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Judgment
The present Consumer Complaint has been filed under Section 21 of the Consumer Protection Act, 1986 (for short “the Act”) by the Complainants, husband and wife, against the Opposite Party, M/s. IREO Private Ltd. (hereinafter referred to as “the Developer”) seeking refund of the deposited amount as the Developer has failed to hand over the possession of the Apartment booked by them in the Project, namely, “IREO City Central” (hereinafter referred to as “the Project”) in terms of the Apartment Buyers Agreement (hereinafter referred to as “Agreement”) executed between the parties.
The facts of the case as narrated in the Complaint, are that in response to the Applications invited by the Opposite Party Developer for allotment of Flats/Apartments in their upcoming Project, “IREO City Central” located at Sector no.59, Gurgaon, Haryana, the Complainants had booked a Service Apartment on 28.02.2012 by paying a sum of ₹13,69,290/- and they were issued a Priority No. S/64 towards their Expression of Interest. The Complainants were allotted Apartment No. R0403 on 4th floor, having an approximate area of 908.33 sq, ft. vide Allotment Offer letter dated 26.09.2012 for a total Sale Consideration of ₹1,42,72,527/-. Thereafter, on 10.05.2013 an Apartment Buyer’s Agreement was executed between the parties. It is averred that as per Clause 13.3. of the Agreement, the possession of the allotted Unit was to be handed over to the Complainants within a period of 42 months from the date of approval of the Building Plans with an additional 180 days as “Grace Period”. Clause 13.3 of the Agreement reads as under:-
“ Subject to Force Majeure, as defined herein and further subject to the allottee having complied with all its obligations under the terms and conditions of this Agreement and not having defaulted under any provision(s) of this Agreement including but not limited to the timely payment of all dues and charges including the total Sale Consideration, registration charges, stamp duty and other charges and also subject to the Allottee having complied with all formalities or documentation as prescribed by the Company, the Company proposes to offer the possession of the said Rental Pool Serviced Apartment to the Allottee within a period of 42 (Forty Two) months from the date of approval of the Building Plans and/or fulfillment of the preconditions imposed thereunder (“Commitment period”). The Allottee further agrees and understands that the Company shall additionally be entitled to a period of 180 days (“Grace period”), after the expiry of the said Commitment Period to allow for unforeseen delays beyond the reasonable control of the Company. ”
According to the Complainants, the Building Plans of the Opposite Party Developer were sanctioned on 05.09.2013 and as such, the Developer was under an obligation to complete the Project and hand over the possession of the Service Apartment booked by them on or before 04.09.2017 including the grace period of 180 days. However, the Developer has miserably failed to complete the Project and hand over the possession of the Service Apartment, complete in all respect, in terms of the Agreement despite having received the huge amount of ₹99,50,107.91/- from the Complainants out of the Total Sale Consideration of ₹1,42,72,527/-.
According to the Complainants, since no response was being received from the Developer regarding expected date of possession and their having already paid a huge amount of ₹1 crore (approx..), to them, they served a Legal Notice dated 23.10.2018, in terms of Clause 13.5 of the Agreement, upon the Developer asking for termination of the Agreement and refund of the deposited amount with interest. However, the said notice was not responded by the Developer. Feeling aggrieved and alleging deficiency in service and Unfair Trade Practice on the part of the Developer in not handing over the possession as promised in the Agreement, the Complainants have filed the present complaint seeking following reliefs:-
(i) Direct the Opposite Party to return the total amount paid with 20% interest p.a. compounded quarterly from the date of first payment made.
(ii) Direct the Opposite Party to pay compensation to the tune of ₹10,00,000 each to the Complainants for the mental and financial harassment;
(iii) Direct the Opposite Party to pay ₹10 lakhs towards punitive damages for gross negligence, gross deficiency in service and unfair trade practice;
(iv) Direct the Opposite Party to pay travel expenses as this Commission deem fit;
(iv) Direct the Opposite Party to pay a sum of ₹1 lakh towards cost of litigation.
Upon notice, the Complaint was resisted by the Opposite Party Developer by filing its Written Statement and raising the Preliminary Objections that; (i) the Complainants are not the ‘Consumers’ as defined under Section 2(1)(d) of the Act as they have invested in the Apartment for commercial gain and to earn profits. The Complainants are only the speculative investors and had booked commercial property under the category of “Managed Serviced Apartments” to be managed by Ascot under the Rental Pool Arrangement; (ii) since the Project is registered with Haryana Real Estate (Regulation and Development) Act, 2016 (hereinafter referred to as the “HRERA”), the remedy for any dispute between the parties, is better available before it; (iii) various Complainants were filed before the HRERA and it was directed by the HRERA that in the interest of justice, the Flat Buyers cannot be allowed refund at the stage when the construction is done, however, they are entitled for delayed possession charges at prescribed rate of interest of 10.75% p.a. from the due date of delivery of possession; (iv) Complainants are the chronic defaulter in making the payment of the installments due and time and again, several reminders were sent by the Developer to the Complainants for payment of the Installments. If the Buyer himself delays the payment, he cannot claim compensation for delayed possession;
On merits, it is contended that the Developer has already completed the construction of the Tower in which the Apartment was allotted to the Complainants and are in process to make application for grant of Occupation Certificate. The Opposite Party Developer has developed several prestigious Projects such as “Corridor”, “Grand Arch” Victory Vallety” etc. and delivered the possession to the Flat Buyers. Parties are bound by the terms and conditions of the Booking Application Form as well as the Agreement as has been held by the Hon’ble Supreme Court in the case Bharti Knitting Co. Vs. DHL World-wide Courier – (1996) 4 SCC 704. As per Clause 13.3 of the Agreement and Clause 38 of the Schedule-I of the Booking Application Form, the Developer has proposed to hand over possession of the booked Apartment to the Complainants within a period of 42 months from the date of approval of Building Plans and/or fulfillment of the pre-conditions imposed thereunder. It was also agreed between the parties that a grace period of 6 months would be provided to the Opposite Party, for any unforeseen delay. In the present case, the approval of the Building Plan was obtained on 05.09.2013 subject to certain pre-conditions which were required to be satisfied and the last of the pre-conditions, i.e. Environment Clearance was granted only on 12.12.2013 and further the “Consent to Establish” was granted on 07.02.2014, hence, the proposed time for handing over of the possession to the Complainants is to be computed from 07.02.2014. Moreover, as per Clause 13.5 of the Agreement, the Developer is entitled for “Extended Delay Period” of 12 months from the end of the grace period and as such the possession is required to be delivered on or before 07.02.2019. The present Complaint filed on 5.1.2019 is ex-facie completely pre-mature and there is no question of any delay in delivery of possession. The issues raised by the Complainants are of contractual nature which can only be agitated before and dealt with by a Civil Court. In terms of Clause 13.4 of the Agreement, for the delay, if any, the Opposite Party is liable to pay compensation @ 20/- per Sq. Ft. of Super Area per month and the Complainant is entitled for the said compensation only after 05.01.2019. Further, in case of delay beyond 12 months after the expiry of Grace Period, the Allottee will be entitled to opt for termination of the Agreement and the Opposite Parties will refund the actual paid up installment, adjusting the interest on delayed payment and delayed compensation. The issues in the present Complaint relate to the interpretation and implementation of the terms of the Application Form and Agreement which can only be decided in a Civil Court or by Arbitration.
We have heard the learned Counsel for the parties at some length and also perused the material available on record including the evidence led by the parties.
The contention of the Learned Counsel for the Opposite Party that the Complainants are not the ‘Consumers’ and that they have booked the subject Apartment for earning profits is completely unsustainable in the light of the judgement of this Commission in Kavita Ahuja vs. Shipra Estates I (2016) CPJ 31, in which the principle laid down is that the onus of establishing that the Complainant was dealing in real estate i.e. in the purchase and sale of plots/ flats in his normal course of business to earn profits, shifts to the Opposite Party, which in the instant case they had failed to discharge by filing any documentary evidence to establish their case. Therefore, we are of the considered view that the Complainants are the ‘Consumers’ as defined under Section 2 (1)(d) of the Act.
As far as the plea that the Complainants are habitual defaulter in making payments and as such the present Complaint is not maintainable, is concerned, we observe that there was remedy available with the Developer either to charge penal interest on delayed payment or cancel the allotment of the Complainants and refund the amount deposited by the Complainants but it neither cancelled the allotment nor refunded the amount deposited by the Complainants. Now, at this stage the Developer cannot take this plea, which is an afterthought.
So far as the plea that the Project is registered under HRERA and therefore, in terms of RERA, this Commission is barred from entertaining the present Complaint, is concerned, we place reliance upon a recent Judgment delivered by Hon’ble Supreme Court in “M/s Imperia Structures Ltd. v. Anil Patni and Anr.” - 2020 10 SCC 783 wherein it has been held that the remedies under the Consumer Protection Act were in addition to the remedies available under special statutes. The absence of a bar under Section 79 of the RERA Act to the initiation of proceedings before a Consumer fora which is not a Civil Court, read with Section 88 of the RERA Act makes the position clear. Section 18 of the RERA Act specifies that the remedies are ― without prejudice to any other remedy available. In M/s. Imperia Structures Ltd. (supra), Hon’ble Supreme Court observed as under: -
“31. Proviso to Section 71(1) of the RERA Act entitles a complainant who had initiated proceedings under the CP Act before the RERA Act came into force, to withdraw the proceedings under the CP Act with the permission of the Forum or Commission and file an appropriate application before the adjudicating officer under the RERA Act. The proviso thus gives a right or an option to the complainant concerned but does not statutorily force him to withdraw such complaint nor do the provisions of the RERA Act create any mechanism for transfer of such pending proceedings to authorities under the RERA Act. As against that the mandate in Section 12(4) of the CP Act to the contrary is quite significant.
Again, insofar as cases where such proceedings under the CP Act are initiated after the provisions of the RERA Act came into force, there is nothing in the RERA Act which bars such initiation. The absence of bar under Section 79 to the initiation of proceedings before a fora which cannot be called a civil court and express saving under Section 88 of the RERA Act, make the position quite clear. Further, Section 18 itself specifies that the remedy under the said section is ―without prejudice to any other remedy available‖. Thus, the parliamentary intent is clear that a choice or discretion is given to the allottee whether he wishes to initiate appropriate proceedings under the CP Act or file an application under the RERA Act.
The afore-extracted view has been further re-affirmed by the Hon’ble Supreme Court recently in the case of “Ireo Grace Realtech Pvt. Ltd. vs. Abhishek Khanna & Ors.” – 2021(3) SCC 241.
Learned Counsel appearing for the Opposite Party Developer argued that the parties are bound by the terms and conditions of the Agreement and no cause of action has arisen in favour of the Complainants. Hence, the Complainants are not entitled for any relief as prayed for in the Complaint. In Abhishek Khanna’s case (Supra) while dealing with the similar type of Clauses of the Agreement as in the present case, the Hon’ble Apex Court also held that the Agreement is one-sided and the Opposite Party Developer cannot compel the Apartment Buyer to be bound by the one-sided contractual terms contained in the Apartment Buyer’s Agreement by observing as under :-
“ We are of the view that the incorporation of such one-sided and unreasonable clauses in the Apartment Buyer‘s Agreement constitutes an unfair trade practice under Section 2(1)(r) of the Consumer Protection Act. Even under the 1986 Act, the powers of the consumer fora were in no manner constrained to declare a contractual term as unfair or one-sided as an incident of the power to discontinue unfair or restrictive trade practices. An ―unfair contract has been defined under the 2019 Act, and powers have been conferred on the State Consumer Fora and the National Commission to declare contractual terms which are unfair, as null and void. This is a statutory recognition of a power which was implicit under the 1986 Act.
In view of the above, we hold that the Developer cannot compel the apartment buyers to be bound by the one-sided contractual terms contained in the Apartment Buyer‘s Agreement”
On the issue “Whether the Apartment Buyers are entitled to terminate the Agreement or refund of the amount deposited with Delay Compensation”, the Hon’ble Supreme Court in Abhishek Khanna’s case (Supra) held that where the Developer has been unable to obtain Occupancy Certificate from the Competent Authorities, the Apartment Buyer is entitled to claim refund along with interest. It was held as under:-
“In the present case, the allottees before this Court in the present batch of appeals, can be categorised into two categories:-
i) Apartment Buyers whose allotments fall in Phase 1 of the project comprised in Towers A6 to A10, B1 to B4, and C3 to C7, where the Developer has been granted occupation certificate, and offer of possession has been made, are enlisted in Chart A;
ii) Apartment Buyers whose allotments fall in Phase 2 of the project, where the allotments are in Towers A1 to A5, B5 to B8, C8 to C11, where the Occupation Certificate has not been granted so far, are set out in Chart B below.
………..
Chart A allottees
(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 28.06.2019, after the issuance of Occupation Certificate on 31.05.2019. 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.
……..
Chart B allottees
(i) Insofar as the allottees in Chart B are concerned, they have paid part consideration, in most cases up to the 4th instalment till 2017, when they found that there was no progress being made in respect of the Towers in which the apartments had been allotted to them. It is an admitted position that Occupation Certificate for Towers A1, A2, A3, B7, C9 and C11, in which the allotments have been made for this category has not been issued by the Municipal Corporation.
The apartments have not been ready for allotment even as on 30.06.2020, as per the date fixed before the RERA Authority.
(ii) The allottees submitted that they were facing great hardship since they had obtained loans from Banks for purchasing these apartments, and were paying high rates of interest. In 2017, when they realised that there was no construction activity in progress, they were constrained to file consumer complaints before the National Commission, and then discontinued payment of further instalments.
(iii) The Developer made an alternate offer of allotment of apartments in Phase 1 of the project. The allottees are however not bound to accept the same because of the inordinate delay in completing the construction of the Towers where units were allotted to them. The Occupation Certificate is not available even as on date, which clearly amounts to deficiency of service. The allottees cannot be made to wait indefinitely for possession of the apartments allotted to them, nor can they be bound to take the apartments in Phase 1 of the project. The allottees have submitted that they have taken loans, and are paying high rates of interest to the tune of 7.9% etc. to the Banks.
Consequently, we hold that the allottees in Chart B are entitled to refund of the entire amount deposited by them.
(iv) In so far as award of compensation by payment of Interest is concerned, clause 13.4 of the Apartment Buyer‘s Agreement provides that the Developer shall be liable to pay the allottee compensation calculated @ ₹ 7.5 per sq. ft. of the Super Area for every month of delay, after the end of the Grace Period. The compensation will be payable only for a period of 12 months.
The Apartment Buyers in their Complaint filed before the National Commission made a prayer for refund of the amount deposited alongwith Interest @ 20% p.a. compounding quarterly till its realisation. The Apartment Buyers, in their submissions have stated that they have obtained home loans on which Interest @ 7.90% p.a. is being paid, even as on date. We have considered the rival submissions made by both the parties. The Delay Compensation specified in the Apartment Buyer‘s Agreement of ₹ 7.5 per sq. ft. which translates to 0.9% to 1% p.a. on the amount deposited by the Apartment Buyer cannot be accepted as being adequate compensation for the delay in the construction of the project. At the same time, we cannot accept the claim of the Apartment Buyers for payment of compound interest @ 20% p.a., which has no nexus with the commercial realities of the prevailing market.
We have also taken into consideration that in 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.
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 fairplay that the amounts 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.
The refund will be paid within a period of three months from the date of this judgment. If there is any further delay, the Developer will be liable to pay default interest @ 12% S.I. p.a. (v) The Developer shall not deduct the Earnest Money of 20% from the principal amount, or any other amount as mentioned in Clause 21.3 of the Agreement, on account of the various defaults committed by the Developer, including the delay of over 7 months in obtaining the Fire NOC.”
In the case in hand, on 28.02.2012, the Complainants, husband and wife applied for a Service Apartment in the Group Housing Complex, namely, IREO City Centre” proposed to be developed by the Developer at Sector-59, Tehsil Sohna, District Gurgaon, Haryana by paying a booking amount of ₹13,69,290/-. Vide Allotment Offer Letter dated 26.09.2012, the Complainants were allotted Apartment No. R-0403 on 4th Floor having of 908.33 Sq. Ft. for a total Sales consideration of ₹1,42,72,527/-. The Apartment Buyer’s Agreement was entered into between the parties on 10.05.2013. As per Clause 13.3. of the Agreement, the possession of the allotted Unit was to be delivered to the Complainants within a period of 42 months from the date of approval of the Building Plans with an additional 180 days as “Grace Period”. The Building Plans were sanctioned by the Directorate Town and Country Planning, Haryana on 05.09.2013. Environment clearance for construction was granted by State Environment Impact Assessment Authority, Haryana on 12.12.2013 subject to obtain “Consent for Establish” from HSPCB which was granted by HSPCB on 07.02.2014. Even if, we calculate the period of 42 months from the date of obtaining of Consent for Establish, i.e. 07.02.2014, the Developer was to hand over the possession of the Apartment, complete in all respect, to the Complainants on or before 07.08.2017. This Commission in the case of Subodh Pawar Vs. M/s Ireo Grace Realtech Pvt. Ltd. – Consumer Complaint No. 1998 of 2016 decided on 24.09.2018 has held that the Developer is entitled for benefit of the grace period only in the event of delay happening on accounts of the reasons which the parties could not have foreseen at the time of the allotment was made. However, in the present case, no such unforeseen circumstances have been established by the Developer and they are not entitled for the grace period of 180 days. But still, if we allow to avail the benefit of the grace period of 180 days, the Developer ought to have offered the possession of the Apartment to the Complainants latest by 07.02.2018. However, even on the said date the construction of the Project was not complete and the Developer was not in a position to hand over the possession of the booked Apartment to the Complainants. It is pertinent for the disposal of the case to mention here that in its Written Statement filed on 30.09.2019, the Developer has submitted that the construction of the Project is complete and the Developer is in the process of applying for the Occupation Certificate for the Project which means even on the said date, the Developer was unable to hand over the possession of the Apartment. Further, in paragraph 12 of the Evidence By Way of Affidavit filed on behalf of the Developer on 13.03.2020, it is asserted that the construction of the Tower in which the Unit is allotted to the Complainants is complete and the Developer is in process for making application for grant of the Occupation Certificate. This fact manifestly substantiate that the Occupation Certificate with respect to the Tower in which the Unit has been allotted to the Complainants has not been obtained so far by the Developer and in terms of the Judgment delivered by the Hon’ble Supreme Court in the case of “Abhishek Khanna’s (supra)”, the Complainants are very much within their right to claim refund of the deposited amount with reasonable interest in the absence of obtaining of Occupation Certificate by the Developer.
Consequently, respectfully following the ratio of the Judgment of the Hon’ble Supreme Court in the case of “Abhishek Khanna’s (supra)”, we partly allow the present Complaint and the Developer is directed to refund the entire deposited amount to the Complainants along with interest @ 9%. p.a. within a period of six weeks from the date of receipt of a copy of this order failing which the amount shall carry interest @12% p.a. for the said period. Besides, the Complainants are also entitled for the costs which we quantify at ₹50,000/-.
The Consumer Complaint stands disposed of in above terms and the pending application, if any, shall also stands disposed of.