Dhruva Bali & Anr. vs M/s. Kamp Developers Pvt. Ltd.

This is a complaint filed in M form by Sh. Dhruva Bali & Smt. Nalini Bali (the Complainants) through their Counsels Shri Sanjay Chhabra, Ms. Vijay Laxmi Mewara and Swati Tewari on 17 March 2020 against M/s. Kamp Developers Pvt. Ltd. (the Respondent) seeking a relief in terms of refund of deposits made by them to the Respondent of a total amount of Rs.11,81,250/- (Rupees eleven lakh eighty one thousand two hundred and fifty five only) along with interest at the rate of nine percent per annum from 10 June 2015 i.e. the date of signing of the Expression of Interest (EOI) in respect of a 2 BHK apartment in ‘Eden Heights’ projects of the Respondent; a compensation of Rs.10,00,000/- (Rupees ten lakhs only) for loss of opportunity, mental pain and agony; a litigation cost of Rs.1,00,000/-(Rupees one lakh only) and, a restraint on the Respondent from alienating any of the movable or immovable property held by the Respondent till the disposal of the complaint.

The brief facts of the case are that the Complainants, who are persons of limited means, visited the office of the Respondent Company in 2013-14, when the sales representatives of the Respondent made several representations such as, that the Respondent Company was coming up with a project ‘Eden Heights’ on a ten acre plot of land situated in ‘L’ Zone of Delhi as per the norms of the Land Pooling Policy approved by DDA; that the Respondent proposed to construct a housing complex upon the said land; that only certain municipal and administrative acts remained pending at DDA office pursuant to which the Respondent Company will be permitted to develop the said housing complex in accordance with the building plan/sanction plan approved by the competent authority; that based on these representations the Complainants applied for allotment of a two BHK flat admeasuring 1050 sq. feet in the real estate project ‘Eden Heights’; that the Complainants made an application for booking the apartment in the requisite format described as Expression of Interest (EOI) on 10 June 2015; that the Complainants paid a total advance deposit of Rs.11,81,250/- (Rupees eleven lakh eighty one thousand two hundred and fifty five only) by way of two payments (for Rs. 7,08,750/- on 10 June 2015 and Rs.4,72.500/- on 10 September 2015); that in the EOI it has been mentioned, inter alia, that the total cost of the two BHK flat admeasuring 1050 sq. ft. shall be Rs.47,25,000/-calculated at the rate of Rs.4250/- per sq. foot; that there has been no sign of commencement of construction at the project site; that upon completion of three years from the date of execution of the EOI, the Complainants had sought a refund of their deposits along with interest as per the agreed terms and conditions vide their email dated 18 July 2018; and that the Complainants received an email from the Respondent on 23 August 2018 whereby the Respondent acknowledged to refund the amount.

The Complainants have further claimed that despite such acknowledgement and successive emails thereafter there was no further response from the Respondent; that the Complainants came to know in February 2020 about the arrest of the Directors of the Respondent Company by the Economic Offences Wing of Delhi Police for allegations of duping a large number of buyers under the garb of housing schemes under Land Pooling Policy; and that fearing malpractices and misappropriation by the Respondent Company and the apparent lack of information from the Respondent Company to construct the real estate project or to fulfill its obligation under the EOI, the Complainants had filed this complaint in form M seeking the reliefs above mentioned.

In filing this complaint, the Complainants stated that they had separately filed a petition under Section 7 of the Insolvency and Bankruptcy Code, 2016 (IBC) to declare the company as insolvent and to seek appointment of an Interim Resolution Professional (IRP) but that in view of the amendment of Section 7 of the IBC brought about in December 2019, the said petition was no longer maintainable. The Complainants further submitted that in their petition under IBC, there was no relief sought for refund of the amount as sought in the present case before this Authority.

After hearing the Counsel for the Complainants on 13 August 2020 (after a gap of several months caused by disruptions due to the Covid-19 pandemic) a notice was issued to the Respondent along with a copy of the complaint. On the next date of hearing on 10 September 2020, Shri Bakul Jain, Advocate appeared for the Respondent and sought time to file his vakalatnama and a detailed reply to the complaint on the plea that his services had been engaged recently. The request was allowed but on the next hearing held on 20 October 2020, it was noted that he had neither filed his vakalatnama nor a reply, on the plea that the possibility of an amicable settlement was being explored between the parties. With no residual possibility of an amicable settlement between the two sides, the Respondent was given a last opportunity to file its reply to the complaint within a week with a copy to the Complainants.

An email was received from the Counsel for the Respondent 20 days later, on 9 November 2020 attaching therewith a reply dated 29 October 2020 with the title “Before the Hon’ble Adjudicating Officer, Real Estate Regulatory Authority New Delhi” and an Affidavit verified/ attested by Shri Aditya Kumar, Authorized Representative (AR) on 2 November 2020, with a similar title as above, but without enclosing any authorization in respect of the AR, or any application/ request for condonation of delay in filing the reply. n the reply filed by the Respondent, the facts of the case were not denied but a prefatory comment was made on behalf of the Respondent regarding non-entitlement of the Complainants to get any discretionary relief from this Authority; allegations of a malafide intent of making false allegations on the Respondent to extract money from them on false and frivolous grounds, etc. The Respondent further averred in its reply that the complaint needs to be dismissed on grounds of forum shopping; on grounds of perjury pleadings and wrong submissions; on grounds of lack of jurisdiction of this Authority; and, that the Complainants do not have any locus standi under the law and that the provisions of Real Estate (Regulation and Development) Act, 2016 would become applicable upon execution of the transaction between the Complainants and the Respondent and that the present proceedings was barred under law in accordance with the provisions of Section 8 of the Arbitration and Conciliation Act. The Respondent requested for dismissal of the case on the above stated grounds. However, in view of the infirmities pointed out above, little credence can be placed on the averments made by the Respondent.

In response to the ‘reply’ and based on a copy that may have been furnished by the Respondent to the Complainants ahead of filing the same before this Authority, an email was received from the Counsel for the Complainants on 8 November 2020 attaching therewith a rejoinder, an exemption application and a list of Judgements that the Complainants wished to rely upon. In the rejoinder the Complainants raised a preliminary objection regarding a delay in filing of the reply by the Respondent without an application for condonation of such delay and that the reply had not been signed/ verified and submitted as per law; and that the reply was filed by an unauthorized person; and requested for the reply to be not taken on record. No mention was, however, made by the Complainants regarding the reply having been filed incorrectly “Before the Hon’ble Adjudicating Officer, Real Estate Regulatory Authority New Delhi”. In fact, the rejoinder filed by the Complainants also suffered from the same infirmity, creating a deficit of credence to their own averments. The Complainants, however, did provide a rebuttal to the various averments made by the Respondent in its reply.

On 10 November 2020 the oral arguments of both sides were heard. In all, seven complaints filed by various Complainants who had filed complaints on similar facts and grounds and had sought similar reliefs were represented by Shri Sanjay Chhabra, Ms. Vijay Laxmi Mewara and Ms. Swati Tewari, Counsels. The Respondent Company, M/s. Kamp Developers Pvt. Ltd., was represented by Shri Gurpreet Singh and Bakul Jain, Counsels. The Counsel for the Complainants contended that the averments made by the Complainants in their complaint had not been countered by the Respondent in its reply and that as such averments of the Complainants are accordingly presumed to have been admitted.

The Counsel for the Complainants submitted that the various objections raised by the Respondent with regard to the maintainability of the complaint has been replied in the rejoinder filed by the Complainants and provided a point-wise rebuttal to the various averments made by the Respondent.

With regard to the averment made by the Respondent that the complaint was liable to be dismissed on the plea that the Complainants were indulging in forum-shopping, having filed a petition earlier under Section 7 of the Insolvency and Bankruptcy Code 2016 (IBC), the Counsel for the Complainants contended that the objection was mis-conceived and referred to the meaning ascribed to the term “Forum Shopping” by the Hon’ble Supreme Court of India in the case of Union of India Vs. Cipla Ltd. (VIII 2016 SLP 114) if a litigant approaches one Court for relief but does not get the desired relief then approaches another Court for the same relief. The Counsel contended that the petition filed by the Complainants before the NCLAT does not fall under the category of Forum Shopping. He further contended that the objections raised by the Respondent deserves to be dismissed in the light of the judgment of the Apex Court in “Pioneer Urban and Land Infrastructure Ltd. Vs. Union of India” AIR 2019 Supreme Court 4055 wherein Apex Court has held:-

With regard to the objections raised by the Respondent that the complaint is liable to be dismissed on grounds of perjury, contradictory pleadings and wrong submissions on the plea that the Complainants had made a wrong declaration at serial no.7 and had concealed facts, it was noted that the allegations made by the Respondent with regard to the contents of the clause 7 of form ‘M’ was not borne to be correct and that the Complainants had in fact provided that requisite details of the pendency of the petition under Section 7 of the Insolvency and Bankruptcy Code 2016. The case law relied upon by the Respondent in support of the alleged objection was therefore, found to be not applicable to the facts of this case.

With regard to the objections raised by the Respondent that the complaint was liable to be dismissed on the ground of jurisdiction of this Authority as the project related to the present complaint is not registered with RERA, the Counsel for the Respondent relied on the judgment titled as Neelkamal Realtors Suburban Pvt. Ltd. Vs. Union of India 2017 SCC On Line Bom 9302 and the majority view of the full bench of Punjab Real Estate Regulatory Authority in the case of “Bikrant Singh and Ors. Vs. State of Punjab and Ors.” The Counsel for the Complainants contended that the said judgment has no application and it is seen with respect to the objections raised by the Respondent herein. He further contended that in the said case the challenge before the Hon’ble Supreme Court of India was with regard to the competence of Parliament to carry out the enactment of penal provisions of chapter 8 of the Real Estate (Regulation and Development) Act, 2016.

The Counsel for the Complainants further contended that the objection raised by the Respondent is no longer res integra and has been held against the Respondents in several cases and cited the judgements in Imperia Structures Ltd. Vs. Anil Patni & Ors. – Civil Appeal No.3581- 3590/2020; Mohammed Zain Khan Vs. Maharashtra Real Estate Regulatory Authority and others WP (Lodging) No.908/2018; M/s Silver City Construction Ltd. Versus State of Punjab and Others, SAS Nagar (Mohali) Appeal No. 4912018 “A close look at the entire scheme of the Act,....under the Act.” “To say that regulatory authority........in unregistered projects”; and M/s Omex Limited Vs. Mrs. Arun Prabha vide Appeal No. 182/2019.

With regard to the objections raised by the Respondent that the Complainants have no locus standi under the law before this Authority or under the provisions of the RERA Act as the transactions between the Complainants and the Respondent is purely of a commercial nature and a remedy lies before the Court of civil jurisdiction and that there is existence of an arbitration clause barring the present proceedings under Section 8 of the Arbitration and Conciliation Act 1996, the Counsel for the Complainants contended that the objections raised by the Respondent is directly in contravention to the provisions of the RERA Act and more particularly Section 79 of the Act. He further contended with regard to the objection relating to the arbitration clause that the said issue is no longer res integra and has been decided against the plea of the Respondent in a number of cases such as Jnandra Kumar Jena Vs. DLF Limited Para 4.; Praveen Kumar Nigam Vs. SVS Buildcon Pvt. Ltd Paras 9 and 10; and, National Seed Corporation Vs. M.M. Madhusudhan Reddy (2012) 2 SCC 506 Para 29.

The Counsel for the Complainants further contended that the objections raised by the Respondent with regard to arbitration clause has been raised without mentioning the relevant arbitration clause in the binding agreement between the Complainants and the Respondent. Since the Respondent has not produced a copy of such binding agreement with the Complainants or the text of the arbitration clause, those objection cannot sustain.

We have carefully considered the arguments given by both sides, in particular those with regard to the objections raised by the Respondent, and have seen the various supporting documents such as the receipts and EOI etc. submitted by the Complainant. The Respondent has claimed that a remedy to the dispute “lies within the Agreement between the parties i.e. the appointment of Arbitrational Tribunal to adjudicate upon the dispute” and has referred to para 31 of the “Terms and Conditions” attached to the EOI document which reads as under:

From plain reading of the text of the Terms and Conditions of the EOI including the above said clauses it emerges that the entire EOI was one-sided in favour of the Respondent, and that at the time of signing of the EOI there was no option for the Complainants but to sign on dotted line and that the Complainants have now approached this Authority by filing an application under a beneficial Act.

There is a catena of judgments of the Hon’ble Supreme Court regarding maintainability of a complaint under a beneficial act such as the Consumer Protection Act even in cases where a clause dealing with arbitration may exist in the Agreement between the two sides. We could however not lay our hands on any judgment in which the Hon’ble Court may have consider this in this specific context of the Real Estate (Regulation and Development) Act, 2016 on this issue. It would be appropriate to consider the objects and reasons of the Act; the Preamble of the Act states as under:

From the above preamble, the intention of the Legislature is quite clearly to protect the interests of the consumer in real estate sector and to provide a mechanism for a speedy dispute redressal system. It is also pertinent to note that the present Act is in addition to another law in force and not in derogation.

It is also pertinent at this juncture to note the provisions of Section 71and section 79 of the Act of 2016 whereunder the jurisdiction of Civil Court is barred but not that of any Forum; and, the power to adjudicate has been entrusted to the Authority including the Adjudicating Officer appointed by it, while restraining a complainant from forum shopping. A proviso under Section 71 also permits a complainant to withdraw his complaint from Consumer Forum/ Commission where such complaint may be pending as on the date of the commencement of this Act, and to file an application before the adjudicating officer of the Real Estate Regulatory Authority. These provisions provide the consumer with two clear, but mutually exclusive, options for redressal of his grievances: one, by filing the complaint under the Consumer Protection Act, and the other by filing a complaint before RERA.

While considering the issue of maintainability of a complaint before a consumer forum/ commission in the face of an existing arbitration clause in the MOU, the Hon’ble Supreme Court in revision petition 2629-30/2018 in Civil Appeal No.23512-13/2017 titled as M/s. Emmar MGF Vs. Aftab Singh observed as under:

In view of the above observations of Hon’ble Supreme Court, a Complainant is well within his rights to seek a special remedy available in a beneficial act such as the Consumer Protection Act (and the RERA Act, 2016) instead of going in for an arbitration; also that the Forums (and the Authorities under the RERA Act) may entertain such complaints and decide on issues.

With the Legislature being well aware of the tendency of the builder/ promoters to formulate one-sided agreements in their own favour, it was provided in Section 13(2) of the Act “….that the Agreement for Sale … shall be in such form as may be prescribed ….”. Further, the Clause 33 of the ‘Agreement for sale’ annexed to the National Capital Territory of Delhi Real Estate (Regulation and Development) (Agreement for Sale) Rules, 2016 omitted the arbitration clause and replaced it with a special provision for dispute redressal under the Act.

In view of the above, and taking into account that the Real Estate Regulation and Development Act 2016 is a special Act and beneficial Act to the allottees/ consumers, we have no hesitation in holding that this Authority has the requisite jurisdiction to entertain the complaint and that the dispute does not require to be referred to arbitration necessarily.

M/s. Kamp Developers Pvt. Ltd. is a company incorporated in Delhi and as per information available in the public domain, it “… is a Non-govt company, incorporated on 10 February 2014. It's a private unlisted company and is classified as a 'company limited by shares. Company's authorized capital stands at Rs 200.0 lakhs and has 0.5% paid-up capital which is Rs 1.0 lakhs. …… Kamp Developers Private Limited is majorly in Construction business from last 7 years and currently, company operations are active…” The Directors of the company are individuals who are involved in several housing projects and schemes in ‘L’ zone of Delhi. The application form, and the EOI documents in respect of Eden Heights, a project promoted by the Respondent Company in the same area has a set of documents comprising an application, a two-page forms seeking various details of the applicants, a list of documents to be submitted along with EOI depending upon whether the applicant is a resident of India or a partnership firm or a private limited company or a non-resident Indian / person of Indian origin; a payment plan; a schedule of preferential locational charges and a three page document called terms and conditions, while there is no mention of the total cost to be paid in respect of the apartment booked by the allottees, the payment plan indicates a payment of fifteen percent at the time of booking and another ten percent within ninety days of the booking. A receipt issued by the Respondent Company to the Complainants on 30 September 2015 mentions two payments by cheque - one of Rs. 708,750/- by cheque dated 10 June 2015 and another of Rs. 472,500 by cheque dated 10 September 2015. The receipt acknowledges that these payments are made towards the sale of 2 BHK, admeasuring 1050 sq. ft. apartment to be developed by the Respondent company in its project called Eden Heights in L Zone of Delhi. The Respondent Company has also accepted its liability to refund the amount in its email dated 23 August 2019 issued from the email id [email protected].

At this juncture we also note that the Respondent has agreed to its responsibility/ obligation to acquire land for the said Housing Project and that it will be its solely responsible to do the project planning and its implementation. It shall also be its responsibility to obtain all statutory, legal and all other applicable clearances from all the government, semi government and other local authorities concerned and have the Housing Project executed and completed. From the reading of the above responsibilities assumed by the Respondent and the provisions of the Real Estate (Regulation and Development) Act, 2016 it becomes abundantly clear that the Respondent Company is very well covered within the meaning of the term Promoter as defined under Section 2zk of the Act, sub-clause 1 of which reads as under:-

Further, Section 12 of the Real Estate (Regulation & Development) Act, 2016 stipulates as under-

The proviso to the Section 12, specifically provides that a person who is affected by any false statement or advertisement and intends to withdraw from the Project shall be returned with his entire investment along with interest. In the above proviso the word ‘investment’ has been used which means any amount that the person may have given as an advance or a deposit shall be liable to be refunded on the discretion of the person who has invested money in the proposed Project. In this case, the Complainants have paid an amount which is 25% of the agreed total cost of the flat in a proposed Project of the Respondent and an EOI executed by the Complainants and accepted by the Respondent.

The Respondent has not denied the facts of the case and has acknowledged its liability to refund the amounts. The Respondent has provided no explanation with regard to the fate of the project and a likely date of commencement of work even as almost seven years have elapsed since the deposits were made by the Complainants. The contention of the respondent that the dispute between the two sides can be settled only in accordance with the provisions of the EOI cannot be accepted as the terms of the EOI are entirely one sided in favour of Respondent and one-sided agreement is not binding on the allotees and is unfair trade practice. The Hon'ble Supreme Court of India in the case of Ireo Grace Realtech Ltd. Versus Abhishek Khanna & Ors, Civil Appeal No.5785 of 2019 decided on 11.01.2021 has held that incorporation of one-sided and unreasonable clauses in the Agreement constitutes an unfair trade practice under Section 2 (1) (r) of the Consumer Protection Act, 1986.

The instant case is entirely covered under the provisions of Section 12 of the Real Estate (Regulation & Development) Act, 2016 and the complaint of the Complainants filed under Section 31 of the Real Estate (Regulation & Development) Act, 2016 is fully maintainable before the Authority, and accordingly the Authority has the requisite jurisdiction to decide the complaint.

Accordingly, it is directed that Respondent should return, within forty-five days of issuance of this order, the amount of Rs. Rs.11,81,250/- (Rupees eleven lakh eighty one thousand two hundred and fifty five only) to the Complainants, along with interest calculated at the rate of 09.30 percent per annum (MCLR plus 2 percent) in accordance with the provisions of the Real Estate (Regulation & Development) Act, 2016 and Rules framed there under, from the dates of payment of each deposit until the refund of the amount to Complainant.

No orders as to costs.