Gautam Roy & 9 Ors. vs M/s Avalon Projects

Heard Mr. Sushil Kaushik, Advocate, for the complainants and Mr. Vivek Kohli, Sr. Advocate assisted by Mr. Akash Yadav, Advocate, for the opposite party.

Initially 10 home buyers of the project “Avalon Rosewood” have filed above complaint, under Section 12(1)c) of Consumer Protection Act, 1986, for directing the opposite party to (i) refund the amounts collected from the buyers with interest @18% per annum from the date of respective deposit till the date of payment, (ii) pay Rs.30000/- to each buyers, as costs of the litigation; and (iii) any other relief which is deemed fit and proper in the facts and circumstances of the case. Permission under Section 12(1)c) of Consumer Protection Act, 1986, has been granted vide order dated 14.02.2019. After publication of notice, several other home buyers of the said project filed applications for their impleadment as the complainants, which were allowed time to time and at present there are 41 complainants.

The complainants stated that M/s. Avalon Projects (the opposite party) was a company, registered under the Companies Act, 1956 and engaged in the business of development and construction of group housing project and selling its unit to the prospective buyers. It was a unit of GRJ Distributors and Developers Pvt. Ltd. The opposite party launched a group housing project, in the name of “Avalon Rosewood” at Village Khanpur, Sector-16, Bhiwadi-Alwar Byepass Road, Tijara, District Alwar, Rajasthan, in the year 2013 and made wide publicity of its facilities and amenities. Believing upon the representations and promises of the opposite party, each complainant booked a 2BHK flat between January, 2013 to August, 2013 and deposited booking amount. The opposite party allotted one Unit of the size 1250 sq.ft. and one covered car parking space for Rs.3943750/- to each of them and executed Apartment Buyer’s Agreements in their favour between June, 2014 to January, 2015. It may be mentioned that some of the complainants were transferees from original allottees, with the permission of the opposite party. The opposite party assured them that time schedule for completion of construction would remain same as it was for original allottee. Annexure-III of Apartment Buyer’s Agreement provides payment plan as “construction link payment plan” and “Down Payment Plan. Some of the complainants opted for “construction link payment plan” and paid the instalments regularly as per demand letters. Some of the complainants opted for “Down Payment Plan” and paid 95% of the consideration within 30 days of the booking. Clause-6.1 of the agreement provides 42 months period from the date of the agreement, for completing construction and grace period of six months. The period of 42 months expired in July, 2018, in all the cases but the opposite party did not offer possession. Some of the complainants visited the site and found that construction work was not of the stages, for which instalments were realized. Skeleton structure of partly constructed building was lying and no construction work was going on. The complainants had reason to believe that the opposite party was syphoning the fund of this project in their other project. Apartment Buyer’s Agreement were one sided and arbitrary, inasmuch as the opposite party was charging interest @24% per annum for delayed payment, while clause-6.2 provides delayed compensation @Rs.3/- per sq.ft. per month on super area. The complainants inquired from the office of the opposite party on telephone about time schedule for possession then the opposite party informed that it would be completed till end of 2021, without giving any cause for delay. Then the complaint was filed on 29.08.2018, alleging deficiency in service.

The opposite party filed its written reply on 04.12.2019 and contested the complaint, in which, booking of the flats in January, 2013, allotment of flat, execution of Apartment Buyer’s Agreement between June, 2014 to January, 2015 and deposits made by the complainants, have not been disputed. The opposite party stated that clause-6.1 of the agreement provides for a grace period of six months. The complainants, whose agreement was executed in January, 2015, 48 months’ period would expire in January, 2019, while the complaint was filed on 29.08.2018, although at that time there was no cause of action for them. Clause-6.1 of the agreement was subject to timely payment of instalment but in the present case, many of the complainants have committed default in timely paying instalments. Jitender Yadav (complainant-4) has delayed payments of instalments and Rs.200684/- was charged from him towards interest on the delayed instalments. Many home buyers stopped payment and total Rs.383683698/- was due as on 28.08.2019, which adversely affected the construction work of the project. Kanika Yadav (complainant-10) did not sign the agreement in spite of repeated request of the opposite party. Due to force majeure reasons i.e. Supreme Court vide order dated 16.11.2017 passed in SLP (C) No.34811 of 2013, restrained 82 mining lease holders from carrying mining of sand and gravel, in state of Rajasthan, which resulted in non-availability of essential building materials. National Green Tribunal used to stop construction works time to time. Demonetization took place in the country vide order dated 08.11.2016, due to which, there had been migration of labourers from urban area to their villages and real estate sector was adversely affected. There had been huge dues from the home buyers as stated above. The opposite party had already invested about Rs.234/- crores in the project. After coming into force of Real Estate (Regulation and Development) Act, 2016, the project “Avalon Rosewood” was registered with Rajasthan RERA authority, who after considering above circumstances extended the period of the completion of the project till 26.06.2021. The opposite party took loan of Rs.58.95 crores from the banks and financial institution for competing the project with the time line as provided by RERA authority. The complainants have filed this complaint on various false and frivolous allegations and is liable to be dismissed. Preliminary objections that the complainants were not a consumer and after coming into force of Real Estate (Regulation and Development) Act, 2016, which is a special enactment on the subject, RERA authority has been created, who is monitoring the project; The complainants be relegated to go before RERA authority, have been raised.

The complainants filed Rejoinder Reply, Affidavit of Evidence and Affidavit of Admission/Denial of documentary evidence of Gautam Roy and documentary evidence. The opposite party filed Affidavit of Evidence of Jasvir Singh and documentary evidence. The opposite party in Affidavit of Evidence has stated that as the country was affected with pandemic “Covid” from March, 2020 till June, 2021 and lockdown was imposed by the government as such RERA authority has extended the completion period up to 20.06.2022. Both the parties have filed their written submissions.

We have considered the arguments of the parties and examined the record. The complainants are allottees in different towers on different time. Some of the allottees are original allottee of the opposite party while some of them are transferees from original allottee. Apartment Buyer’s Agreements are executed on different dates and due date of possession has not expired for some of the complainants on the date of filing of the complaint. Some of the allottees are defaulters in payment of instalment and have paid very less amount. Although all the complainants are aggrieved with delay in handing over possession but there is no sameness amongst the allottees, inasmuch as who are defaulters their earnest money will be liable to be forfeited for breach of the contract. As such although permission under Section 12(1)(c) of Consumer Protection Act, 1986 has been granted but in view of the judgment of Supreme Court in Brigade Enterprises Limited vs Anil Kumar Virmani, (2022) 4 SCC 138, we convert it as a joint complaint of the allottee under Section 12 (1)(a) of Consumer Protection Act, 1986.

The opposite party took ground of force majeure reasons for delay as well as defaults committed by various allottees, i.e. Demonetization took place in the country vide order dated 08.11.2016, due to which, there had been migration of labourers from urban area to their villages and real estate sector was adversely affected and  Supreme Court vide order dated 16.11.2017 passed in SLP (C) No.34811 of 2013, restrained 82 mining lease holders from carrying mining of sand and gravel, in state of Rajasthan, which resulted in non-availability of essential building materials. National Green Tribunal used stopped construction works time to time. The country was affected with pandemic “Covid” from March, 2020 till June, 2021 and lockdown was imposed by the government. Clause-6.1 of the agreement was subject to timely payment of instalment and force majeure reasons, which arose during 42 months period as provided.

Force Majeure is a clause that is included in contract to save from the liability for unforeseen and unavoidable catastrophic that interrupt. Force Majeure has been statutorily recognised under Section 56 of the Contract Act, 1872. Supreme Court in Dhanrajmal Govindram Vs. Shyamji Kalidas, AIR 1961 SC 1285, held that an analysis of the rulings on the subject shows that where reference is made to “force majeure” the intention is to save the performing party from the consequences of anything over which he had no control. In IREO Grace Realtech Pvt. Ltd. Vs. Abhishek Khanna, (2021) 3 SCC 241, the period of delay caused in issuing NOC by Fire Department, was excluded from counting the period of delay.

The complainants have prayed for refund of their money. As per clause 6.1 of the agreement, the opposite party is entitled for extension of period for which, the construction was delayed for force majeure reasons. On the date of filing of the complaint, it was premature after adding the period of force majeure. The complainants are committing breach of contract, as such, the earnest money is liable to be forfeited under clause-3.3 of Apartment Buyer’s Agreement. However, some of the complainants have made payment under subvention scheme under which 95% payment has been made, but till today the opposite party has not offered possession to them also. The period as extended by RERA Authority Rajasthan has also expired in June, 2022.  Those allottees are entitled for full refund.

Under clause-2.4 Apartment Buyer’s Agreement, 20% of basic sale price has been mentioned as earnest money. But Supreme Court, in Maula Bux Vs. Union of India, (1970) 1 SCR 928 and Sirdar K.B. Ram Chandra Raj Urs Vs. Sarah C. Urs, (2015) 4 SCC 136, held that forfeiture of the amount in case of breach of contract must be reasonable and if forfeiture is in the nature of penalty, then provisions of Section-74 of Contract Act, 1872 are attracted and the party so forfeiting must prove actual damage. After cancellation of allotment, the flat remains with the developer as such there is hardly any actual damage. This Commission in CC/438/2019 Ramesh Malhotra Vs. EMAAR MGF Land Ltd. (decided on 29.06.2020), CC/3328/2017 Mrs. Prerana Banerjee Vs. Puri Construction Ltd. (decided on 07.02.2022) and CC/730/2017 Mr. Saurav Sanyal Vs. M/s. IREO Grace Pvt. Ltd. (decided on 13.04.2022) held that 10% of basic sale price is reasonable amount to be forfeited as “earnest money”.

ORDER

In view of the aforesaid discussions, the complaint is partly allowed. The opposite party is directed to refund entire money deposited by those complainants who have made payment under subvention scheme or paid 95% of consideration with interest @9% per annum from the date of respective deposit till the date of payment, within a period of two months.

The opposite party is directed to refund entire money deposited by rest of the complainants who have made the payment less than 95% of the consideration with interest @9% p.a. from the date of respective deposit till the date of payment after deducting 10% of basic sale price within a period of two months.

It will be open to the opposite party to satisfy the bank loan first and then return balance amount to the complainants.