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Judgment
This complaint has been filed under section 21 of the Consumer Protection Act, 1986 (in short, the ‘Act’) alleging deficiency in services in respect of non-delivery of a flat booked by the Complainant with the Opposite party in the project ‘Araya’, promoted and developed by it.
The facts, in brief are that according to the Complainant, they had booked a flat on 18.12.2012 in the project ‘Araya’,Sector 62, Golf Course Extension Road, Gurgaon, Haryana by paying an amount of Rs.40,00,000/-. Allotment was made on 19.12.2012 which clearly stated that the Buyer’s Agreement will be forwarded within 30 days, after which complainant started receiving the demand letters for the payment of more money amounting to Rs.2 Crores. However, the complainant did not make the payment since the Buyer’s Agreement were not sent to the complainant by the opposite party. Complainant submits that in the absence of the Buyer’s Agreement he could not apply for loan from the bank. Therefore, there was deficiency in service by the opposite party in not forwarding the Buyers Agreement to the complainant. Thereafter, complainant received a letter dated 10.02.2014 from the opposite party terminating the allotment and also forfeiting the amount of Rs.40 lakhs deposited by the complainant with the opposite party.
The complainant therefore filed a criminal complaint with the Commissioner of Police, Gurgaon, Haryana where the authorized person of the opposite party was summoned on 16.04.2015. In reply to that complaint, the opposite party made no reference to the Buyers Agreement which is the subject matter of the issue. The complainant submits that he is still pursuing with the opposite party for the refund of the money with interest but to no avail.
The case of the complainant is that there was no concluded contract in force between the complainant and the opposite party since the application form became void once the Buyer’s Agreement was not sent. It is contended that the opposite party should have returned the booking amount to the complainant. The termination letter without mentioning the Buyer’s Agreement was a valid legal proof on record that such an agreement was not in place. Therefore, the complainant filed a consumer complaint no. 1015 of 2016 before this Commission which was however withdrawn on 13.07.2016 with permission to approach the appropriate forum. Thereafter, the complainant approached State Commission in Consumer Complaint no. 428 of 2016 which was also withdrawn in view of the judgment passed by this Commission in Ambrish Kumar Shukla vs. Ferous Infrastructure Pvt. Ltd. in CC no. 97 of 2016 on the ground of pecuniary jurisdiction. The Complainant has alleged deficiency in service and unfair trade practices and is before this Commission with the following prayer:
a. Direct the opposite party to pay the booking amount of Rs. 40 Lakhs deposited by the complainant with the opposite party.
b. Grant sum of Rs.33,60,000/- (Rs. Thirty Three Lakhs Sixty Thousand only)(towards interest of principal amount deposited till date) at the rate of 24% per annum along with pendent lite and future interest or which this Hon’ble Commission may deem fit in the interest of justice.
c. Grant a sum of Rs.25 Lakhs towards exemplary damages and mental damages detailed above in the complaint.
d. Grant cost of litigation of Rs.10 lakhs to the complainant.
e. Any other order, relief or direction which this Hon’ble commission may deem fit and proper under the circumstances of the case may kindly be passed in favour of the complainant and against the opposite party.
The complaint was resisted by the opposite party by way of reply. The preliminary objection raised by the Opposite party is that this Commission does not have the pecuniary jurisdiction in the matter as the total sum involved in this complaint was only Rs.40 Lakhs and the prayer of the complainant was for refund of the same. Therefore, the law laid down by this Commission in the case of Ambrish Kumar Shukla (supra) does not help the complainant as the sale consideration or amount involved was only Rs.40 Lakhs and the compensation cannot be Rs.60 lakhs even if the maximum interest is applied. It is contended that the complainant did not inform this Commission that prior to booking D-601 in the same project “Araya” she had earlier booked Unit no. B-1102 on 05.01.2012 through another Real Estate Broker i.e. M/s Earth Links Reality Pvt. Ltd by paid paying two cheques dated 06.01.2012 and 12.01.2012 for a sum of Rs.10 Lakhs and Rs.30 Lakhs respectively. The complainant had also defaulted in payment of Rs.46,00,405/- which had to be paid within 60 days of the allotment for which a demand letter was also sent. A demand for payment of interest of Rs.1,26,693/- had also been raised. Based on the reminders sent to the complainant, she was required to pay interest of Rs.7,72,613.64/- on the overdue amounts. The complainant made part payment of Rs.22 lakh on 02.09.2012 and the opposite party, on request of the complainant, waived off 50% of the interest due on it. Thereafter the complainant paid Rs.52,64,340/- on 07.12.2012 and Rs.3,86,308/- on 11.12.2012. On 13.12.2012 the complainant requested the opposite party to transfer the allotment of the apartment in the name of a Third Party.
The complainant applied for the allotment of another apartment through another Real Estate Broker viz., Sanjay Dhamija & Associates on 17.12.2012 for apartment no. D-601 in the project ‘Arya’. An allotment letter was issued to the complainant on 19.12.2012. Complainant was liable to pay a sum of Rs.64,94,292/-; instead, she paid Rs.40 Lakhs on 18.12.2014. Opposite party intimated to complainant that a sum of Rs.89,88,585/- was required to be paid by 16.02.2013. No further payments were made by the complainant in respect of the new apartment allotted. The opposite party issued a letter dated 29.10.2013 giving a final opportunity to the complainant to pay the outstanding amount of Rs.2,04,41,443/- within a period of 30 days failing which the opposite party would be compelled to forfeit the money and terminate the allotment letter. This letter drew our attention to Clause 43 of the Terms and Conditions of the application form, wherein it was mentioned that the builder would be entitled to forfeit the earnest money and non-refundable amounts in case of default. The complainant visited the office of the opposite party and expressed her inability to make the due payments. Accordingly, the opposite party sent a termination letter dated 10.01.2014 for Unit No. D-601, which was returned undelivered on 23.01.2014. Thereafter, the opposite party sent a notice which was served on the complainant at her new address. As no response was received from the complainant, the opposite party was compelled to terminate the allotment by forfeiting the sum of Rs.40 Lakhs.
The Complainant filed a rejoinder and both the parties filed their affidavits in evidence as well as their short synopses of arguments. I have heard the learned counsel for both the parties and have carefully considered the material available on record.
Learned Counsel for the Complainant argued that the complainant booked an apartment for which an allotment dated 19.12.2012 was made to the complainant by the opposite party which clearly states that Buyers Agreement shall be forwarded to the complainant within 30 days of the allotment. Thereafter, the complainant started receiving demand letters for payment of money amounting to Rs.2 Crores. The complainant was not able to make the payment as no Buyer’s Agreement was executed between the parties due to which the complainant was not able to obtain a loan from the bank. Complainant prayed for refund of the amount paid by the complainant to the opposite party to support the medical treatment cost of her husband and her father as both were hospitalized for different ailments. The opposite party did not refund the money deposited by the complainant and forfeited the amount and terminated the allotment. Thereafter, the complainant requested for the transfer of the allotment in the name of a Third Party and the same was done by the opposite party subject to full and final settlement of all payments. Accordingly, a Buyer’s Agreement signed with the complainant for apartment no. B-1102 became void and stood cancelled. The complainant states that the opposite party allotted another apartment in the name of the complainant but there was no Buyer’s Agreement signed between the parties. The opposite party was stated to be fabricating lies. It is contended that the termination of a non-existence Buyer’s Agreement, as in the instant case of apartment D-601, is not possible under the law. The opposite party by their act of refusal to refund the money of the complainant have acted in a deficiency manner and caused an act of negligence in responding to request of the complainant.
Learned Counsel for the opposite party argued that the consumer complaint had been filed by complainant seeking refund of the money forfeited as a result of the termination of her Unit No. D-601 in project “Araya” by opposite party. The opposite party had terminated the unit and forfeited a sum of Rs.40 Lakhs on the ground that the complainant had defaulted in making payment through installments as per the payment schedule provided to her. The present consumer complaint is liable to be dismissed on the grounds that (i) this Commission did not have pecuniary jurisdiction to entertain the complaint which has to be considered at the time of filing which was prior to the decision of Ambrish Kumar Shukla (supra) and the same cause of action could not be justified consequent to the judgment in the case by a larger bench of this Commission merely on the basis of an exorbitant claim; (ii) the complaint was filed after delay and it was barred by limitation. The termination of the allotment of the unit could under no circumstances be considered as a continuous cause of action as the contract between the parties stood terminated and the present claim was solely for refund arising from such a termination. It was submitted that when the first complaint filed by the complainant was barred by limitation, for which no application was filed for condonation of delay, this Commission ought not to have condoned the delay in filing the consumer complaint and ought to have dismissed the same; (iii) the complainant is not a ‘consumer’ since the complainant admitted in her complaint that prior to booking of the unit in question, she had also booked a unit in Tower B of the same project; (iv) the complainant had defaulted continuously in payments for that unit as well. However, considering her representation, the opposite party, in good faith waived off 50% of the interest on the delayed amounts when she sought transfer of her unit to a Third Party. However, within 4 days of selling the rights of that unit, the complainant booked the apartment in question; (v) the Contract between the parties was binding since the application form read with the provisional allotment letter constituted a binding contract for provisional allotment, which cannot be ignored. It is a well settled law that a provisional agreement is always binding until it is superseded by a formal agreement. Thereafter, Clause 36 read with Clause 43 of the application makes it mandatory on the complainant to abide by the payment schedule. As per the allotment letter the complainant was required to deposit a sum of Rs.89,88,585/- after which the Builder Buyer Agreement would be sent.
The complainant has relied upon this Commission’s order in Satish Kumar Pandey vs. Unitech in Consumer Complaint No. 427 of 2014 decided on 08.06.2015 to allege unfair trade practice as it was held that:
“the interest being charged by the Banks and Financial Institutions for financing projects of the builders is many times or than the nominal compensation which the builder would pay to the flat buyers in the form of flat compensation. In fact, the opposite party has not even claimed that the entire amount recovered by it from the flat buyers was spent on this very project. This gives credence to the allegation of the complainants that their money has been used elsewhere. Such a practice, in my view, constitutes unfair trade practice within the meaning of section 2(r) of the Consumer Protection Act, 1986 since it adopts unfair methods or practice for the purpose of selling the product of the builder. Though, such a practice does not specifically fall under any of the clauses if section 2(r)(1) of the Act that would by immaterial considering that the unfair trades, methods, and practices enumerated in section 2(r)(1) of the Act are inclusive and not exhaustive, as would be evident from the use of word “ including” before the words “any of the following practices”.
Complainant has also relied upon this Commission’s judgment in Ambrish Kumar Shukla (supra) wherein it was held that pecuniary jurisdiction is based on the total consideration as an aggregate of all claims.
Counsel for the opposite party had relied upon the judgments of this Commission in Ambrish Kumar Shukla (supra) and Renu Singh vs. Experion Developers Pvt. Ltd. in CC No. 1703 of 2018 and has contend that this judgment did not enable the complainant to invoke pecuniary jurisdiction of this Commission. Opposite Party has also relied upon the judgment of this Commission in the case of Gaurav Aneja & Ors. Vs. Supertech Ltd. II (2018) CPJ 365 (NC) which held that a complainant cannot be allowed to bypass a State Commission and circumvent the scheme of the Act by filing a highly inflated and exorbitant claim. Since interest awarded as compensation @ 18%, includes all kinds of loss including financial loss and distress and mental agony caused to a flat buyer.
From the foregoing, it is evident that that the complainant was allotted a flat in a project promoted and developed by the opposite party. Despite an allotment letter, no Buyers Agreement was executed. The complainant defaulted in making payments justifying the same on the ground that the Buyer’s Agreement had not been executed. The opposite party canceled the allotment and forfeited the amount of Rs.40 lakhs deposited by the complainant. The complainant has sought refund of Rs.40 lakhs with interest as compensation and other costs. The opposite party has contested the complaint on the grounds of maintainability alleging that the complainant was not a ‘consumer’ within the ambit of section 2(1)(d) of the Act as she booked another flat in the same project and transferred it to a Third Party. It is also challenged on the grounds of pecuniary jurisdiction that on the date of filing of the complainant, the larger bench of the National Commission had not clarified the issue of jurisdiction in Ambrish Kumar Shukla (supra) through its judgment in Renu Singh (supra).
This complaint was filed on 1st November 2017. Admittedly, the pecuniary jurisdiction as on that date was, as per section 21 (a) (i) of the Consumer Protection Act, 1986 as follows:
“21. Jurisdiction of the National Commission- Subject to the other provisions of this Act, the National Commission shall have jurisdiction-
(a) to entertain-
(i) complaints where the value of the goods or services and compensation, if any, claimed exceeds [rupees 1 crore];”
The complaint was, however, admitted before this Commission and has travelled to the stage of final arguments. At this stage we are not inclined to consider the issue of pecuniary jurisdiction especially since the principle of such jurisdiction stands reiterated by a larger Bench of this Commission in the case of Renu Singh (supra).
As for the contention of the opposite party that the complainant was not a ‘consumer’ under the preview of section 2(1)(d) of the Act, this Commission has held in Kavita Ahuja vs. Shipra Estates ltd. & Ors. I (2016) CPJ 31 (NC) that the onus of proving that the allottee was in the business of buying and selling houses/ flats i.e. Real Estate lay upon the opposite party which was making this averment. ‘Commercial purpose’ has been laid down by the Hon’ble Supreme court in Lakshmi Engineering Works vs. P.S.G Industrial Institute (1995) 3 SCC 583. It has also been held by the Hon’ble Supreme Court in Sanjay Bansal vs. Vipul Limited (2019) 15 SCC 568 that a person may require more than one house a flat or flat for himself and his family and the mere booking of multiple units does not constitute commercial purpose. In any case, the complainant has stated that there was a requirement of funds by her for the medical treatment of her husband and father which could be the reason for the sale of the other unit allotted to her by the opposite party. In view of the opposite party not having proved that the complainant was engaged in real estate for livelihood, the contention that she was not a consumer cannot be sustained.
As regards the contention of the opposite party that the complaint was barred by limitation as it was filed on 1st November 2017 whereas the letter of cancellation of the allotment was dated 10.02.2014 and the Act provides for a period of two years for appeal, it is evident from the facts of the case that the allotment letter in respect of the subject flat D 601 was dated 19.12.2012. No Buyer’s Agreement in the matter has been executed which is in itself both an unfair trade practice as well as a deficiency in service since funds have been received by the opposite party after promising to formalize the booking without complying with this commitment. Not providing a Buyer’s Agreement constitutes a continuing cause of action. Hence, the complainant cannot be non-suited on the ground of limitation.
As per the allotment letter dated 19.12.2012, the opposite party had undertaken to execute a Buyer’s Agreement within 30 days. Clause 43 of the allotment letter reads as under:
“43 Forfeiture of Earnest Money: The applicant agrees that the company shall be entitled to forfeit, as per its policy, the Earnest money along with the Non- Refundable amount in case of non-fulfillment/ breach of the terms and conditions of the application/ agreement (including withdrawal of application) and also in the event of failure by the applicant to sign and return to the company the agreement within thirty (30) days from the date of its dispatch by the company…………”
It is admitted by the opposite party that this Buyer’s Agreement was not executed. It is contended that the allotment letter read with the provisional allotment letter constituted a binding contract and that the complainant was bound by it. The complainant has contested this averment on the ground that after the initial payment, subsequent payments were withheld by it on the ground that there was no final allocation of rights and obligations between the allottee and builder which a Buyer’s Agreement constitutes and therefore the cancellation of the allotment was illegal and unjustified. I am inclined to accept the argument of the complainant by virtue of being a allottee was entitled to a full knowledge of his rights and obligations pertaining to the purchase of flat no.D 601 of the opposite parties project. This was especially because the opposite party at the time of booking and taking the initial deposit for the flat had itself stated so. The act of shying away from this stated commitment constitutes both a deficiency in service as well as unfair trade practice on the part of the opposite party. The contention of the opposite party that the allotment letter read with provisional allotment letter constitutes a binding agreement cannot be considered since the allotment letter is specific in providing for a Buyer’s Agreement within 30 days which has admittedly not been done. There is no explanation for this on the part of the opposite party. The cancellation of the allotment is, therefore, not on the basis of a Buyer’s Agreement and is therefore liable to be set aside.
Cancellation of the allotment was also required to be done by the opposite party after due opportunity to the complainants. As per the counsel, no notice was provided to the complainant. Furthermore, cancellation of allotment has to be done with deduction of Earnest Money. As per Clause 43 of the allotment letter, an allottee is entitled to Earnest Money. The forfeiture of the entire amount received towards booking is an unfair trade practice. The Hon’ble Supreme Court in Maula Bux vs. Union of India (1969) 2 SCR 554 has held that an amount equivalent to 10% of the basic sale price to be considered as Earnest Money is justifiable. The action of the opposite party in deducting Rs. 40 lakh as earnest money is contrary to this position of law and is, therefore, untenable. The fact that the complainant did not deposit the entire amount in the absence of the Buyer’s Agreement cannot be held against her since it is evident that the Agreement itself had not been executed.
In view of the foregoing reasons and the facts and circumstances of this case, the consumer complaint of found to have merits and is accordingly allowed with the following directions:
(i) Opposite Party shall refund the amount of Rs.40 lakh deposited by the Complainant after deducting 10% as Earnest Money along with compensation as interest @ 9% per annum from the respective dates of deposits till realization;
(ii) This order shall be complied within eight weeks;
(iii) In case of delay in payment, the rate of interest shall be 12% per annum simple interest from the date of respective deposits till realization; and
(iv) Opposite Party shall also pay the complainant litigation cost of Rs.15,000/-;
All pending IAs, if any, shall stand disposed of with this order.