M/s Ambey Apartments & Anr vs Prashant Kumar Sahu & Anr

Subhash Chandra, Presiding Member;

This appeal under Section 19 of the Consumer Protection Act, 1986 (in short, the ‘Act’) challenges the order dated 22.11.2017 of the State Consumer Dispute Redressal Commission, U.T., Chandigarh (in short, the ‘State Commission’) in Consumer Complaint no. 111 of 2017 upholding the complaint partly and directing the Opposite Parties jointly and severally liable to:

(i) Refund the amount of Rs 16,47,039/- to the complainants, along with interest @ 10% p.a. from the respective dates of deposits onwards

(ii) Pay compensation in the sum of Rs 75,000/- for causing mental agony and physical harassment

(iii) Pay cost of litigation to the tune of Rs 22,000/- to the complainants

(iv) The payment of awarded amounts mentioned at sl. nos. (i) to (iii) shall be made within a period of 02 (two) months from the date of receipt of a certified copy of this order, failing which the amount mentioned at sl. no. (i) shall carry penal interest @ 13% p.a. instead of @ 10% p.a. from the date of default and interest @ 10% p.a. on the amounts mentioned at sl. nos. (ii) and (iii) from the date of filing of this complaint till realization.

However, it is made clear that if the complainants have availed loan facility from any banking or financial institution for making payment of instalments towards the said unit, it will have the first charge of the amount payable to the extent the same is due to be paid by the complainants.

There was a delay of 21 days in the filing of this appeal. In the interest of justice, the delay was condoned.

According to the appellant the facts of the case, in brief, are that the appellant had agreed to sell a 3 BHK flat No. 103, 2nd Floor in its project Ambey Apartments, Khara, District Mohali at a sale price of Rs 16,75,000/- to the respondents vide an Apartment Sale Agreement dated 08.07.2008 (in short, the ‘Agreement’). Respondents paid Rs 1,18,000/- by bank transfer and possession was promised on or before 15.06.2009 subject to appellant not being liable for delay due to factors beyond its control and full payment being made with the respondent being required to take possession within 3 months of the intimation of possession. According to the appellant the respondent made full payment in October 2012 instead of in 2009. The complaint filed by the respondents before the State Commission was argued to be not maintainable on grounds of pecuniary jurisdiction or merits. It was contended that the project was approved by the Municipal Council, Kharar and that the respondents were defaulters as they did not make payments in time, with the full payment being done only on 04.10.2012. The respondents were stated to be speculative investors. It was also stated that the Agreement provided for arbitration and therefore the complaint did not lie before the State Commission.

Despite notice, the respondents failed to be present to argue their case. Their written synopsis was taken as their final submissions and the appellants were heard. We have heard the learned counsel for the appellant and given careful consideration to the material on record.

The impugned order is challenged on the grounds that the State Commission lacked pecuniary jurisdiction since the amount in question was less than the Rs 20 lakhs amount required for the State Commission to consider the case. It was contended that the issue was required to be adjudicated by arbitration as per the Sale Agreement and hence the complaint was misplaced. It is also contended that the complainant was not a ‘consumer’ under the Act having booked the flat with the objective to re-sell it and was also a  defaulter who had failed to make payments on time, despite which the appellant was willing to offer possession of the flat.

The appellant has denied that the project lacked necessary approvals and has brought on record the approval of the Municipal Council, Kharar. It is not denied that there was delay in the execution of the project. No reasons for the same are, however, provided. It is stated that the full payment against the sale consideration of the flat was received on 04.10 2012. The impugned order is challenged on the grounds that the State Commission acted erroneously in entertaining the complaint which did not meet the pecuniary threshold and was filed without jurisdiction as the respondent was not ‘consumer’ entitled to claim relief under the Act. It was also argued that the provision of arbitration under the Agreement excluded the complaint.

The case of the respondent is that the appellant delayed the project and failed to hand over the flat within the promised period of time. It is their case that the delay in payment was due to the lack of progress in construction and that they were forced to not make timely payments due to this reason. It was argued that the additional records sought to be brought on record be not permitted under Order 41 Rule 27 of the Code of Civil Procedure (CPC) since these purported documents, such as emails and account statements, were within the knowledge and possession of the appellant at the stage of the complaint and since it had not relied upon them at that stage, bringing them on the record now would amount to setting up a new case which was not permissible. Refund with compensation was therefore claimed and allowed by the State Commission.

The impugned order is based on the findings that the appellant failed to establish that the respondents were not a ‘consumer’ under the Act inasmuch as they failed to establish that they were engaged in the buying and selling of flats or were engaged in real estate as the burden of proof lay on the appellant, as held by this Commission in Kavita Ahuja Vs. Shipra Estate Ltd. & Jai Krishna Estate Developers Pvt. Ltd. in CC 137 of 2010 dated 12.02.2015. It has also held that the Consumer Protection Act was not in derogation to other Acts but in addition and therefore, relying on MGF Land Ltd., vs Aftab Singh (2019) 12 SCC 751 held that as held by this Commission, the provision of arbitration in the Agreement did not preclude the respondents from approaching the State Commission. On the issue of pecuniary jurisdiction, the impugned order has held that the total claim of the respondent, including the damages claimed, was Rs 20 lakh and therefore within the jurisdiction of the State Commission.

From the material on the record, it is manifest that the appellant offered to hand over possession of a flat in its project to the respondents against a sale consideration. Although there was a delay in the making of the payment of the full sale consideration under the Agreement, it is not denied that there was a delay in the construction as alleged by the respondent. No plausible reasons to establish that these were beyond the control of the appellant or any evidence to support this contention have been brought on the record by the appellant. It is also manifest that the appellant did not choose to cancel the allotment of the flat in question despite the alleged delay in the making of payments by the respondents. In Ankur Goswami vs Supertech Ltd., Anr. 2017 SCC Online NCDRC 1240, this Commission has held that once the builder fails to cancel an allotment which is provisional for delay or default by the allottee, it is not open to it to deny the refund if claimed for reasons of delay in execution of the project on its part. The claim of the appellant that the respondents had delayed making payments and were defaulters can therefore not be considered at this stage. The additional documents sought to be brought on record at this stage also cannot be permitted as the appellant has failed to justify the same as required under Order 41 Rule 27 of the CPC.

The argument of the appellant that the respondents could not have approached the State Commission since there was provision for arbitration under the Agreement in case of dispute has rightly been held by the State Commission in light of Aftab Singh (supra) and cannot be faulted. We find no reason to hold otherwise.

The issue of pecuniary jurisdiction stands settled in light of Ambarish Kumar Shukla and 21 Ors vs Ferrous Infrastructure Pvt. Ltd., I 2017 CPJ 1 (NC)  as reiterated by a larger Bench of this Commission in Renu Singh vs Experion Developers Pvt. Ltd., CC no.1703 of 2018. It is the aggregate of the claim that is required to be considered for establishing the pecuniary threshold in cases before the consumer fora and the finding of the State Commission is therefore found to be in order.

The Hon’ble Supreme Court has held in a catena of judgments, notably in Kolkata West International City Pvt. Ltd. Vs. Devasis Rudra, II (2019) CPJ 29 SC decided on 25.03.2021, Pioneer Urban Land & Infrastructure Ltd. Vs. Govindan Raghavan, II (2019) CPJ 34 (SC) decided on 02.04.2019 and Fortune Infrastructure & Anr. Vs. Trevor D’Lima & Ors. (2018) 5 SCC 442 that a consumer cannot be expected to wait indefinitely for possession of a flat booked and that in case of inordinate delay in the offer of possession an allottee would be justified in seeking refund of the amount deposited with compensation in the form of interest. The Hon’ble Supreme Court has also held, in Experion Developers Pvt. Ltd. Vs. Sushma Ashok Shiroor, Civil Appeal No. 6044 of 2019 decided on 07.04.2022 that the rate of interest should be both compensatory and restitutionary. The claim of refund is therefore justified as per the law laid down by the Hon’ble Apex Court.

However, the Hon’ble Supreme Court has also laid down in Sushma Ashok Shiroor (supra) that a 9% rate of interest is considered fair and just in cases of refund of the amount deposited. It has also held, in DLF Homes Panchkula Pvt. Ltd., vs D S Dhanda in CA nos. 4910-4941 of 2019 decided on 10.05.2019 that compensation as interest is payable from the respective dates of deposit and that multiple compensations for a singular default in payment is not justified. It is evident that the impugned order though justified on merits needs to be modified in accordance with the law laid down by the Hon’ble Supreme Court.

In view of the discussion above, we partly allow the appeal and modify the impugned order as under:

Opposite parties are directed, jointly and severally to:

(i) Refund the amount of Rs 16,47,039/- to the complainants, along with interest @ 9 % p.a. from the respective dates of deposits within 8 weeks of this order failing which the applicable rate of interest shall be 12 % p.a. till realization;

(ii) Pay cost of litigation to the tune of Rs 22,000/- to the complainants;

(iii) Compensation of Rs 75,000/- for mental agony and physical harassment directed to be paid is set aside.

Pending IAs, if any, stand disposed of with this order.