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Judgment
Avm J. Rajendra, Avsm, Vsm (Retd.), Member
This Order shall decide both the Appeals arising out from the impugned Order dated 12.07.2016 passed by the learned State Consumer Disputes Redressal Commission, Haryana, Panchkula (hereinafter referred to as the “State Commission”) in Consumer Complaint No. 90/2015, wherein the State Commission partly allowed the complaint.
There was a delay of 230 days in the filing of Appeal no. 618 of 2017. For the reason stated in IA/4333/2017, the delay is condoned.
For Convenience, the parties are being referred to as mentioned in the Complaint before the State Commission. Chetan Prakash (hereinafter referred to as the Complainant) being First Appeal No.1128 of 2016. While the M/s. ALM Infotech City Private Ltd. & Anr. (hereinafter referred to as the Opposite Parties / OPs. Builder) being First Appeal No.618 of 2017.
Brief relevant facts of the case are that the Complainant Shri Chetan Prakash booked a flat bearing No.3C, Block Panaroma, Type 3BR, 3rd Floor, ILD Grand, Sector 37-C, Gurgaon, admeasuring 1789 Sq Ft with ALM infotech City Private Limited (for short 'the Builder'/Opposite Parties). The Complainant made an initial payment of Rs.3,00,000/- on 30.04.2012 and received the Provisional Allotment Letter on 16.08.2012. Thereafter, on 21.10.2013, an Apartment Buyers Agreement was executed between the Complainant and the Builder, stipulating that possession of the flat will be made within 36 months from the date of the Agreement, with an additional grace period of 180 days. Despite the Complainant paying a total of Rs. 25,02,479/-, the builder failed to initiate construction of the flat. In April 2014, the Complainant requested for refund of the amount paid, leading to the builder canceling the flat booking on 04.02.2015.
Subsequently, legal notice was issued by the Complainant demanding refund the amount paid along with 18% interest per annum. However, this yielded no response. Being Aggrieved, the Complainant filed a Consumer Complaint no. 90 of 2015, before the State Commission, with prayer as under: -
(i) To refund the amount of Rs.25,02,479/- to the complainant along with interest @ 18% per annum from the date of demand i.e., April 2014 till realization.
(ii) To pay an amount of Rs.50,00,00/- as compensation for mental agony, harassment and deficiency in service.
(iii) To pay Rs.10,00,00/- as cost of litigation.
In their response to the State Commission, the Builder (OP) acknowledged receiving a total of Rs.25,02,479/- from the Complainant. In terms of Clause 9.1 of the Apartment Buyers Agreement the construction of the project should be completed within 36 months from the date of Agreement, with an additional grace period of 180 days. The total sale consideration amount was Rs.80,47,975/-, and the payment was as per Construction Linked Plan. The Complainant failed to adhere to the timeline for payments. The OPs issued reminder notices including the one dated 02.07.2012 to settle the outstanding due of Rs. 11,01,653/-. As the Complainant failed to pay, the allotment was cancelled on 04.02.2015. The OPs sought the dismissal of the complaint.
The learned State Commission partly allowed the Complaint vide order dated 12.07.2016 & directed as follows:
“12. In view of Harinder S. Kang's case (Supra), the builder can forfeit 10% of the total sale consideration of the flat. In the present case, the basic sale price of the flat was Rs.67,98,200/- and 10% of it comes to Rs.6,79,920/- which can be forfeited by the builder. The complainant deposited Rs.25,02,479/-. Thus, the amount refundable to the complainant by the builder comes to Rs.18,22,559/- i.e. (Rs.25,02,479 - 6,79,920). The builder-opposite parties are liable to pay interest to the complainant @ 12% per annum from the date of deposit till the date of realization of this amount. It is ordered accordingly.”
Aggrieved by the Order of the State Commission, both the parties i.e., the Complainant and the Opposite Parties have filed the present cross Appeals before this Commission seeking the following:
FA/1128/2016 – filed by the Complainant- Mr. Chetan Prakash-
“It is therefore, respectfully prayed that impugned order may kindly be set aside to the extent to deduct 10% amount of basic price from the total price paid to respondents by appellant and it may kindly be modified and respondent may kindly be directed to refund entire amount of Rs.2502479/- paid by appellant along with 12% pa interest from date of respective deposit till realization and respondents may also be directed to pay compensation to appellant for mental harassment and financial loss.”
FA/618/2017 – filed by the Builder/OPs- M/s. ALM Infotech City Pvt. Ltd. & Anr.
i. Set aside the impugned judgment and order dated 12.07.2016 passed by the Learned State Consumer Dispute Redressal Commission, Haryana, Panchkula in Complaint No 90 of 2015, to the extent of granting 12% interest to the respondent from the date of deposit till the realization of the amount.
ii. Pass any such other orders as this Hon'ble Commission deems fit and proper in the said circumstances and render justice.
In Appeal No.1128 of 2016, the Appellant/Complainant mainly advanced the following grounds:-
a) The learned State Commission failed to consider the orders of the NCDRC, specifically the cases of DLF Ltd. v/s Bhagwati Narula (2015(2) CLT 89) and Samarth Associate Engineers RP/4729/2012(NCDRC) and erroneously relied on Harjinder Singh Kang v/s M/s Emaar MGR Land Ltd in CC/482/ 2014.
b) The SCDRC failed to acknowledge that the Respondents did not refund the amount, despite demands and legal notices.
c) The SCDRC also overlooked the fact of unfair trade practice by the Respondents, as the Builder Buyer Agreement was signed 18 months after the initial booking.
d) The SCDRC incorrectly determined the complaint as premature. It has erroneously concluded that the Respondent was entitled to deduct 10% of the basic price. At the same time, it failed to grant any relief to the Appellant, even when facts established that compensation was due.
In Appeal No.618 of 2017, the primary contention of the Appellant/Builder revolves around the premature nature of the complaint. As per the Agreement, the possession of the property was due in April 2017. Further, the Appellant asserted that the State Commission failed to adequately consider that the award of interest is only appropriate when funds are retained illegally by the builder or when a deficiency in service is evident. The Appellant maintained that it acted in accordance with the terms of contract. Thus, the complaint is premature and without merit.
In his arguments, the learned Counsel for the Complainant reiterated the grounds of Appeal and further argued that based on the facts of the case, the Complainant is entitled to a full refund of the entire amount, Rs.25,02,479 along with interest and compensation for mental harassment and financial losses.
On the other hand, the learned counsel for the OPs/Builder asserted that as per Clause 2 of the Apartment Buyer Agreement, the builder has the right to cancel the allotment and forfeit the earnest money, if they issue a written notice of cancellation. In this case, the builder issued due notice to the Complainant, giving the Complainant a final opportunity to pay the overdue amount within 15 days. However, the Complainant did not respond or take any steps to clear the outstanding amount. Thus, the OPs cancelled the Allotment Letter as per Clause 5 of the Agreement. The learned Counsel pointed that as per Clause 9(i) of the Agreement, possession of the flat was to be handed over to the Complainant within 36 months from the date of the agreement's execution, with a grace period of 180 days. It means that the delivery of the flat was due by 19.04.2017. However, the Complainant filed the case before the State Commission on 03.06.2015 itself, which is clearly premature. Award of interest is liable if the money was illegally retained by the builder or if there was a deficiency in service. In this case, it was the Complainant who failed to fulfil his obligations under the Agreement, while the builder complied with the terms and conditions. Therefore, the awarding of interest is not justified.
We have examined the pleadings and associated documents placed on record and rendered thoughtful consideration to the arguments advanced by the learned Counsels for both the Parties.
It is the admitted position of both the parties that they entered into the contract in question and thus the Appellant made payments to the extent of Rs.25,02,479. The total consideration towards the basic sale price of the flat was Rs.67,98,200. In terms of Para 9(i) of the Apartment Buyer Agreement dated 21.10.2013, the project was to be completed within the period of 36 months from the date of agreement with further grace period of 180 days. It is also an admitted position that the Appellant had in fact sought refund of the amount paid to the OPs in April 2014, as there was no progress in construction. On the other hand, the Respondent/ OPs contested that Appellant failed to make payments as per the prescribed construction linked payment schedule. Thus, after affording due notices, the Allotment Letter dated 16.08.2012 was cancelled. In terms of Clause 19(B)(iii) of the Agreement dated 21.10.2013, ‘in the event of failure of the buyer to pay the installments in time resulting in cancellation of allotment, or the buyer pre-maturely withdrawing from the allotment resulting in cancellation, the OP (Developer) shall be under no obligation, save and except to refund the amounts already paid by the Allottee to the Developer, without any interest, and after forfeiting and deducting the Earnest Money and other amounts due and payable to it only after resale of the said Unit’. In the present case, notwithstanding the terms of contract entered into by Appellant, and having withdrawn from the project in April 2014 itself, while the date of handing over was only on 20.02.2017, he sought entire refund with interest. On the other hand, the OPs contested that the Appellant is not entitled for any relief and the claim at best be limited to the provisions of Para 19(B)(iii) of the Agreement.
The learned State Commission placed reliance on the decision in the case of Harjinder Singh Kang (Supra) wherein this Commission has held that the amount exceeding 10% of the total price of the property cannot be forfeited unless the OP can show that it suffered loss to the extent of the amount actually forfeited by it. The OPs have not brought out anything substantial towards the same. Therefore, we see no infirmity in the Order dated 12.07.2016 passed by the learned State Commission in CC No. 90 of 2015 except the interest amount directed to be refunded.
As regards the rate of interest on refund and the scope for compensation in such matters, the Hon’ble Supreme Court in Experion Developers Pvt. Ltd. Vs. Sushma Ashok Shiroor, in CA No.6044 of 2019 decided on 7.4.2022 has held that:-
“We are of the opinion that for the interest payable on the amount deposited to be restitutionary and also compensatory, interest has to be paid from the date of the deposit of the amounts. The Commission in the Order impugned has granted interest from the date of last deposit. We find that this does not amount to restitution. Following the decision in DLF Homes Panchkula Pvt. Ltd. Vs. DS Dhanda and in modification of the direction issued by the Commission, we direct that the interest on the refund shall be payable from the dates of deposit. Therefore, the Appeal filed by purchaser deserves to be partly allowed. The interest shall be payable from the dates of such deposits.
At the same time, we are of the opinion that the interest of 9% granted by the Commission is fair and just.”
In view of the foregoing discussions, the Order of the learned State Commission, Haryana dated 12.07.2016 in CC No. 90 of 2015 is modified as under:-
The Builder/ Opposite Parties are to refund Rs.18,22,659 to the Complainant along with interest @ 9% per annum from the date of deposit till the date of realization of the entire amount. This payment shall be made within a period of one month from the date of this order. In the event of delay beyond one month, the interest applicable for such additional period shall be 12% per annum.”
With the above modification, both the Cross Appeals stand disposed of. There shall be no orders as to costs. All the pending Applications, if any, are disposed of accordingly.
The Registry is directed to release the Statutory amount, if any, on due compliance of the above order.