Jayant Mehrotra & Anr vs Arimas Developers Pvt. Ltd

Subhash Chandra, Presiding Member

This consumer complaint under the Consumer Protection Act, 1986 (in short, the ‘Act’) is filed against the opposite party alleging deficiency by the opposite party in not refunding the amount deposited by the complainants towards a villa booked by them in the project ‘Amoda Reserve’, Lonavala, Maharashtra.

The complainants’ case is that the opposite party did not provide any Agreement to Sell or progress of the project for nearly two years and upon cancellation of booking did not refund the full amount deposited by them for a 3 BHK Villa (No. F9B) admeasuring 2285 sq ft carpet area for a sale consideration of Rs 2,87,18,346/- excluding stamp duty, registration, service tax and other taxes or levies booked on 21.07.2015 in the above project. Rs 89,77,356/- was deposited with the opposite party which amounts to more than 20% of the total sale consideration on the clear assurance on email by the opposite party that the complainants could withdraw the full amount without any deduction of cancellation charges within 6 months. However, since the draft of the Agreement to Sell was not provided by the opposite party from the date of booking in July 2015 till the date of filing of this complaint, i.e. for a period of over two years, nor was any information provided regarding the progress of the project, on 01.03.2017 they cancelled the booking and sought refund of the amount deposited but despite numerous efforts to obtain the draft agreement they received evasive answers leading them to inform the opposite party that further payments would be made only on receipt of this document. The opposite party vide letter dated 10.03.2017 responded but gave no reason for the rejection of the request. Hence, a legal notice was issued by complainants on 01.04.2017 to the opposite party in reply to which it was conveyed that only Rs 79,54,982/- would be refunded. The complainants allege that the opposite party had retained their money illegally while no Agreement to Sell was provided till date. Such actions are stated to be an unfair trade practice. Reliance is placed on this Commission’s order in Subhash Chander Mahajan Vs. Parsvnath Developers Ltd., CC No. 144 of 2011 wherein the opposite party was directed to pay interest @ 18% per annum along with compensation of Rs 7,00,000/- and litigation cost of Rs 2,00,000/-. Complainants also rely upon Ghaziabad Development Authority Vs. Balbir Singh (2004) 5 SCC 65 wherein the Hon’ble Supreme Court held that a higher rate of interest was payable where a purchaser was deprived of the benefit of escalation of price due to the return of the amount deposited. The complainants are before this Commission with the prayer to:

(i) direct the opposite parties to refund the entire amount paid by the complainants along with interest @ 18% p.a. from the date of payment; and

(ii)  direct the opposite parties to pay the complainants Rs 2,50,000/- towards litigation expenses; and

(iii)  direct the opposite parties to pay the complainants Ts 10,00,000/- towards mental agony and distress; and

(iv) direct payment of costs of this complaint by the opposite parties in favour of the complainants; or pass any other/further orders as this Hon’ble Commission may deem fit in the facts and circumstances of the case.

The opposite party resisted the complaint by way of a written statement supplemented with additional submissions after final arguments were over and stated that the complainants had booked the villa on 21.07.2015 and was informed that an Agreement to Sell was under finalization on 17.08.2015. In September 2015 he had signed the cost sheet which was a tacit agreement to continue with the booking. A Letter of Intent (LOI) was also sent to the complainants on 30.11.2015. However, on 25.07.2017 the complainants opted to seek a refund abruptly and the opposite party in October, 2017 and November, 2017 forwarded a copy of the Agreement to Sell. Preliminary objections of the opposite party are that (i) the complainants purchased the villa for commercial reasons since they have other properties and therefore the complaint was not maintainable under the Act; (ii) they were not ‘consumers’ under the Act as they reside in Bandra (West), Mumbai; (iii) they had made another booking of a flat in Indiabulls Sky Suits project of Indiabulls Real Estate Co. Pvt. Ltd., and sought similar relief in CC no. 1693 of 2017 in J M Vs India Bulls Real Estate Ltd., (iv) the complaint was filed in October 2017 after 2 years 4 months of the last payment in July 2015 and was, therefore, barred by limitation; (v) the complainants had sought a refund after negotiating for an upgraded villa and (vi) that the opposite party was not liable to pay any interest as per the terms and conditions of the application form dated 21.07.2015. Reliance was placed on the judgments of the Hon’ble Supreme Court in Madan Kumar (D) through LR vs District Magistrate, Sultanpur and Ors., (2009) 9 SCC 79 which held that in order to determine ‘commercial purpose’ to establish whether a person was a ‘consumer’, the “immediate purpose” as distinct from the “ultimate purpose” of purchase, sale in the same form or after conversion and a direct nexus with profit or loss would be the determinants of the character of a transaction whether it is for a ‘commercial purpose’ or not. As regards establishment of deficiency in service, it was submitted that the Hon’ble Supreme Court in SGS India Ltd., vs Dolphin International Ltd., 2021 SCC Online SC 879 has held that the onus of proof of deficiency in service is on the complainant and; in Indigo Airlines vs Kalpana Rani Debbarma (2020) 9 SCC 424, it was held that burden of proof would shift on the appellants only after the respondents/ complainants had discharged their initial burden in establishing the factum of deficiency in service; and in Ranveet Singh Bagga vs KLM Royal Dutch Airlines and Anr. (2000) 1 SCC 66, it was held that the burden of proving the deficiency in service is upon the person who alleges it. The opposite party contends that the complainant’s have not substantiated their evidence in its averments regarding deficiency in service by the opposite party.

On merits, it was stated that (i) the construction of the villa was now complete and the Municipal authorities had issued the occupation certificate; (ii) the complainant had failed to execute the LOI; (iii) the complainant had failed to come to the office of the opposite party to inspect the draft agreement and a copy was sent to him and (iv) the Terms and Conditions of the booking form were binding on the complainant; (v) The complainants has not challenged either the application form or the letter of intent despite opportunity or in the complaint; (vi) the opposite party has obtained the occupation certificate from the competent authority on 19.09.2017 which establishes that the project was completely in a timely manner; (vii) the complainant had negotiated with the opposite party for an upgraded Villa and its cancellation of the same with the request to refund the deposits reflected the complainants mala fide intention; (viii) that the complainants have stated contrarily that the agreement for sale had been promised within one month whereas in their own e-mail dated 08.03.2016 it is mentioned as 15 days; (ix) the parties are found by the terms and conditions of the agreement/ application form/ letter of intent in terms of the judgment of the Bharati Knitting Company vs DHL Worldwide Express Courier Division of Airfreight Ltd., (1996) 4 SCC 704 and that as per the application form no interest was payable till the execution of the agreement for sell and cancellation would result in forfeiture of earnest money or refund after deducting the service tax and / or other taxes and administrative charge of 2%; (x) that in view of the failure of the complainant to execute the agreement for sell, the opposite party cannot be saddled with interest after eight years as per the judgment of the Hon’ble Supreme Court in Supertech Vs Rajni Goyal (2019) 17 SCC 681 which held that purchaser cannot be allowed to reap the benefits after delay in taking over the possession; (xi) that the opposite party was compelled to sell the villa at substantially lower rate and has therefore, suffered loss and cannot be put to double jeopardy.  The complaint is, therefore, stated to be vexatious and prayed to be dismissed.

Complainants filed a rejoinder and both parties filed their evidence affidavits and short synopses of arguments. I have heard the learned counsel for the parties and considered the material on record.

The learned counsel for the complainant argued as per his complaint and stressed that following the booking of the villa, the opposite party had confirmed over the e-mail dated 28.08.2015 in reply to complainant’s mail dated 17.08.2015 and subsequently vide e-mail dated 01.09.2015 in response to complainant’s mail dated 31.08.2015 that refund without cancellation charges would be made within six months in the case of complainant’s cancelled the booking. It was now being contended by the opposite party that as per clause 10 of the application forum the refund was at the discretion of the company after deducting service tax and other taxes and administrative charges @ 2%. It is argued that opposite party was in default of section 4 (1) of the Maharashtra Ownership of Flats Act, 1963 under which cancellation of advance payment/ deposits more than 20% without written agreement for sale was prohibited. It is also argued that the opposite party’s reference to the letter of intent is an after-thought and based on contradictory statements in that it was handed over in September 2015 whereas as per the evidence the covering letter is dated 30.11.2015. It was also argued that the purported letter is not annexed to the written version and was added in the evidence subsequently.

On behalf of the opposite party, learned counsel argued that the complainant was not ‘consumer’ under the Act but had invested in the property for commercial purpose and that he had also booked other flats. It was argued that the complainant were guilty of suppresio vari and suggestion falsi  and had suppressed material facts of other bookings with other builders. It was also argued that the present complaint was barred by limitation and it has been filed beyond the statutory period of two years and no condonation of delay had been sought.

The preliminary objections of the opposite party have been considered.  The main ground that the complainants are not ‘consumers’ as they reside in Mumbai and have other properties is not sustainable since the mere possession of multiple properties does not render booking of a property as one for commercial purpose and hence excluded under the Act. As per the judgment of this Commission in Rajnish Bhardwaj and Ors vs M/s CHD Developers Ltd., and Ors in CC no. 3775 of 2017, decided on 26.11.2019, the onus is on the opposite party to prove that the complainants were engaged in the business of buying and selling of the property for commercial gains in the real estate market. In Sanjay Rastogi vs BPTP Ltd., and Anr. CC no. 3580 of 2017 decided on 18th June 2020 which was upheld by the Hon’ble Supreme Court it has been held that ‘commercial purpose’ requires that complainants be shown to be in the business of buying and selling the flat and in Sai Everest Developers vs Harbans Singh Kohli – 2015 SCC Online NCDRC 1895 dated 21.07.2015, it was held that the opposite party should establish by way of documentary evidence that the complainants were dealing in real estate or in the purchase of sale for the purpose of making profits. This onus has not been discharged by the opposite party in the instant case except to make a bald statement.  The mere booking of more than one flat cannot be considered to be a ‘commercial purpose’ as contended by the opposite party. The Hon’ble Supreme Court in Laxmi Engineering Works vs P S G Industrial Institute (1995) 3 SCC 583 has clearly laid down that commercial purpose needs to be established on a case to case basis. It has also been held by the Hon’ble Supreme Court in Laxmi Engineering Works (supra) that the mere fact of booking more than one flat does not amount to ‘commercial purpose’ for this reason. The contention of the opposite party is, therefore, not sustained. The objection that the complaint is barred by limitation since the payment was made in July 2015 and the complaint is dated October 2017 cannot be considered in the light of the fact that admittedly there have been a series of communication between the complainant and the opposite party regarding the refund of the money that had been paid by the complainant to the opposite party and therefore, there is a continuing cause of action which does not warrant the application of section 24 (A) of the Act. With regard to the applicability of the terms and conditions as set out in the application forum dated 21.07.2015 and there being no liability on the opposite party to pay interest, the objection does not warrant consideration in view of the fact that the opposite party had failed to execute the Agreement to Sell within a reasonable time and had, in the meanwhile, given assurances on two occasions that refund without deduction would be provided to the complainant. Its reliance on the application form at this juncture is clearly reflective of its unfair trade practice.

Based on the material on record and the arguments, it is evident that the construction of the villa had not been completed as on date of filing of this complaint. Admittedly, the occupation certificate was obtained on 19.09.2017. The opposite party has admitted that it forwarded the Agreement to Sell to the complainant only in October – November 2017 for execution and that the occupation certificate was received from the concerned Municipal Authorities on 19.09.2017. It is apparent from the material on record that the complainant had repeatedly pressed upon the execution of the agreement to sell with the opposite party. Strangely, the opposite party instead of making the document available after having received Rs.89,77,356/- chose not  to provide the documents but instead asked the complainant to review the documents in its office. No evidence has been brought on record to substantiate the opposite parties contentions that the agreement to sell had been dispatched to the complainant or received by him or on its behalf. Reference to the letter of intent also does not appear worth consideration since there is no reference to any such document in the application form nor is there any cogent evidence brought on record to prove its delivery to the complainant as contended by the opposite party. From the foregoing, it is evident that despite the booking of the villa on 21.07.2015, no agreement to sell was provided to the complainant till 25.07.217 when the complainant asked for refund with compensation. This document by the opposite party’s own admission was shared with the complainant on 25.10.2017. Therefore, it is manifest that cancellation of the booking of the villa by the complainants is justified on the ground that neither the agreement to sell was executed by the opposite party with them nor the details about the progress of the project were shared with the complainant.  On the contrary, the opposite party is liable for unfair trade practice un the Act in not sharing any information or documents with the complainant despite having received over 20% of the sale consideration. It is not denied by the opposite party that the quantum of advance taken by it is violative of section 4 (1) of Maharashtra Ownership of Flats Act, 1963.

In this case, admittedly, the complainants had remitted an amount of Rs 89,77,356/- towards the sale consideration of the villa allotted by the opposite party in its project ‘Amoda Reserve’ at Lonavala, Maharashtra on 21.07.2015. The complainants have submitted that they were constrained to cancel the booking on 25.07.2017 since the Agreement to Sell was not provided by the opposite party for nearly two years. A full refund of the deposited amount was sought since the same had been assured within 6 months in case of cancellation. Opposite party has offered refund but after deducting the service charge paid and stated that it would be refunded as and when the refund is received by it. In the submissions made by the opposite party, there is no valid justification for the failure to provide a draft Agreement to Sell has been provided. An offer to peruse the draft document in its office was, however, made and is referred to. The sum of Rs 89,77,356/- accepted is not a meagre sum and the period of nearly two years to provide a document is also not a reasonable period of time.

The arguments of the opposite party that the complaint is bound by the terms of the application form till the time that the agreement to sell is signed and therefore, is not entitled to any interest and further liable to refund in the case of cancellation after deduction of taxes and 2% administrative charge and that the cancellation of the villa after negotiating for upgraded villa booked was reflective of its malafide intention cannot be countenced in view of the fact that inordinate delay in providing agreement to sell after receiving substantial amount of deposits itself is an unfair trade practice and indicative of deficiency in service on the part of the opposite party. It is evident that the opposite party chose to demand and receive various instalments of the sale consideration amounting to Rs.89,77,356/- without making the agreement to sell available as required to be done by it. Relying instead on a letter of intent or the application form or an agreement to sell being delayed is not of any help to the opposite arty since, the complainants had steadfastly maintained to proceed with the booking of the villa after the agreement to sell was executed which had been confirmed through correspondence by the opposite party to the complainant.

The opposite party is, in the absence of any legitimate and justifiable grounds to explain these lapses, liable to be guilty of both unfair trade practice and deficiency in service under the Act. No mitigating circumstances or reasons to explain the lapse or the delay has been brought on record. In view of these reasons, the opposite party is liable for the act of omission and commission in deliberately delaying the sharing of the basic document of sale with the complainants to whom it had allotted a villa against part payment of the sale consideration. The delay in the execution of the agreement to sell and execution of the project is a clear evidence of deficiency in service. The opposite party’s argument that the onus is not discharged is therefore, not valid.

In view of the foregoing discussion, the complaint is liable to succeed. Accordingly, the complaint is hereby allowed partly with the following directions:

(i) opposite party is directed to refund the entire amount of Rs. 89,77,356/- deposited by the complainants with it along with simple interest @ 9% from the date of deposits till the date of this order;

(ii)  opposite party shall also pay Rs 50,000/- to the complainant towards cost of litigation;

(iii)  this order shall be complied with within 8 weeks failing which the applicable rate of interest shall be 12% till realization.

All pending IAs, if any, also stand disposed of with this order.