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Judgment
Dr. Inder Jit Singh,Presiding Member
The present First Appeal (FA) has been filed by the Appellant against Respondents as detailed above, under section 19 of Consumer Protection Act 1986, against the order dated 12.03.2018 of the State Consumer Disputes Redressal Commission Punjab (hereinafter referred to as the ‘State Commission’), in Consumer Complaint (CC) no. 652 of 2017 inter alia praying for the following reasons :
(i) Setting aside the order dated 12.03.2018 of the State Commission.
(ii) Direction to the respondents to refund the forfeited consideration of Rs.7,16,910/- paid to the respondents with 12% interest p.a from the date of deposit till realization. Also to pay the interest on the entire amount of Rs.11,47,212/- refunded @ 12% p.a. w.e.f. date of deposit by the appellant till the date of its realization and thereafter to pay interest @ 12% on the interest amount accumulated upto 26.08.2015 i.e. w.e.f. 26.08.2015 till the date of realization.
(iii) Direction to the respondent to pay interest on the amount of Rs.2,05,878/- @ 12% p.a. from the date of deposit till its realization.
The Appellant was the Complainant and the respondents were the Opposite Parties before the State Commission. Notice was issued to the Respondents on 07.06.2018. Parties filed Written Arguments/Synopsis on 14.12.2021 ( Appellant ) and 17.01.2022 (Respondents). During the hearing on 22.11.2023, learned counsel for the Appellant stated that Appellant has expired and he sought permission to bring legal heirs on record. The permission was granted and his son Mr. Kuldeep Singh was impleaded in the present proceedings. Delay in filing the FA was condoned vide order dated 26.09.2018.
Brief facts of the case, as emerged from the FA, Order of the State Commission and other case records are that Complainant applied for a Type 3 apartment alongwith servant accommodation in the project of the OP, namely, Purab Premium Apartment’ located in Sector 88, Mohali for a total consideration of Rs.69.00 lacs. The Complainant deposited earnest money of Rs.6,90,000/-. The draw of lot was held on 20.03.2012 and complainant was declared as successful allottee and intimation in this regard was issued by OPs.
It is further the case of the Complainant that OPs issued an allotment letter / Letter of Intent ( LOI) dated 22.05.2012 for allotment of the Type 3 Apartment, showing the tentative total price payment schedule and within how much time, the possession of the flat will be given. According to the payment schedule, the complainant was to pay Rs.13.80 lacs being 20% price of the apartment to be made by 22.06.2012 ( to complete 30% of the apartment. ). The remaining was to be paid in lumpsum within a period of 60 days from the issue of Letter of Intent with 5% rebate, otherwise, the remaining amount was to be paid in six half yearly instalments.
Complainant further stated that after paying the 30% of the amount to the OPs, he made several visits to the site and till March 205, not even 30% of the work was complete. Since the project was not going to be completed within time, complainant applied for refund of the amount alongwith interest as agreed in the LOI. The OPs, however, did not pay the interest and rather a sum of Rs.9,22,788/- was deducted against the terms and conditions of the LOI vide letter dated 26.08.2015, which deduction was communicated to the complainant vide letter dated 12.08.2015. Being aggrieved, the complainant filed a Complaint before the State Commission for quashing the letter dated 12.08.2015 and 26.08.2015 and deducting a sum of Rs.9,22,788/-. The State Commission vide order dated 12.03.2018, partly allowed the Complaint of the Complainant and directed the OPs to pay a sum of Rs.2,05,878/- to the complainant alongwith interest @ 9% p.a. from 26.08.2015 till the date of payment. It was further directed to the OPs to pay Rs.50,000/- on account of compensation for harassment and Rs.21,000/- as litigation expenses.
Appellant has challenged the Order dated 12.03.2018 of the State Commission mainly on following grounds:
i. As per clause 3 (II) of the LOI, possession of the apartment shall be handed over after completion of development work at site in a period of 36 months from the date of issuance of LOI. The possession was to be delivered latest by 20.03.2015 or by 22.05.2015. The respondents themselves have failed to deliver the possession on time and on 26.08.2015, respondents passed an order for deduction of sum of Rs.9,22,788/-.
ii. The project was not completed within time and the appellant applied for refund of amount alongwith interest as agreed in clause 3 (II) of LOI. However, respondents did not pay interest, rather a sum of Rs.9,22,788/- was deducted against the terms and conditions of LOI.
iii. The respondents have categorically admitted in reply that there are not in a position to deliver the possession of the apartment in question. Once, there was no development over the site in question, it cannot be expected from an allottee to make further payments of instalments. Moreover, even as per clause 2.1 ( I) of the LOI, further payment of installment was to be made only after completion of 30% of apartment.
iv. State Commission erred in assessing the amount to be paid to the Appellant.
v. The judgment relied upon by the State Commission titled Rajiv Arora vs. State of Punjab and Ors. CWP No. 16153 of 2014 is not applicable to the present case.
vi. Clause 3 (II) clearly stipulates that in case of default on the part of the authority in delivering the possession within 36 months, the allottee shall be entitled to receive the entire amount deposited with 8% interest to be compounded annually.
Heard counsels of both sides. Contentions/pleas of the parties, on various issues raised in the FA, based on their FA/Reply, Written Arguments, and Oral Arguments advanced during the hearing, are summed up below.
7.1. Learned counsel for the Complainant apart from repeating the points which have been stated in para 8 argued that the National Commission in First Appeal No. 402 of 2017 – Emaar MGF Land Pvt. ZLtd. Vs Govind Paul directed the appellant ( builders ) to refund the principal sum of Rs.39,88,056/- to the respondent together with interest at the rate at which loans were taken by the respondent for the purpose of making payment of the principal amount to the appellant.
7.2 Learned counsel for the Respondents argued that case is covered under clause 5 (VII) of the LOI which states that in case of breach of any condition(s) of the allotment or of regulations or non-payment of any amount due together with the penalty, the apartment shall be liable to be resumed and in that case an amount not exceeding 10% of the total amount of consideration money, interest and other fees payable in respect of the apartment shall be forfeited as per the provision of Section 45 (3) of the Punjab Regional and Town Planning and Development Act, 1995.
7.3. Learned counsel for the respondents basically relied upon clause 2.3(II) and 5 (VII) of the LOI, which deals with cancellation of the allotment and forfeiture of 10% of the amount.
The total consideration / tentative total price of the unit in question as per LOI dated 22.05.2012 was Rs.69.00 lacs, the Complainant paid in total 30% of this amount ( Rs.20.70) lacs, 10% ( Rs.6.90 lacs) as earnest money alongwith application and another 20% ( Rs.13.80 lacs) after LOI. As per LOI, remaining amount was to be paid in lumpsum within 60 days from the date of LOI with a rebate of 5% or in six half year instlaments alongwith interest @ 12%. As per LOI, the committed date of handing over the possession after completion of development works was 36 months form the date of LOI i.e. 22.05.2015 It is the case of the Complainant that till March 2015, not even 30% of the work was complete, and since project was not going to be completed within time, complainant on 22.06.2015 applied for refund of the amount alongwith interest as per clause 3 (II) of the LOI. However, OPs contended that Complainant failed to pay as per LOI conditions and relying on clauses 2.3 (II) and 5 (VII) deducted / forfeited an amount of Rs.9,22,788/- and refunded the balance of Rs.11,47,212/- only as per order / letter dated 12.08.2015 and 26.08.2015. State Commission vide its order dated 12.03.2018 held that OP has wrongly calculated the refundable amount even as per clauses relied upon by the OP, and paid Rs.2,05,878/- less, hence directed OP to pay Rs.2,05,878/- to the Complainant alongwith interest @ 9% p.a. State Commission relying on the judgment of the Hon’ble High Court in CWP No. 16153 of 2014, Rajiv Arora Vs. State of Punjab and Ors decided on 21.07.2015 held that Complainant is not entitled to refund according to clause 3 (II), but will be entitled to refund under clause 2.3 (II) and 5 (VII) of LOI. In this regard, extract of relevant paras of orders of the State Commission are reproduced below :
“9. As per the averments in the pleadings, some of the facts are admitted that complainant had applied for an apartment in the project of the Ops known as "Purab Premium Apartments" in Sector 88, SAS Nagar, Mohali. Alongwith the application, he had deposited a sum of Rs. 6,90,000/-. He was successful in the draw of lots and in this regard, intimation was given to him vide letter dated 23.3.2012 Ex. C-3 and then LOI dated 22.5.2012 Ex. C-4 was issued. After issuance of the LOI, the complainant further deposited a sum of Rs. 13,80,000/- vide receipt Ex. C-5. Then vide letter dated 22.6.2015, the complainant had moved an application for refund of the amount as the project could not be completed within the time frame given in the LOI. The Clause 3(ii) of the LOI is relevant, which reads as under:-
(II) Possession of apartment shall be handed over after completion of development works at site in a period of 36 months from the date of issuance of Letter of Intent. In case for any reason, the Authority is unable to deliver the possession of apartments within stipulated period, allottee shall have the right to withdraw from the scheme by moving an application to the Estate Officer, in which case, the Authority shall refund the entire amount deposited by the applicant along with 8% interest compounded annually. Apart from this, there shall be no other liability of the Authority."
However, the counsel for the Ops argued that after paying the 30%, the complainant failed to pay either according to the Plan-A or Plan-B. He has further referred to Clause 2.1(I) and 2.3(II), which read as under;-
"2.1(I) Payment of Rs. 1380000/- (Thirteen Lakh Eighty Thousand Only) being 20% price of the apartment is to be made by 22.6.2012 to complete 30% of the apartment. 2.3(II) Delays in payment of instalments shall result in cancellation of the allotment. However, on request establishing genuine grounds, delays up to 12 months can be condoned by the Estate Officer, by charging 18% interest for the period of delay. Delays beyond 12 months shall not be condoned under any circumstances and shall result in cancellation of allotment and refund of the amounts paid, after forfeiture of 10% of the amount. Possession shall not be handed over till all dues are cleared."
He has further referred to Clause 5(VII) of the LOI, which reads as under:-
"In case of breach of any condition(s) of allotment or of regulations or non-payment of any amount due together with the penalty, the apartment shall be liable to be resumed and in that case an amount not exceeding 10% of the total amount of consideration money, interest and other fees payable in respect of the apartment shall be forfeited as per the provision of section 45(3) of the Punjab Regional and Town Planning and Development Act, 1995 (hereinafter to be called the Act)."
According to that in case the complainant breached the conditions of the LOI then the apartment shall be liable to be resumed and the amount deposited will be refunded to the complainant after deduction of 10% of total amount of the consideration, interest and other fees payable and accordingly, a sum of Rs. 9,22,788/- was deducted.
Whether the complainant is entitled to refund of the amount according to Clause 3(II) of the LOI as pleaded in the complaint? This question had came up for hearing before the Hon'ble High Court in CWP No. 16153 of 2014 "Rajiv Arora Versus State of Punjab and others", decided on 21.07.2015 and it was observed by the Hon'ble High Court that in case the complainant himself is defaulter then he is not entitled to the refund as per Clause 3(II) of the LOI. Rather, he will be entitled to refund under Clause 2.3(II) of the LOI. Similar matter in Appeal No. 843 of 2016 had came up before this Commission also and after referring CWP No. 16153 of 2014 (supra), it was observed that the complainant will not be entitled to refund under Clause 3(II) of the LOI, rather, the Ops will be liable to pay the excess amount to the complainant under Clause 2.3(II) and Clause 5(VII) of LOI.
In refund order Ex. C-8 there is no split up of the basic amount and the other amounts in the form of interest and other fees payable. However, after addressing arguments, on 1.3.2018, the counsel for the Op has given the calculation sheet, which reads as under:-
Sr. No.
Particulars
Amount
Amount
(A)
Total Amount deposited by Allottee
20,70,000/-
Calculation of Consideration Money
1.
Total Cost of Flat
69,00,000/-
2.
Scheme Interest
9,41,850/-
3.
Penal Interest
11,72,820/-
4.
Total Consideration Money
9,01,4670/-
(B)
10% of Consideration Money
9,01,467/-
(C)
Service Tax # 3.09% earnest money i.e. 6,90,000/-
21,321/-
Net Refundable Amount to Allottee
(A)-(B)-(C)
11,47,212/-
Whether the interest for the entire period and penal interest is required to be calculated when the case for refund is to be processed. For that, we are to go by the entire LOI terms and conditions and we can rely upon Clause 5(VII) or Clause 2.3(II) referred above. Clause 2.3(II) referred above shows that in case there was any delay in payment, it shall result in cancellation of the allotment. However, on request, establishing genuine ground delay upto 12 months can be condoned by the Estate Officer by charging 18% penal interest and delay beyond 12 months shall not be condoned and excess amount will be refunded after forfeiture of 10% of the amount. It is clear from the pleadings and documents on the record that no request was made by the complainant to Ops to condone delay in depositing the payment. Therefore, in case first installment was not paid by the complainant then the flat should have been cancelled and then refund the amount according to the terms and conditions of the LOI. In case the Ops failed to cancel the flat allotted in favour of the complainant for their own benefit, which cannot be allowed to the disadvantage of the complainant because they did not cancel the flat so that later on they could calculate the interest amount at the time of calculating the refund upto that date. Therefore, the calculations made by the counsel for the Ops in the calculation sheet referred above are not correct. In the first installment, the interest amount has been calculated as Rs. 2,69,100/- and its 10% will come to Rs. 26,910/-. In this way, the Ops were entitled to deduct a sum of Rs. 6,90,000/- plus Rs. 26,910/- and total comes to Rs. 7,16,910/- whereas the Ops have deducted a sum of Rs. 9,22,788/-. In this way, the Ops have paid a less amount to the complainant to the tune of Rs. 2,05,878/-. Another amount of Rs. 21,321/- has been deducted on account of Service Tax. Once no services have been availed by the complainant then Service Tax was not liable to be paid. Moreover, no Service Tax statement submitted to the concerned Authority has been placed on the record by the Ops that it was paid to the Government of India. The order for refund was made on 26.8.2015 and it would have been paid in the year 2015-16 and in the absence of any Service Tax Statement on the record whether it was paid to the Government of India or not, Ops cannot be allowed to deduct this amount as a Service Tax amount due to the complainant.
In nutshell, the complainant is entitled to a sum of Rs. 2,05,878/-. Since the amount was illegally withheld by the Ops, therefore, Ops will pay interest on the amount w.e.f. 26.8.2015 when the refund order was passed.”
As regards judgment of Hon’ble Punjab and Haryana High Court in Rajiv Arora ( supra ), Complainant has contended that the said judgment varies from the instant case as the Complainant in the above mentioned case asked for refund before the stipulated time to deliver possession as per LOI, whereas in the present case, application for refund was made by Complainant after the OP failed to deliver the possession within the stipulated time, contending further that there has been no default as such on the part of Complainant as OP have been deficient in services as they have not been able to complete development work by the committed date of possession.
We have carefully gone through the order of the State Commission, other relevant records and rival contentions of the parties. In this case, the unit in question was not ready for possession after completion of development work by the committed date of possession as per LOI i.e. 22.05.2015, hence the Complainant was justified in withholding further payments beyond 30% paid by him. If OP considered it a case of default on the part of Complainant, it ought to have cancelled the allotment under clause 2.3 (I) and 5 (VII) and refunded the balance after forfeiting of amounts permissible as per these clauses. However, no such cancellation was done by the OP. It was the Complainant, who applied for refund under clause 3 (II) of LOI on the ground of OP not being able to deliver the possession by the due date. Hence, we are of the considered view that in the present case, Complainant is entitled to refund in accordance with clause 3 (II) and action of the OP to process his refund under clause 2.3 (II) and 5 (VII) is not correct. Hence, we hold that order of the State Commission suffers from a material irregularity and cannot be sustained. Accordingly, order of the State Commission is set aside, appeal is allowed and OP is directed to refund the entire amount of Rs.20.70 lacs paid by the Complainant ( after adjusting the amount already refunded, if any), alongwith interest @ 8% p.a. as per clause 3 (II) w.e.f. date of receipt of his request dated 22.06.2015 in the office of the OP, within 45 days of date of this order, failing which amount payable at the end of 45 days shall carry interest @ 12% p.a. till the date of payment. OP shall also pay litigation cost of Rs.25,000/- to the Complainant.
The pending IAs in the case, if any, also stand disposed off.