Chandigarh Overseas Private Limited & Anr vs Avtar Chand Sharma

Dinesh Singh, Member

The State Consumer Disputes Redressal Commission, Punjab, hereinafter referred to as the 'State Commission', disposed of Consumer Complaint No. 719 of 2017 and Consumer Complaint No. 720 of 2017 vide a common Order dated 03.04.2018.

These two Appeals, F.A. No. 1996 of 2018 and F.A. No. 1997 of 2018, have been filed under Section 19 of The Consumer Protection Act, 1986, hereinafter referred to as the 'Act', challenging the said Order dated 03.04.2018 passed by the State Commission.

The Appellants herein, in both the Appeals, Chandigarh Overseas Private Limited & its one Director, were the Opposite Parties before the State Commission, in both the Consumer Complaints, and are hereinafter being referred to as the 'Builder Co.'.

The Respondent herein, Mr. Avtar Chand Sharma, was the Complainant before the State Commission, in both the Consumer Complaints, and is hereinafter being referred to as the 'Complainant'.

We heard arguments from the learned Counsel for both sides, and perused the entire material on record including inter alia specifically the impugned Order dated 03.04.2018 of the State Commission and the Memoranda of Appeal.

We note that the two Appeals have similar facts and same questions of law involved.

We are taking F.A. No. 1996 of 2018, Chandigarh Overseas Pvt. Ltd. & Anr. vs. Avtar Chand Sharma , arising out of the Order dated 03.04.2018 of the State Commission in Consumer Complaint No. 719 of 2017, as the lead-case.

F.A. No. 1996 of 2018

Brief salient facts of F.A. No. 1996 of 2018, the lead-case, shorn of unnecessary details, are that the Complainant deposited Rs. 33,00,000/- with the Builder Co. with an application dated 15.10.2010 for allotment of a "Residential Unit" in its "INDUSTRIAL KNOWLEDGE (FASHION TECHNOLOGY) PARK", hereinafter being referred to as the 'Project'.

A Buyer Developer Agreement, hereinafter being referred to as the 'Agreement', was executed between the Complainant and the Builder Co. on 15.10.2010.

The agreed and assured date of completion of the Project, as written in the Agreement dated 15.10.2010, was 31.12.2011.

The Builder Co. issued a "Provisional Allotment Letter" on 15.10.2010 for a residential unit, No. 121 in Tower 11 (Eleven), hereinafter being referred to as the 'Unit'.

The "Provisional Allotment Letter" inter alia contained a condition that "The Final Allotment and Possession will be subject to the Terms & Conditions, Rules and Regulations and directions issued by the department of Industries in its approvals and subsequent correspondence until now and to be issued in future.".

The Builder Co. failed to make a "Final Allotment" or to deliver "Possession" of the Unit to the Complainant till the agreed and assured date i.e. 31.12.2011.

The Builder Co. issued another "Provisional Allotment Letter" on 20.11.2013 for an alternative residential unit, No. 508 in Tower 04 (Four), hereinafter being referred to as the 'alternative Unit'.

The condition that "The Final Allotment and Possession will be subject to the Terms & Conditions, Rules and Regulations and directions issued by the department of Industries in its approvals and subsequent correspondence until now and to be issued in future." was again contained therein.

The agreed and assured date of completion of the Project, as written in the Agreement dated 15.10.2010, was simultaneously amended (on 20.11.2013) from 31.12.2011 to 30.06.2014, with the cutting and amendment attested by a Director of the Builder Co.

The Builder Co. failed to make a "Final Allotment" or to deliver "Possession" of the alternative Unit to the Complainant till the so amended assured date i.e. 30.06.2014, or even thereafter.

The Complainant filed Consumer Complaint No. 719 of 2017 before the State Commission on 21.08.2017.

The State Commission vide its impugned Order dated 03.04.2018 allowed the Complaint. The Award made by the State Commission is reproduced below:

In view of my above discussion, the complaint is allowed and following directions are issued to the opposite parties:

i) to deliver possession of flat No. 508 in Tower No. 4 after completely constructing the building, along with all promised amenities and facilities;

OR in the alternative :

to offer the possession of some other flat of same dimensions in some other Tower in the same project, which is near completion;

ii) to pay penalty at the rate of 1,000/- per day on account of delay in delivery of possession of the flat with effect from 01.01.2012 till actual delivery of possession of the flat to the complainant, as per Clause-14 of agreement, Ex.C-4; and

iii) to pay 2,00,000/-, as compensation on account of mental agony and harassment suffered by the complainant.

The State Commission has, in essence, directed the Builder Co. to deliver possession of the alternative Unit or "to offer the possession of some other flat of same dimensions in some other Tower in the same project, which is near completion" along with penalty @ Rs. 1,000/- per day for delay in possession and compensation of Rs. 2,00,000/- for mental agony and harassment.

The salient material chronology is as below:

i.

Date of Application by the Complainant with the Builder Co. for allotment of a residential unit in their Project

15.10.2010

ii.

Date of making deposit and amount of the deposit:

15.10.2010

Rs. 33,00,000/-

iii.

Total cost of a residential unit:

Rs.33,00,000/-

iv.

Date of execution of the Agreement:

15.10.2010

v.

Date of the first Provisional Allotment Letter for the Unit:

15.10.2010

vi.

Agreed and assured date of completion of the Project:

31.12.2011

vii.

Date of the second Provisional Allotment Letter for the alternative Unit:

20.11.2013

Viii

Amended assured date of completion of the Project:

30.06.2014

ix.

Date of filing of the Complaint before the State Commission (C.C. No. 719 of 2017):

21.08.2017

x.

Date of the State Commission's impugned Order:

03.04.2018

xi.

Date of filing of the Appeal by the Builder Co. before this Commission (F.A. No. 1996 of 2018):

12.11.2018

xii.

Date of arguments before this Commission:

26.09.2019

One contention made by the Builder Co. was that, since the assured date of completion was 31.12.2011 / 30.06.2014, and the Complaint was filed before the State Commission on 21.08.2017, the Complaint is barred by limitation.

We find this contention to be totally untenable.

When the amount of Rs. 33,00,000/- was deposited on 15.10.2010, being the total cost of a residential unit (i.e. the Unit or the alternative Unit), and when neither any refund was made and nor the Unit / the alternative Unit / any unit offered for possession, it was a continuing wrong, the Complainant had a continuing cause of action, and as such it can in no way be said that his Complaint was barred by limitation.

Another contention made by the Builder Co. was that the Complainant had booked the Unit / the alternative Unit for "speculative purpose to earn profits by reselling" and was accordingly not a 'Consumer' within the meaning of Section 2(1)(d) of the Act.

We find this contention also to be totally untenable.

We note that the Complainant has specifically and categorically averred in his Complaint that "the complainant, with an intention to buy a residential flat for gifting the same to his daughter (Reetu Sharma) as wedding gift for her residential purposes, agreed to purchase the said Residential Flat" (para 4 of the Complaint).

We also note that the State Commission has correctly appraised this issue in its impugned Order and arrived at a reasoned finding that the Complainant was a 'Consumer' under the Act (para 12 of the State Commission's Order).

We further note that the Builder Co. has but raised only a bald objection, it has not adduced any cogent evidence to rebut the Complainant's specific and categorical averment that the Unit / the alternative Unit was for giving to his daughter as a wedding gift for her residential purposes or to substantiate its contention that the Complainant booked the Unit / the alternative Unit for "speculative purpose to earn profits by reselling".

In the clear absence of any cogent evidence to substantiate its anyhow made objection, that the Complainant had booked the Unit / the alternative Unit for "speculative purpose to earn profits by reselling", we agree with the State Commission that the Complainant is a 'Consumer' within the meaning of Section 2(1)(d) of the Act.

The Builder Co. has inter alia stated that it entered into and later terminated a Joint Development Agreement with one M/s Ionic Realty Limited, that it was involved in litigation, that as a consequence of "stay" on the "construction" of the Project there was no activity on the Project site from 26.04.2011 to 23.08.2014.

It has also stated that the Project was "stalled" by the Regulatory Authorities.

It has accordingly contended that the Project was delayed due to reasons beyond its control, and has sought protection under the Force Majeure clause in the Agreement.

We may however state that prior to, or, at the least, simultaneous to, getting a Consumer to enter into its Agreement and accepting the first payment towards the total cost of the subject unit, the Builder Co. was required and expected to have the due pragmatic and realistic assessment and preparation of the Project Planning, Execution and Completion.

It was the prime responsibility of the Builder Co. to ensure that it was in a position to deliver the possession of the subject unit(s) to the Buyer(s) Consumer(s) within the agreed and assured period and in all contingencies within a reasonable period thence (reasonable period here would connote such period as a reasonable man would not normally agitate).

Planning, Execution and Completion were its responsibility, and not of the Consumer(s).

(Normal) impediments or problems that arise in Planning, Execution and Completion were its responsibility, and not of the Consumer(s).

Specifically, availability of land (/ acquisition of land), as well as all approvals from the concerned Government / Development / Municipal authorities, as and when due, being fundamental basic requirements of a construction Project, were decidedly the Builder Co.'s primary responsibilities, and not of the Consumer(s).

Its arrangements of Joint Development Agreement(s) etc. with any third party or its arrangements with its contractors or sub-contractors etc. or its litigation etc. were its own concern / problem, and not of the Consumer(s).

Cost and Time overruns were its responsibility, and not of the Consumer(s).

Non-fulfilment of its overall responsibilities of Project Planning, Execution and Completion can not be and are not grounds for condoning or overlooking delay in completion and failure to hand over possession within the agreed and assured period.

Force Majeure , unforeseeable circumstances, irrespective of its various 'liberal' or 'strict' interpretations, and irrespective of its various interpretations in different sets of facts, can, but, not be nebulously and irrationally articulated in the agreement, or contended and argued for anything and everything related to the Builder Co.'s responsibilities for completion of the Project without Cost or Time overruns.

It is a matter of record that:

[a] The Agreement was executed between the Complainant and the Builder Co. on 15.10.2010.

[b] The Complainant deposited the total cost for a residential unit, i.e. Rs.33,00,000/-, with the Builder Co. on 15.10.2010.

[c] The Builder Co. issued a "Provisional Allotment Letter" for the Unit, on 15.10.2010 itself, which contained a condition that "The Final Allotment and Possession will be subject to the Terms & Conditions, Rules and Regulations and directions issued by the department of Industries in its approvals and subsequent correspondence until now and to be issued in future.".

[d] The agreed and assured date of completion of the Project, as written in the Agreement, was 31.12.2011.

[e] The Builder Co. failed to complete the Project and deliver physical possession of the Unit by the agreed and assured date (31.12.2011).

[f] The Builder Co. issued another "Provisional Allotment Letter" for an alternative Unit, on 20.11.2013, which again contained the condition that "The Final Allotment and Possession will be subject to the Terms & Conditions, Rules and Regulations and directions issued by the department of Industries in its approvals and subsequent correspondence until now and to be issued in future.".

[g] The Builder Co. obtained the total cost (Rs.33,00,000/-) of the Unit / the alternative Unit from the Complainant on 15.10.2010 itself, at the time of entering into the Agreement.

[h] The Builder Co. failed to complete the Project and deliver physical possession of the Unit by the agreed and assured date (31.12.2011), or of the alternative Unit by the subsequently amended assured date (30.06.2014), or even till the date of filing of the Complaint before the State Commission (21.08.2017), or even still till the date of decision of the State Commission (03.04.2018), or even further still till the date of arguments in the instant Appeal in the Circuit Bench at Chandigarh (26.09.2019).

[i] No refund of the amount (deposited in 2010), with or without deduction, with or without interest, was made by the Builder Co. after the expiry of the initially agreed and assured date of completion (31.12.2011), or after expiry of the subsequently amended assured date of completion (30.06.2014), or even within a reasonable period thence (reasonable period here would again connote such period as a reasonable man would not normally agitate).

No refund was made even till the date of arguments before this Commission (in 2019).

[j] The Builder Co.'s Project did not have all (repeat all) necessary approvals from the competent Government / Development / Municipal authorities at the time of its Agreement i.e. on 15.10.2010, or even on the initially agreed and assured date of completion i.e. on 31.12.2011, or even still on the subsequently amended assured date of completion i.e. on 30.06.2014, or even further still within a reasonable period thereafter.

A Consumer cannot be made to wait indefinitely or unreasonably. Indefinite or unreasonable delay cannot continue ad nauseam, ad infinitum (such situation would be absurd). In the facts of the present case, unreasonable delay is writ large. A natural corollary thereof is that two rights accrue to the Consumer:

one : the option to wait for the subject unit to be handed over, if and when the construction is completed and the offer of possession of the subject unit is made by the Builder Co., at his (the Consumer's) considered wisdom and discretion, and in addition to seek just and equitable compensation under the Act for unreasonable delay and consequential loss and injury.

two : to claim refund of the deposited amount with just and equitable interest / compensation / cost of litigation.

That is, the Consumer has both options available, one , to obtain possession of the subject unit if and when offered by the Builder Co. and in addition seek just and equitable compensation under the Act for unreasonable delay in possession, and, two, to opt for a fair amount from the Builder Co. comprising of refund of the deposited amount with just and equitable interest / compensation / cost of litigation.

In a nutshell, the Builder Co. invited Application(s) for allotment of "Residential, Industrial and Commercial Units" and collected deposits from Consumer(s) without the Project being duly approved by the competent Government / Development / Municipal authorities, it did not get the Project duly approved within the initially agreed and assured period of completion i.e. till 31.12.2011, it did not get the Project duly approved within the subsequently amended assured period of completion i.e. till 30.06.2014, it did not get the Project duly approved even within a reasonable period thence.

The deposit of Rs. 33,00,000/-, being the total cost of the subject unit, was made by the Complainant with the Builder Co. in 2010 itself, at the time of entering into the Agreement. The Builder Co. failed to complete the Project and deliver physical possession of the earlier allotted Unit till the earlier agreed and assured date (31.12.2011), or of the subsequently allotted alternative Unit till the subsequently amended assured date (30.06.2014), or even within a reasonable period thence.

We note ingredients of both, 'deficiency in service' within the meaning of Section 2(1)(g) & (o), and 'unfair trade practice' within the meaning of Section 2(1)(r) of the Act, to be well and truly evident on the part of the Builder Co.

In respect of 'unfair trade practice', we may note here that it is a specific provision unique to The Consumer Protection Act, 1986.

Section 2(1)(r) says of "a trade practice which, for the purpose of promoting the sale, use or supply of any goods or for the provision of any service, adopts any unfair method or unfair or deceptive practice including any of the following practices, namely:-".

The list provided in Section 2(1)(r) is illustrative and not comprehensive.

That is to say, an unfair method or unfair or deceptive practice, as is judiciously determined, on facts and reasons, on fair and objective appraisal of the evidence and material on record, would qualify as 'unfair trade practice' within the meaning of Section 2(1)(r).

In the instant case,

[a] Inviting and accepting "Application" and obtaining concomitant deposit of Rs. 33,00,000/- and entering into an Agreement on 15.10.2010 without having all (repeat all) approvals in place,

[b] Not having all approvals in place by the initially agreed and assured date of completion i.e. by 31.12.2011,

[c] Not having all approvals in place even by the subsequently amended assured date of completion i.e. even by 30.06.2014,

[d] Not having all approvals in place even still within a reasonable period thereafter,

[e] Issuing a "Provisional Allotment Letter" on 15.10.2010 inter alia containing a condition that "The Final Allotment and Possession will be subject to the Terms & Conditions, Rules and Regulations and directions issued by the department of Industries in its approvals and subsequent correspondence until now and to be issued in future.",

[f] Issuing another "Provisional Allotment Letter" on 20.11.2013 inter alia again containing the condition that "The Final Allotment and Possession will be subject to the Terms & Conditions, Rules and Regulations and directions issued by the department of Industries in its approvals and subsequent correspondence until now and to be issued in future.",

[g] Arbitrarily and highhandedly retaining the deposited amount of Rs. 33,00,000/-, being the total cost of the Unit / the alternative Unit, for an unreasonably protracted period beyond the initially agreed and assured date of completion (31.12.2011), as well as beyond the subsequently amended assured date of completion (30.06.2014), are decidedly unfair and deceptive within the meaning of Section 2(1)(r).

We may add that the Act is for "better protection of the interests of consumers", in recognizedly a fight amongst unequals.

Its Statement of Objects and Reasons speaks of "speedy and simple redressal to consumer disputes".

The Complainant deposited the total cost of the subject unit i.e. Rs. 33,00,000/- with the Builder Co. in 2010. The initially agreed and assured date of completion of the Project was 31.12.2011. The subsequently amended assured date of completion of the Project was 30.06.2014. We are now in 2019.

This is a plain and simple case of a Builder Co., with wherewithal, on the one side, and an ordinary common Consumer, without wherewithal, on the other side, with the Builder Co. first indulging in deficiency in service and unfair trade practice, causing loss and injury to the Consumer, and then indulging in litigation in one, and then, two, Consumer Protection Fora. We also find that, before the second Forum, i.e. this Commission, also, its case fails.

All this is not viewed favourably.

We note that the State Commission has passed a well-appraised and well-reasoned Order.

We find the Award made by the State Commission, as quoted in para 8 above, to be just and equitable.

We have no hesitation in dismissing the Appeal and confirming the Award made by the State Commission vide its impugned Order dated 03.04.2018.

In addition, we deem it just and appropriate that Rs. 50,000/- shall be paid by the Builder Co. to the Complainant towards cost of litigation in the appellate proceedings before this Commission.

Further, for 'unfair trade practice' per se , the Builder Co. through its Chief Executive is put to stern advice of caution with imposition of cost of Rs. 1,00,000/- to be deposited in the Consumer Legal Aid Account of the State Commission.

The Builder Co. shall ensure compliance within four weeks of the pronouncement of this Order (paras 22 , 23 and 24 above).

The State Commission shall undertake execution as per the law for failure or omission in compliance within the stipulated period.

Towards this end, the Registry is directed to send a copy of this Order to the State Commission within three days of its pronouncement.

We may add that the liability qua the Consumer-Complainant initiated the day he made his first deposit with the Builder Co., and it continues, as a continuing wrong.

The duties / responsibilities of Director are laid-down in The Companies Act, 2013.

We also refer to the substantive principles of law as contained in Section 47 ('Questions to be determined by the Court executing decree') under Part II, Execution , of the CPC.

The Director(s) of the Builder Co. shall have to discharge the onus to show that they are not liable, along with the Builder Co., jointly and severally, on the question being raised in the executing Forum in execution proceedings.

We are making this observation in reference to ' Enforcement ' under Section 25(3) and ' Penalties ' under Section 27 of the Act.

F.A. No. 1996 of 2018, the lead-case, is so disposed.

F.A. No. 1997 of 2018

The F.A. No. 1997 of 2018 is disposed of, mutatis mutandis , with similar directions, in terms of the examination and reasons contained hereinabove apropos F.A. No. 1996 of 2018, the lead-case.