pay the balance amount of Rs.81,534/- to the complainant within 4 weeks from today, failing which, the said amount shall carry interest @ 12% p.a. from the date of this order till payment. However, in the facts and circumstances of the case, we find no justification for grant of any compensation or cost of litigation to the complainant. The orders passed by District Forum and State Commission stand modified accordingly."

(3) Shahaji Baba Javir Vs. Shree Khidkaleshwar Land Developers & Ors., MANU/CF/0721/2015. It has been held that:-

The Hon'ble Supreme Court dismissed the Special Leave to Appeal (Civil) No. 35627 of 2013 filed against the order of this Commission, dated 01.04.2013, wherein it was held:-

"The question as to "whether the seller is entitled to forfeit the earnest money deposit where the sale of an immoveable property falls through by reason of the fault or failure of the purchaser" came up for consideration before the Hon'ble Supreme Court in the case of Satish Batra Vs. Sudhir Rawal - (2013) 1 SCC 345. The Hon'ble Supreme Court after taking into consideration the entire case law answered the question as under:-

"19. We are, therefore, of the view that the seller was justified in forfeiting the amount of Rs.7,00,000/- as per the relevant clause, since the earnest money was primarily a security for the due performance of the agreement and, consequently, the seller is entitled to forfeit the entire deposit. The High Court has, therefore, committed an error in reversing the judgment of the trial court."

I have given a thoughtful consideration to the arguments advanced by the learned counsel for the parties and have examined the material on record. It is true that when the complaint was filed the complaint was premature as the due date had not expired. As per the agreement the due date of possession is 10.09.2017, which is now expired, therefore, the complaint cannot be dismissed now on the ground of being premature. Therefore, the complaint needs to be decided on merits. It is true that the builder-buyer agreement has a Clause - D, which states that the complainants have seen all the documents and plans in respect of the project. However, for a common layman it is difficult to understand these plans and fine points involved in the matter. However, if certain dispute in respect of the land comes to the knowledge of the allottee/purchaser, he has every right to seek clarification from opposite party and if he is not satisfied, he can pull out of the project.

The case of the complainants is not without any basis as the statement of the authorised representative of the opposite party made before the correspondent of Times of India, which has been admitted by the learned counsel for the opposite party in the arguments, clearly creates doubt in the mind of the common purchaser that there may be some dispute with respect to the land on which the project is being built though there may not be any truth in the matter. Some of the purchasers, who are ready to spend about Rs.4,00,00,000/- would not like to take any risk with respect to the land on which the project is being built and would avoid taking flat in such a project if they are doubtful about title of the land and about the future completion of the project. Hence, if the complainants are seeking refund, it cannot be denied. However, the conditions of such refund need to be decided in the facts and circumstances of the present case.

It is seen that the complainants stopped paying instalments and they would come in the category of defaulter, though they had some reasons for not making payments as explained above. Moreover, the clause relating to deduction of earnest money stipulates that if the allottee remains defaulter for a period of three months, opposite party will be entitled to forfeit the earnest money and cancel the allotment. In the present case, the complainants did not deposit the instalments as there was a valid apprehension that the land of the project was disputed and the project was being built on a drain (nala). In these conditions, this clause will not be applicable in the present case as the complainants' withholding of instalments was not without valid reasons.

On the other hand, it is also true that the complainants are seeking refund on a ground which is not substantiated and is only in the form of an apprehension. It cannot be ruled out that the complainants want to pull out of the project due to some other reasons. As has already been seen that complainants are entitled to ask for the refund, however, in the circumstances, the complainants are not entitled for any compensation as no deficiency in service has been established or proved against the opposite party. It is also true that refund is required to be given with some interest as the amount has been retained by the opposite party. As the complaint is being allowed, the unauthorised retention of the paid amount would be considered only from the date of filing of the complaint in the facts and circumstances of the present complaint case. Hence, in the present case, I deem it appropriate to order refund of the paid amount with interest @10% p.a. from the date of filing of the complaint which in the present case would be taken to be 10.09.2017 as the complaint was prematurely filed and actual date of filing complaint cannot be taken into account.

Based on the above discussion, the complaint is allowed and opposite party is directed to refund Rs.1,62,00,619/- (the amount paid by the complainants to the opposite party) to the complainants along with interest @10% p.a. from 10.09.2017 till actual payment. The opposite party is directed to comply with this order within a period of 45 days from the date of receipt of this order.