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Judgment
Dr. S. M. Kantikar, Member
These three Consumer Complaints have been filed by Dr. Vijay Purushottam Kale, Dr. Purushottam Gopalrao Kale and Dr. Satishchandra Purushottam Kale (hereinafter collectively referred to as the "Complainants") under Section 21 (a) (i) of the Consumer Protection Act, 1986 (in short "the Act") against M/s Hetali Enterprises, Builders & Developers (Opposite Party No. 1) and Andheri Nav Bahar CHS (Opposite Party No. 2/ the Society) at Vile Parle, seeking compensation towards the alleged deficiency, unfair trade practice and delayed possession of their flats under redevelopment plan.
Since the facts of the cases and the Opposite Parties are same, these Complaints are being disposed of by this common Order.
The Complainants were residing at "Nav Bahar" building in Vile Parle. Their Society named Andheri Nav Bahar Co-op Housing Society (hereinafter referred to as the "Opposite Party No. 2) invited bids from various builders/developers to entrust the redevelopment work (demolition and new construction) of the existing buildings 'Nav Bahar' at Lallubhai Park Road Extension, Vile Parle West, Mumbai. M/s. Hetali Enterprises, Builders and Developers (hereinafter referred to as the 'Opposite Party No. 1/Builder Co.') was entrusted the redevelopment work. On 30.07.2011, a redevelopment agreement was registered with the appropriate authority as varied by a supplemental agreement dated 05.12.2012 between both the Opposite Parties. Under the said agreement, Opposite Party No. 1 had agreed to provide new flats to the members of the Society - Opposite Party No. 2 in the new building with additional 28% carpet area. The Complainants entered into tripartite agreemen on 24.12.2012 and in terms of the agreement, the Complainants were given an offer to purchase additional area at predetermined rates and the possession was to be offered within 24 months of the License date i.e. on or before 31.12.2014 with a grace period of 3 months.
The details, as agreed, are reproduced in the chart below:
As per the tripartite agreement: [Original area surrendered by the Complainants, their entitlement of carpet area considering additional 28% agreed to be allotted to them, the additional concessional area purchased by them and the agreed date of possession]
S.No
Clause No.
Complainant
Vijay Kale
Purushottam Kale
Satishchandra Kale
CC No.
2443/2017
2444/2017
2445/2017
1.
Original Flat no.
(Clause V)
A-42
A-41
A-2
2.
New Flat No. in the new building
(Clause XXI)
A-602
A-601
B-102
3.
Surrendered Carpet Area by complainant
(Clause V)
607.50
601.00
421.50
4.
Additional 28% area entitled (Clause XX)
170.10
168.28
118.50
5.
Additional area purchased @Rs.20670/- per sq.ft
(Clause XX)
30.375
30.05
----
6.
Additional area purchased @Rs.24650/- per sq.ft
(Clause XX)
67.025
70.67
----
7.
Total carpet area of the new flat (3+4+5+6)
(Clause XXI)
875.00
870.00
540.00
8.
License date
(date of surrender of flat) (Clause 12.1)
31.12.2012
31.12.2012
31.12.2012
9.
Date of possession
(Clause 14)
31.12.2014
31.12.2014
31.12.2014
10.
Per month Agreed charges to pay for alternate accommodation - first 24 months @ Rs.70/sft
(Clause 13.1)
@ Rs.70/- per sq. ft.
Rs.42,525/-
Rs.42,070/-
Rs.29,505/-
Beyond 24 months Charges per month for alternate accommodation
@ Rs.77/- per sq. ft.
11.
@ Rs.77/sft
(Clause 13.1)
Rs.46,777/-
Rs.46,277/-
Rs.32,456/-
It was submitted that as per Clause 19 of the Agreement, the area of the flat was to be physicall measured and certified jointly by the Society's Architect and the Developer's Architect and in case there is any shortfall in the area, it was to be compensated @Rs.24,650/- per sq. ft.
The Opposite Party No. 1, vide letter dated 06.01.2015, informed the Complainants that they were liable to pay certain amount towards enhanced premium for deficiency in open space. The details of the amounts, so demanded from the Complainants, are as under:-
CC No.
2443/2017
2444/2017
2445/2017
Amount demanded
Rs.4,70,622/-
Rs.4,65,586/-
Rs.3,26,530/-
In response thereto, the Complainants sent a protest letter dated 07.02.2015 to Opposite Party No. 1 and asked the reason for deduction of said amount from their payment. However, there was no clarification from the Opposite Party No. 1, but it deducted amounts (as mentioned above) from the charges payable to the Complainants towards alternate accommodation.
The Complainants further contended that they were informed through Opposite Party No. 2, about for the inspection the flats in new building. On 17.12.2015, the Complainants along with the Architect Patwardhan & Associates inspected the flats and noticed shortage in the carpet area of all the three flats. A report dated 18.12.2015 to that effect was furnished by the Architect. The details o shortage of carpet area are as under:-
CC No.
2443/2017
2444/2017
2445/2017
Carpet area agreed to be delivered (sq. ft)
875
870
540
Carpet area as measured by architect (sq. ft)
846.65
840.529
509.906
Shortage in area sq.ft
28.35
29.471
30.094
The Complainants further contended that after completion, the Occupation Certificate was received on 10.12.2015. The Opposite Party No. 1 offered possession of flats to the other members o the Society, but the Complainants were not called upon to take possession of their flats. But in contrary, through e-mail dated 28.12.2015, the Opposite Party No. 1 informed the Complainants that possession would not be offered unless they withdraw their cases(s) filed against the Opposite Party No. 1. Being aggrieved by such threat, the Complainants filed a Complaint with the senior police officer on 31.12.2015, and with Deputy Registrar K/W Ward, MHADA, Bandra. On 01.01.2016, the Complainants through email informed the Opposite Party No. 2 that their rental agreement with the existing landlord would end in November 2015 and if possession of new flats was not delivered to them, they would be without roof thereafter. In response thereto, the Opposite Party No. 2, by an email, informed therein that:
" we MC members want you to settle your financial matters with Jayesh Bhai and will have to withdraw pending cases lodged with the society and also our builder and also have to give undertaking, you have no issues pending against the society as well as with our developer and you will not raise similar issues in near future ."
As there was no option but because of such coercive attitude of the Opposite Parties, the Complainants signed a letter and then only they were put in possession of their respective flats on 04.01.2016. The said letter was countersigned by the Society which contained a clause absolving the Opposite Party No. 1 from any claim or grievance whether monetary or otherwise for any unpaid ren or compensation or otherwise.
Being aggrieved by the conduct of the Opposite Parties, who coercively put the Complainants i possession of new flats, wherein, the Opposite Parties wrongly collected the charges towards the shortage of carpet area and also for the deficiency in open space, the Complainants filed the present Consumer Complaints seeking just and proper compensation.
The Opposite Party No. 1 filed its written version and denied all the allegations. It was submitte that on 06.01.2011, the Government of Maharashtra introduced a new policy of fungible compensatory FSI, by which builders were to give 35% fungible FSI on the total existing built-up area to the members of the Society. Therefore as per the new policy, the Opposite Party No. 1 entere into a Supplementary Agreement dated 05.12.2012 with the Opposite Party No. 2 to give 28% additional carpet area to the Complainants as against 20%, which was decided earlier. In this regard, the Opposite Party No. 1 submitted a proposal to Municipal Corporation of Greater Mumbai (MCGM), but it was disapproved. Thereafter, MCGM issued a circular dated 26.12.2013 regarding levy of premium for open space deficiency due to utilization of the fungible FSI by the builder. The MCGM raised a demand of Rs. 1,01,75,000/- but it was unilaterally enhanced to Rs.8,99,28,950/-. As the Opposite Party No. 1 was incapable of challenging the arbitrary demand and therefore members of the Society were requested to absorb the proportionate cost. As regards the shortage in carpet area, it was submitted that requisite clarification was given by the Opposite Party No. 1 vide i letter dated 31.12.2015 and that the Complainants were satisfied themselves with the area of the flat and only thereafter possession was taken by them.
The Opposite Party No. 1 contended that there was a delay of 5 months in delivering the possession of the new flats for reasons beyond their control. However the delay was also attributed to the Opposite Party No. 2 which took a stand for inserting Society's name in the City Survey records, which was applied before the revenue authority on 30.10.2013. The part Occupation Certificate was obtained on 10.12.2013. The name of the Opposite Party No. 2 could be entered in the land records even after completion of the new building. It was further submitted that as per the agreement, the increased charges of alternate accommodation were paid to the Complainants, therefore asking compensation for delayed payment is not justified.
The Opposite Party No. 2 submitted that the Complaint was bad for misjoinder of the party because nowhere had the Complainants mentioned that they had hired the services of Opposite Party No. 2. The Society had never agreed or passed any resolution stating that the members will have to pay the amounts demanded by the builder. The Society had left the decision to the individual members to pay charges for deficiency in open space. The Opposite Party No. 1 has placed an affidavit of the Architect certifying that there was no shortage in the area.
We have heard the arguments from the learned counsel for the parties and perused the material on record inter alia the Tripartite Agreement, the correspondences and emails between the parties.
After our thoughtful consideration, we note that the flats were purchased from the Opposite Party No. 1 for consideration and surrendering their old flat. The Complainants are the member of th Opposite Party No. 2 Society and the membership fee, maintenance charges etc. were regularly paid. Thus, the Complainants are Consumers within the meaning of the Act, 1986. It is further to note tha since the value of services hired and compensation sought exceeds Rs. 1 Crore and thus, the Complaints fall well within the pecuniary jurisdiction of this Commission. Moreover, on the date of taking possession, in pursuant to the Tripartite Agreement executed between the parties, the valuatio of each flat @ Rs. 24, 650/- per sq. ft. exceeds Rs. 2 Crores.
It is pertinent to note that according to the Opposite Party No. 1, the MCMG made an arbitrary demand of Rs. 8,99,28,950/- for the deficiency in open space, therefore the Opposite Parties decided to request the members to share proportionately the said cost. In our view, the Opposite Party No. 1 should have challenged in appropriate court of law for such MCMG's arbitrary demand. We note the agreement between the parties was silent about the issue and therefore the Opposite Parties cannot put additional burden on the Complainants. It is an admitted fact that the additional area designated a fungible FSI and the guidelines were issued by the Maharashtra Government in January 2012 and the agreement with the Complainants was executed in December 2012. Thus, the Opposite Party No. 1 slept over a year to incorporate clause in the Agreement and trying to exercise a right of recovery from the Complainants. The Opposite Party No. 1, Bulider Co. availed 35% fungible FSI and have passed 28% on to the existing members of the society. The balance 7% FSI per member appears to have been utilized by the Builder Co. during constructing the flat. Thus, in our view, it was illegal to collect the charges from the Complainants by the Opposite Party No. 1, which shall be refunded to the Complainants.
There are two certificates issued by the respective Architects of both the parties. The Clause 19 of the Agreement is:
"...flats comprised in the members' premises are constructed as per the approved plans and the area shall be physically measured and certified jointly by the Society's Architect and the Developer's Architect..."
In the instant case, the Opposite Party No. 1 has violated the condition under Clause 19. It is pertinen to note that the representative of the Opposite Party No. 1 was present at the time of the measurements being taken by the Architect of the Complainants; whereas the Complainants were no present or called during measurements taken by the Architect of the Opposite Party No. 1.
The date of license was 31.01.2012 on which the old flats were surrendered by the Complainants. As per the Agreement, the Complainants ought to have been put in possession by 28.01.2015. The Opposite Party No. 1, at the time of execution of Agreement, was aware of the need to enter the name of the Opposite Party No. 2 in the property card. Thus, in our view, the Complaints are no way concerned with the delay to deliver the possession of new flats. Therefore, as per the Clause 13.1, the Complainants are entitled to get the increased charges towards alternate accommodation during the delayed period as below:
CC No.
2443/2017
2444/2017
2445/2017
Charges for alternate accommodation for first 24
Rs.42,525/- pm
Rs.42,070/- pm
Rs.29,505/- pm
months
(Clause 13.1)
@Rs.70 per sft
@Rs.70/- per sft
@Rs.70/- per sft
Charges for alternate accommodation beyond 24
Rs.46,777/- pm
Rs.46,277/-pm
Rs.32,546/- pm
months
(Clause 13.1)
@Rs.77 /-per sft
@Rs.77/- per sft
@Rs.77/- per sft
It is clear that after 24 months, there was an increase of Rs.7/-per sq. ft. in the charges for alternate accommodation.
As per Clause 19 of the Agreement in case of shortage in area, the parties will be compensated @Rs.24,650/- per sq. ft. carpet area. Accordingly, the valuation of flats become as under:-
CC No.
2443/2017
2444/2017
2445/2017
Total carpet area of the new flat (SFT)
875.00
870.00
540.00
Valuation @ Rs.24650/sft
2,15,68,750
2,14,45,500
1,33,11,000
Difference in monthly charges payable when possession is delayed
Rs.4252
Rs.4207
Rs.3041
Expressed in percentage terms
0.24%p.a.
0.24% p.a.
0.27% p.a.
It is apparent from the Agreement that the builder can claim the rate of interest 18% on the delayed payments from the Complainant but in contrary, for the builder, the rate of interest on compensation for delayed possession comes to meager rate of interest 0.24% p.a. Such a disparity in the rate of interest is both unfair and inequitable. Accordingly, it would be just and proper that the Opposite Party No. 1 shall pay the interest at the rate of 9% p.a. for the period of delay.
The case of the Complainants is that the Opposite Parties are withholding the possession of flats; coerced the Complainants to withdraw their pending cases filed before District Forum, Police and Dy. Registrar. It is apparent from the email dated 02.01.2016 ( supra para 7). By any means we are of the considered view that the Complainants have right to claim compensation in the instant case.
Catena of judgments from Hon'ble Supreme Court and this Commission have discussed about the rate of interest on the delayed possession. In the case of Wing Commander Arifur Rahman Khan & Aleya Sultana vs DLF Southern Homes Limited, (2020) 16 SCC 512, the para 15 deals with the issue of delay in handing over possession and it was observed that the flat purchasers ought not to be constrained by one-sided and unreasonable terms of the agreement. In Para 45 of the same judgment, it was dealt with the issue of coercion wherein the flat purchasers were presented with unfair choice of either retaining their right to pursue the claim in which event they would not get possession or title or to forsake the claims in order to perfect their title. Further In Para 40 it was observed that
"to accept such a construction would lead to an absurd consequence of requiring the purchaser either to abandon a just claim as condition for obtaining the conveyance or to indefinitely delay the execution of the deed of conveyance pending protracted consumer litigation ."
On the issue of what would constitute a reasonable rate of interest in the present times, attention drawn to the Order of Hon'ble Supreme Court in the case of Ireo Grace Realtech Pvt. Ltd. Vs. Abhishek Khanna & Anr [ 2021 SCC OnLine SC 14] , decided on 11.01.2021 while dealing with the question of awarding compensation for delay in handing over the possession has held as under:-
"(i) We are of the view that allottees at Serial Nos.1 and 2 in Chart A are obligated to take possession of the apartments, since the construction was completed, and possession offered on 28.6.2019, after the issuance of Occupation Certificate on 31.5.2019.The Developer is however obligated to pay delay compensation for the period of delay which has occurred from 27.11.2018 till the date of offer of possession was made to the allottees."
In its Order, it further held that -
Subodh Pawar v. IREO Grace , this Court recorded the statement of the Counsel for the Developer that the amount would be refunded with Interest @ 10% p.a. A similar order was passed in the case of IREO v. Surendra Arora . However, the Order in these cases were passed prior to the out-break of the pandemic. We are cognizant of the prevailing market conditions as a result of Covid-19 Pandemic, which have greatly impacted the construction industry. 53 In these circumstances, it is necessary to balance the competing interest of both parties. We think it would be in the interests of justice and fair play that the amount deposited by the Apartment Buyers is refunded with Interest @ 9% S.I. per annum from 27.11.2018 till the date of payment of the entire amount."
We further note that on one hand the society-Opposite Party No. 2 initially made no compulsion to its members to pay the charges towards the deficiency in open space. However, later on, the Society admitted that the MCGM demand Rs. 8.99 crore to be entirely payable by the individual members of the Opposite Party No. 2 Society and alleged that the Complainants unnecessarily filed the Consumer Complaints against the Opposite Party No. 1.
It is apparent from the record that the value of each flat was more than 2 crore in 2016, there was delay of 8 months to hand over the possession. The Opposite Parties made the Complainants to suffer physical stress and mental agony, therefore the Complainants deserve for a fair compensation.
In the light of the above discussion, we find, 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), to be well and truly evident on the part of the Opposite Parties since the Opposite Party No. 1 did not pay the amount in timely manner as per the Agreement. In remedy, it would be just and equitable to direct the Builder Co., the Opposite Party No. 1 to pay the following amounts to each of the Complainants:
i) To refund the charges to the Complainants collected by the Opposite Party No. 1 towards deficiency in open space @9% p.a. since 06.01.2015 till its realization.
ii) The amount towards shortage in the carpet area @ Rs.24,650/- per sq.ft on the date o possession with the interest @9% p.a. from 05.01.2016 till its realization.
iii) Rs. 10,00,000/- towards mental agony and Compensation for delay of 8 months in handing over possession.
iv) The Opposite Parties Nos. 1 and 2 are directed to pay Rs. 2,00,000/- jointly and severally towards the litigation costs to each of the Complainants.
The aforesaid direction shall be complied with within a period of six weeks from today, failing whic the amount shall carry interest @ 12% p.a. till its realization.
The Consumer Complaints are disposed of with the above directions.