CDR Rajesh Rajgopalan & 5 Ors vs M/s Vatika Ltd

This order will dispose a complaint filed under section 21 of the Consumer Protection Act, 1986 (in short, the ‘Act’) alleging deficiency in service and unfair trade practice by the opposite party, a builder, in delay in handing over possession of the flats booked by the complainants and related issues. A separate application under section 12(1)(c) read with section 22 of the Act was filed by the complainants seeking permission to file the complaint by consumers having same interest which was allowed.

The facts, in brief, according to the complainants are that while there were originally 40 complainants, 6 complainants settled the matter with the opposite party, one withdrew his complaint, one more complainant was impleaded as a party. Hence, there are 34 complainants presently left. The complainants booked flats in the housing project "City Homes", Gurgaon, Haryana between March – August 2008. The sale consideration of a 3 BHK flat was Rs. 36 lakhs and Rs.29.02 lakhs for a 2 BHK flat. The first installment of Rs.6,00,000/- was paid and a demand was raised for second installment of Rs.6,00,000/-. In February 2009 the opposite party forwarded a Flat Buyers Agreement (FBA) to the complainants which was completely one-sided. Complainants were asked to pay the third installment within 10 days. Clause 10.1 of the FBA provided that the date of handing over possession would be from the date of signing of the FBA, without a penalty for delay in handing over possession. Based on objections to the FBA, the opposite party made changes to the FBA including agreeing to pay interest @ 7.5% on the amount for buyers who booked flats between 15.03.2008 and 01.08.2008; amendment of Clause 10.1 to provide that the period of three years for offering possession would count from the date of payment of the booking amount; in case of  delay in handing over possession, penalty of Rs.5 per sq. ft. for 12 months of delay and Rs. 10 per sq. ft. thereafter till possession. The opposite party made changes to the housing project including change in location, open parking instead of basement parking at an additional cost of Rs. 2 Lakhs, increase in super area of the flat by 16% to 19%, enhancement of sale price of flat to Rs. 55 Lakhs for 3 BHK and Rs. 38 lakhs for a 2 BHK flat. Flats were also re-allotted and earlier allotments were cancelled. On 29.04.2014 opposite party applied for Occupation Certificate (OC). The opposite party started offering possession from the year 2014 to 2016/2017 to flat buyers and without completing the project they forced the flat buyers to pay third installment and to take possession without obtaining OC and NOC from Fire Safety Department which was received subsequently on 26.03.2015. Complainants alleged cheating and fraud by the opposite party before the Directorate of Town and Country Planning, Haryana on the ground that despite payment of 95% of the sale consideration opposite party had delayed in handing over possession by 4 to 7 years. It was alleged that complainants were unable to obtain loan from banks as no building approval drawings were provided by the opposite party.

The complainants rely on the judgments of Hon'ble Supreme Court of IREO Grace Realtech Pvt. Ltd. Vs. Abhishek Khanna & Ors.  2021 SCC Online SC 14 which rejected the meagre compensation offered by the developer for delayed possession and granted a higher rate of compensation and Lanco Hills Technology Park Pvt. Ltd. Vs. Manisha Balkrishna Kulkarni & Anr. (2020) 11 SCC 699 wherein the developer was held liable to pay compensation for the delay even beyond the contractually agreed period and lumpsum compensation amounting to Rs.10 Lakhs was awarded to home buyers. The complainants also rely upon Wg. Cdr. Arifur Rahman Khan Vs. DLF Southern Homes Pvt. Ltd. 2020 SCC Online SC 667 wherein it has been held that :

… It would, in our view, be manifestly unreasonable to expect that in order to pursue a claim for compensation for delayed handing over of possession, the purchaser must indefinitely defer obtaining a conveyance of the premises purchased or, if they seek to obtain a deed of conveyance to forsake the right to claim compensation. This basically is a position which the NCDRC has espoused. We cannot countenance that view.

The complainants are before this Commission with the prayer to:

a. Direct the opposite party to pay delay charges at the rate of Rs.5.00 per sq ft per month on the period of delay after the expiry of three years from the date of booking for the first 12 months and Rs.10/- per sq ft per month till the balance period of delay till the date of possession of the flat legally;

b. Direct the opposite party to hand over the possession of the flat after obtaining the completion certificate/ occupation certificate from the competent authorities and not to force the complainants to accept the possession under the threat of the holding charges;

c. Execute the sale deed in favour of the complainants on receipt of the total cost price initially agreed to be paid by each complainant to whom the possession has been forcibly given;

d. Restrain the opposite party from forcing the complainants to sign the maintenance agreement with M/s Enviro a group company of the opposite party and leave the discretion to the complainants to maintain the same through Residential Welfare Association;

e. Permit the complainants to purchase the electricity from any Government agency and not to force the complainants to purchase the electricity from M/s Enviro;

f. The final installment of the flat cost has been unilaterally hiked and no detailed calculation of the basis is provided. Thus, direct the opposite party to provide detailed calculations of area, carpet area, super built up area, cost/ revised cost details and charges from super area based on BBA;

g. Cost of the complainant may please be also awarded; and

h. Any other relief which this Hon’ble Commission deems fit and proper be also awarded in the facts and circumstances of the case.

The opposite party resisted the complaint by way of reply and affidavit and contended that the present complaint is not maintainable since the complaint was not filed with a notarized attested affidavit and accompanying affidavits were not signed by all the complaints as specified under section 2(c) of the Act. The opposite party contends that a joint complaint cannot be filed to claim pecuniary jurisdiction of this Hon'ble Commission by adding the value of each case and valuation should be done on the basis of the individual claims of the complainants which would be much less than Rs. 1 crore in each case and hence, this Commission lacks the pecuniary jurisdiction to deal with the matter; that complainants are not ‘consumers’ as defined under section 2 (d) of the Act, since complainants at serial nos. 4, 6, 10 & 40 had taken possession of their respective apartments and rented them for earning profits; that some complainants had more than one residential premises which amounts to booking of flat in question for investment / commercial purpose; that this Commission was not the forum for adjudication of the present complaint and complainants should be directed to approach a civil court for redressal as this complaint arises out of breach of FBA and should be resolved by arbitration as provided in the FBA; that complainants had failed to establish any case for deficiency in service or unfair trade practice against the opposite party since delay was due to force majeure events beyond the control of the opposite party which prevented construction work in Sector 85.

The opposite party has relied upon this Commission’s judgments in

(a)  Moran Plantation Pvt. Ltd., Parasramka Holding Pvt. Ltd., and Mili Marketing Pvt. Ltd., v/s Ambience Pvt. Ltd., in CC nos.307, 308 and 309 of 2012 which held that “…collection of rent is earning profits” and complainants should “approach the appropriate Civil Court to seek their remedy, if so advised…….”.

(b) National Insurance Co. Ltd. V/s Mustan & Anr., Civil Appeal no.7381 of 2005 decided on 09.12.2005 to highlight that “The doctrine of election postulates that when two remedies are available for the same relief, the aggrieved party has the option to elect either of them but not both”.

It is stated that the claim of the complainants for compensation for delayed possession was misconceived and baseless since opposite party’s letter dated 27.04.2010 specified that the clause for payment of interest in case of delay shall apply only in case of those applicants who have paid at-least two of the installments and the booking amount and not to all complainants. Therefore, all the complainants are not eligible for compensation.

Complainants rely on judgment of Hon’ble Supreme Court in Samruddhi Co-operative Housing Society Ltd. Vs. Mumbai  Mahalaxmi construction Pvt. Ltd.,  2022 SCC Online SC 35 which laid down that “The failure of the respondent to obtain the occupation certificate is a deficiency in service for which the respondent is liable” and “the members of the appellant society are well within their rights as ‘consumers’ to pray for compensation as a recompense for the consequent liability”; and orders of this Commission in (a) Kamal Kishore & Anr. Vs. M/s Supertech Limited 2017 SCC Online NCDRC 67 to highlight that “no maintenance charges should be levied before obtaining the OC” and in (b) Madhusudan Reddy R & Ors. Vs. VDB Whitefield Development Pvt. Ltd. & Ors. dated 25.01.2022 in Consumer Complaint No.763 of 2020 wherein it was held that

“As per the principle laid down by the Hon’ble Supreme Court, a delay compensation of 9% is reasonable and justified in case of unreasonable delay” and “As per the order of this Commission in Kamal Kishore and Anr. Vs M/s Supertech Limited (supra) no maintenance charge should be levied before obtaining the Occupancy Certificate. In this case, even of some of the allottees including the complainants, have taken possession of their respective units, it would be considered as paper possession only. So, the question of charging maintenance charge is in our considered view not proper and therefore should not have been collected and should not be collected till receipt of the occupancy certificate. The complainants will be liable to pay maintenance charge only after the occupancy certificate is received”.

Complainants led their evidence and filed written submissions. We have also heard the learned counsel for the complainants and perused the records carefully. Vide order dated 13.12.2022 opposite party had been proceeded ex parte. A last opportunity was granted to the opposite party to file written arguments and an excel sheet indicating the date of handing over possession to the 34 allottees which they failed to do. The Opposite party did not appear on 31.03.2023 when orders were reserved. Therefore, the reply of the opposite party was taken as their final submission.

Complainants argue that they booked flats in the project of opposite party in 2008 by paying first installment. Possession was to be offered three years from the date of allotment, i.e. in 2011. Admittedly, opposite party applied for grant of part Occupation Certificate in September 2014 and thereafter for grant of part occupation certificate in October 2015. As the project was not complete, OC and NOC from fire department opposite party had not been received. However, the complainants were forced to take possession and asked to deposit third installment. Complainants were therefore left with no option but to take possession. At present there are 34 complainants left. There has been delay of about 4 to 7 years in possession even after 95% of the payment of the total consideration having been paid. All the complainants have taken possession as on date although Occupancy Certificate (OC) and No Objection Certificate (NOC) from the Fire Directorate were received on 26.03.2015.

The opposite party in its written statement raised preliminary objections and contested this Commission’s pecuniary jurisdiction to entertain the complaint.  It was argued that complainants are not ‘consumers’ under the Act having other residential premises and that the issues arising from the FBA need to be adjudicated in an appropriate civil court or through arbitration. Deficiency in service and unfair trade practice is denied on the ground of applicability of force majeure conditions which prevented work as the site was inaccessible due to non-availability of proper roads and delay by the contractor engaged for construction.

The preliminary issues raised by the opposite party have been considered. The settled law on pecuniary jurisdiction as held by this Commission in Ambarish Kumar Shukla and 21 Ors vs Ferrous Infrastructure Pvt. Ltd., I 2017 CPJ 1 (NC) and Renu Singh vs Experion Developers Pvt. Ltd.,  CC no.1703 of 2018 is that the principle for determining the pecuniary jurisdiction is the total consideration paid by the persons who have joined the complaint in a joint complaint and other damages claimed shall determine such jurisdiction. In view of this position of law the contention of the opposite party regarding pecuniary jurisdiction does not sustain. As regards the contention that the complainants are not ‘consumers‘ under section 2(1)(d) of the Act, since they possess other residential premises and a few of them have let them out for residential purpose, in light of the judgment of this Commission in Kavita Ahuja vs Shipra Estate Ltd., (1) 2016 CPJ 31 wherein it was held that the onus of establishing that the complainants were dealing in real estate for commerical purpose rests on the opposite party which in the instant case, has not been discharged by any documentary evidence, the contention cannot be sustained. The contention of the opposite party that in view of the the provision of a clause for arbitration in the FBA, this complaint does not lie before this Commission, this contention is not valid in light of Aftab Singh vs Emaar MGF Land Limited and Anr., Consumer Case no. 701 of 2015 wherein, vide order dated 13.07.2017 it was held that ‘arbitartion clause in the buyer’s agreement does not bar the jurisdiction of the consumer fora’, and in the case of Ireo Grace Realtech Pvt. Ltd., vs Abhishek Khanna and Anr., (Supra) in Civil Appeal no. 5785 of 2019 decided on 11.01.2021 wherein the Hon’ble Supreme Court held that:

“The Consumer Protection Act, 1986 was enacted to protect the interests of consumers, and provide a remedy for better protection of the interests of consumers, and  provide a remedy for better protection of the interests of consumers, including the right to seek redressal against unfair trade practices or unscrupulous exploitation ......... Section 3 of the Consumer Protection act provides that the remedies under the Act are in addition to, and not in derogation of any other applicable....”

As for the applicability of the force majeure conditions, it is apparent that the accessibility of the site and contractual disputes with the contractor donot constitute a force majeure since these are normal risks associated with any project and it would be grossly unjust to the complainants since, the opposite party is expected to address suchissues in the course of the execution of a project for which it has already factored in three years for execution.

Admittedly there has been an offer of possession by the opposite party and all the complainants have taken possession of their respective flats. As per the affidavit filed by the learned counsel for the complainants, all the complainants are in possession of their respective flats.

The issues that survive for considersation are (i) compensation for the delay in handing over the flat; (ii) execution of sale deed; (iii) exemption from holding and maintenance charges; and (iv) determination of final charges to be paid to the opposite party. The issues raised by the complainants with regard to signing of an agreement with M/s Enviro, a group company of the opposite party for maintenance and electricty are not considered relevant at this stage since the possession of the flat has already been taken and the complainants are availing the facilities.

It is manifest that the opposite party has delayed the completion of the project. The flats were promised to be handed over after three years. However, the offer of possession was made between 2014 to 2016/2017 on which date admittedly there was neither an OC nor an NOC of the Fire Department. The possession offered was also linked to further financial penalty in case of refusal and hence the complainants were left with no option but to accept the possession. However, in the absence of the OC and the NOC, the possession can only be construed to be a paper possession which constitutes  deficiency in service. In view of the admitted fact that the OC and NOC from the Town and Country Planning Department and the Fire Services Department respectively were obtained only on 26.03.2015, the opposite party is liable to compensate the complainants in terms of the FBA for the delay and for the possession that was without the necessary legal clearances. Possession taken by the complainants was merely a paper possession in view of Kamal Kishore (supra) and therefore such alottees are not liable to pay any holding or maintenance charges till 26.03.2015. In Abhishek Khanna (supra) which has been relied upon by the complainants, the Hon’ble Supreme Court laid down that a higher compensation could be considered than that included in the agreement between the parties. In Manisha Balkrishna Kulkarni (supra) it was held by the Hon’ble Supreme Court that compensation beyond the contractually agreed period was also payable. Therefore, in the facts and circumstances of the instant case where possession has been delayed for 4 to 7 years from the promised date of three years from the date of payment of booking amount for handing over possession, and in light of the fact that the opposite party has failed to provide any cogent and documentary evidence for the delay except to rely on force majeure grounds which do not sustain in view of the discussion above, the complainants are found to be entitled to a higher compensation. As per clause 11.5 of the FAB, the opposite party is liable to compensate the complainants who had paid atleast two instalments after the booking amount @ rate of Rs. 5/- per sq. ft. for 12 months of delay and Rs.10 per sq. ft. thereafter till possession. Accordingly, the complainants who have paid two installments after the booking amount are liable to be compensated under this clause.

Revision of the sale consideration of the flats by the opposite party along with other charges for parking etc., has not been denied by the opposite party. After the signing of the FBA such revision is arbitrary and an unfair trade practice. The FBA provides for revision of cost of the flat only to the extent any change in the super area upon completion of the project till which time it is tentative. The prayer of the complainants to provide detailed calculations of area, carpet area and super built up area with revised cost details and charges based on super built up area is, therefore, valid and in the absence of any evidence to the contrary having been provided, is  accordingly upheld.

For the above said reasons, this complaint is disposed of with the following directions:

i. Opposite party shall compensate the complainants who have paid two installments after the initial deposit @ Rs.5/- sq ft for the period March 2011 to August 2012 for the first 12 months of delay and @ Rs.10/- per sq ft thereafter till 26.03.2015;

ii. Opposite party shall not charge any holding charges or maintenance fee for the period ending 26.03.2023;

iii. Opposite party shall also execute the necessary sale deeds after providing the necessary documentation of the completion and occupancy certificate from the concerned authorities which are stated to be in its possession;

iv. The opposite party shall also pay Rs.50,000/- as cost of litigation; and

v. This order shall be complied within eight weeks of its receipt failing which interest applicable shall be 9% simple interest per annum.

All pending IAs also stand disposed of with this order.