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Judgment
Avm J. Rajendra, Avsm, Vsm (Retd.) Member
The two Appeals, bearing Nos. FA/995/2016 and FA/996/2016 were filed by M/s. Harsh Constructions & Anr (hereinafter referred to as the “Appellants”/ “Opposite Parties”) against Consumer Welfare Association & Anr (hereinafter referred to as the “Respondents”/“Complainants”). These appeals challenge the Orders dated 21.06.2016 in (1) CC/13/244 and (2) CC/13/245 respectively passed by the learned State Consumer Dispute Redressal Commission, Maharashtra, Mumbai (hereinafter referred to as the “State Commission”), which partly allowed both the Complaints.
There was a delay of 2 days in filing both the Appeals. In the facts and circumstances of the case, the delay is condoned.
Since the facts and questions of law involved in both Appeals are substantially similar, except for minor variations in dates, events and flat numbers, these Appeals are being disposed of by this common Order. Nevertheless, for ease of reference, First Appeal No. 995 of 2016 shall be considered as the lead case, and the facts outlined below are derived from Consumer Complaint No. 244/2013.
The brief facts of the case are that the Respondent No.2/ Complainant No. 2, Smt. Sarita Mishra booked a flat bearing No. 901, admeasuring 425 sq. ft. (carpet area) on 9th Floor of ‘B-1’ Wing in the Project called “Divyam Heights”, situated at Plot No. 5, Survey No. 105, Gilbert Hill, Andheri(W), Mumbai from the Appellants/Promoters. The agreed consideration for the flat was Rs.18,04,820/- and entered into an agreement for sale dated 15.02.2006 and was duly registered on 01.04.2006 with the Appellants/OPs. As per Clause 5 of the said sale Agreement, she was required to make installment payments in proportionate amounts, with 50% to be paid by drawing two account payee cheques, each in favor of OP-1 and OP-2 (the two promoters). Accordingly, on 12.02.2006, Complainant No. 2 made a total payment of Rs.4,15,108/-, i.e., Rs. 2,07,554/- to each of the OPs/Promoters.
The Respondent No.2/ Complainant No. 2 asserted that as per Clause 8 of the Agreement, the Appellants/OPs had assured and promised to hand over possession of the flat by the end of June-2008. Additionally, as per Clause 20 of the Agreement, the OPs were obligated to obtain the Occupancy/ Completion Certificate within two extensions of six months each, and in any case, by the end of June 2010. Complainant No. 2 alleged that she had paid Rs. 4,15,108/- to Appellants/ OPs and was ready and willing to pay further instalments. However, the OPs dishonestly demanded the cancellation or termination of the agreement on false and fabricated grounds. Further, the Appellants/ OPs failed to fulfill their obligations under the agreement for sale, including the completion of construction and delivering possession of the flat till date.
Being Aggrieved by the delay, the Respondents/ Complainants filed a Consumer Complaint no. 244/2013, before the State Commission, Maharashtra with prayer as under: -
A. The Opponents be directed jointly and severally to
i) Resume and complete within reasonable time, the construction of Complainant's flat no.901 on 9th Floor of the B-1 wing of building Divyam Heights and
ii) Receive from Complainant the installments due against completion of the stages (i) to (xv) under Schedule of Installments (clause 5) certified by Architect and
iii) Deliver to the Complainant possession with Occupation/ Completion Certificate as undertaken in Clause 21 of the registered Agreement for Sale (Ex.A) of Flat No.901 admeasuring 425 sq. ft. carpet area on 9th Floor of B-1 wing of Divyam Heights for the price of Rs.18,04,820/- vide Agreement for Sale dated 15th February 2006.
OR
To pay to the Complainant compensation of Rs.42,70,523/- (Rs.56,60,235/- current market value of booked, flat Less balance amount payable Rs.13,89,712/- against agreed price of Rs. 18,04,820/-) for the deficiency in service and unfair business practice of the Opponent who denied the Complainant booked flat of carpet area 425 sq. ft. which is currently valued, at the said amount of Rs.56,60,235/- as per the Stamp Duty Ready Reckoner 2013 (Ex.D)
B. The Opponent be directed jointly and severally to pay compensation of Rs.5 lakhs to the Complainant for the inconvenience, harassment, frustration and mental anxiety Complainant suffered since 2006 and continues to suffer at the hands of the Opponents who were paid Rs.4,15,108/- booking amount for flat which is not delivered up to the present day and which amount the Opponents are utilizing to, earn interest and profit in their business at the cost of Complainant.
C. Cost of this complaint Rs.20,000/-.
The Appellants/OPs raised two main preliminary objections in their written version of the Complaint. Firstly, the Complainant No. 2 failed to make the payments demanded by the Appellants on multiple occasions, viz. 21.03.2006, 28.02.2008, 03.07.2008, and 03.10.2012. Secondly, the Complaints filed by them were premature, as the construction of the building in question could not be completed due to the pending Public Interest Litigation (PIL) in the High Court. Additionally, the Appellants submitted that OP No. 2 is not a necessary party to the consumer complaint. Further, they had already offered to refund the entire amount to Complainant No. 2, making it unnecessary for them to file a consumer complaint. They emphasized that the delay in completing the construction of the building was due to circumstances beyond their control, including the pending litigation and the lack of necessary approvals from the Municipal Corporation of Greater Mumbai.
After hearing all the Parties and appreciating the facts of the case, the State Commission on 21.06.2016 passed the following Order:
“The Opposite Parties, jointly & severally, are under an obligation to hand-over vacant and peaceful possession of the said flat to the Complainant without any further delay for acceptance of balance consideration amount of Rs. 13,89,712/- towards total agreed consideration of Rs. 18,04,820/-. The Opposite Parties shall, therefore, execute a registered Sale Deed in favour of the Complainant No.2 upon acceptance of balance consideration payable by the Complainant No.2 to the Opposite Parties, within a period of three months from the date of this order and failing which, the Opposite Parties shall pay to the Complainant, an amount in sum of Rs.42,70,523/- in view of rising prices of immovable property in the area. (As per prevailing ready reckoner, the Complainants have shown the market price of the flat in sum of Rs.56,60,235/-). Opposite Parties shall also pay to the Complainant No.2, an amount of Rs. 1,00,000/- by way of compensation towards mental agony and hardship besides costs of litigation quantified at Rs.25,000/-. Compensation shall be paid within a period of six month from the date of this Order and in default, amounts payable shall carry interest @ 18% p.a. from the date of expiry of stipulated period of six months till realization of the entire amount. With these directions, consumer complaint is hereby allowed accordingly.”
Aggrieved by the Order of the State Commission, the Appellants / Opposite Parties filed the Appeal No. 995 of 2016 before this Commission with the following prayer:
a. Allow the appeal of the appellants and set aside the impugned final order and judgment dated 21.06.2016 in Complaint Case No. CC/244 of 2013 of the State Consumer Disputes Redressal Commission, Maharashtra, Mumbai.
b. Pass such other and further orders as this Hon'ble Commission may deem fit and proper in the facts and circumstances of this case.
The Appellants in their present Appeals mainly raised the following grounds:-
a) The State Commission failed to appreciate that complaint is premature as the construction of the building could not be completed due to circumstances beyond control of Appellant. These factors include the pendency of Public Interest Litigations (PIL) and Writ Petitions filed in the High Court of Bombay, as well as lack of necessary approvals from Municipal Corporation of Greater Mumbai.
b). The State Commission erroneously assumed that Complainant No. 2 was ready and willing to pay as per the agreement. They also pointed out that Complainant No. 2 did not make the required payments, despite receiving letters from the Appellants demanding payment.
c). The State Commission failed to consider that the Appellant has already offered to refund 'the amounts paid by the Complainant No. 2 along with interest. Further, Complainant No. 2 suppressed the fact that the Opponent No. 2/Appellant No. 2 is neither the necessary nor the proper party to the complaint.
Upon notice on the Memo of Appeal, Respondents/ Complainants have not filed any Reply/objections to the present Appeals. However, The Respondents/Complainants reiterated their facts that construction progress was stagnant since 2006, and they were willing to make installment payments. Even after receiving a reply letter from OP-1, there was no communication about resuming construction. Left with no other option, the Complainant filed a Consumer Complaint before the State Commission. The main prayer in the Complaint was for delivery of possession of the booked flat or, in the alternative, compensation of Rs.42,70,523/- on account for their loss and secure a similar residential flat.
We have gone through the Original Complaint along with material available on record and Written Submissions filed by the Parties.
The learned Counsel for the Appellants argued that the State Commission failed to consider the Demand Letters sent by the Appellants to Complainant No. 2, which went unanswered, indicating non-payment of amounts due. The Counsel also emphasized that the Complainant did not prefer any Rejoinder or Affidavit of Evidence to rebut the demands made by the Appellants. The construction resumed after the High Court dismissed the Public Interest Litigation No. 57/2011. Clause 8 of the agreement covered delay in such a scenario. The Appellant No. 1 remained willing to refund the amount to the Complainant throughout the proceedings, making the State Commission's order for allotment of the flat or a refund with interest at 18% unjustified.
The Learned Counsel for the Respondent No. 2 argued that the Appellants' reliance on alleged letters for demanding instalment payments lacked evidence in support of proof of service to the Respondents. The Counsel asserted that the learned State Commission had already dismissed these claims for lack of corroboration and awarded compensation to the Respondent for the quantified loss due to the Appellants' deficiency in service and unfair trade practices. Moreover, the Counsel emphasized that the present First Appeal No. 995 of 2016 filed by the Appellants reiterates the same grounds that were previously rejected by the State Commission.
The objection of the Appellants/ OPs that the delay was due to force majeure circumstances which include the pendency of Public Interest Litigations (PIL) and Writ Petitions filed in the High Court of Bombay, as well as lack of necessary approvals from Municipal Corporation of Greater Mumbai are devoid of merit. This aspect has been substantially addressed by the learned State Commission. Further, this Commission in CC 379 of 2013 Sivarama Sarma Jonnalagadda & Anr vs. M/s Maruthi Corporation Limited & Anr decided on 21.09.2021 has held that:
“We are of the view that that the Complainant cannot be made to wait indefinitely for the delivery of possession and the act of the Opposite Party in relying on force majeure clause while retaining the amounts deposited by the Complainant, is not on only an act of deficiency of service but also amounts to unfair trade practice.”
It is clear that there was significant delay in handing over possession of the flat to Complainants as per the Agreement. Complainant No. 2 cannot be expected to wait indefinitely, as she has already paid a substantial amount with the expectation of timely possession. In several cases, the Hon'ble Supreme Court has asserted the right of buyers to receive fair delay compensation when developers unduly and unreasonably delay possession as per the Agreement.
The Hon’ble Supreme Court in Kolkata West International City Pvt. Ltd. Vs. Devasis Rudra, II (2019) CPJ 29 SC, decided on 25.03.2019 has observed that:
“.....It would be manifestly unreasonable to construe the contract between the parties as requiring the buyer to wait indefinitely for possession. By 2016, nearly seven years had elapsed from the date of the agreement. Even according to the developer, the completion certificate was received on 29 March 2016. This was nearly seven years after the extended date for the handing over of possession prescribed by the agreement. A buyer can be expected to wait for possession for a reasonable period. A period of seven years is beyond what is reasonable. Hence, it would have been manifestly unfair to non-suit the buyer merely on the basis of the first prayer in the reliefs sought before the SCDRC. There was in any event a prayer for refund. In the circumstances, we are of the view that the orders passed by SCDRC and by the NCDRC for refund of moneys were justified.”
In another Landmark judgement, the Hon’ble Supreme Court in Pioneer Urban Land & Infrastructure Ltd. Vs. Govindan Raghvan, ll (2019) CPJ 34 (SC), decided on 02.04.2019 has held that:
We see no illegality in the Impugned Order dated 23.10.2018 passed by the National Commission. The Appellant – Builder failed to fulfil his contractual obligation of obtaining the Occupancy Certificate and offering possession of the flat to the Respondent – Purchaser within the time stipulated in the Agreement, or within a reasonable time thereafter. The Respondent – Flat Purchaser could not be compelled to take possession of the flat, even though it was offered almost 2 years after the grace period under the Agreement expired. During this period, the Respondent – Flat Purchaser had to service a loan that he had obtained for purchasing the flat, by paying Interest @10% to the Bank. In the meanwhile, the Respondent – Flat Purchaser also located an alternate property in Gurugram. In these circumstances, the Respondent – Flat Purchaser was entitled to be granted the relief prayed for i.e. refund of the entire amount deposited by him with Interest”.
As regards refund, in a recent Order, the Hon’ble Supreme Court has held in the case of Experion Developers Pvt. Ltd. Vs. Sushma Ashok Shiroor, in Civil Appeal No.6044 of 2019 decided on 7.4.2022 that:-
“We are of the opinion that for the interest payable on the amount deposited to be restitutionary and also compensatory, interest has to be paid from the date of the deposit of the amounts. The Commission in the Order impugned has granted interest from the date of last deposit. We find that this does not amount to restitution. Following the decision in DLF Homes Panchkula Pvt. Ltd. Vs. DS Dhanda and in modification of the direction issued by the Commission, we direct that the interest on the refund shall be payable from the dates of deposit. Therefore, the Appeal filed by purchaser deserves to be partly allowed. The interest shall be payable from the dates of such deposits.
At the same time, we are of the opinion that the interest of 9% granted by the Commission is fair and just and we find no reason to interfere in the appeal filed by the consumer for enhancement of interest.”
As regards possession the Hon’ble Supreme Court in Supertech Ltd. Vs. Rajni Goyal (2019) 17 SCC 681 decided on 23.10.2018 has held that:-
“However, the Commission held that since there was a delay in handing over possession of the flat to the Respondent purchaser, the Appellant builder was liable to pay interest to the Respondent purchaser by way of compensation. The scheduled date for handing over possession was 31.10.2013. The Appellant builder had issued the pre-possession letter on 31.10.2015. As per the Respondent purchaser, the Appellant builder did not have the occupancy certificate on that date. The Commission directed the Appellant builder to pay compensation in the form of simple interest @ 8% p.a. from 1.11.2013 till the date on which possession was actually offered to the Respondent purchaser.
The Appellant builder inter alia submitted that possession of the flat was offered to the Respondent purchaser in December, 2015 after obtaining the completion certificate for the building. Even though the agreement provided for delivery of possession by 31.10.2013, the delay occurred because of various legal impediments in timely completion of the project because of various orders passed by the National Green Tribunal. The delay ought to be computed from six months after 31.10.2013 i.e. from 1.5.2014 by taking into consideration, the 6 months grace period provided in the agreement. Furthermore, the period of interest should close on April, 2016 when the full occupancy certificate was obtained as per the admission of the Respondent purchaser herself in para 4(j) of the Consumer Complaint, wherein she has admitted that the Appellant builder had obtained the completion certificate as late as April, 2016 with respect to delay in handing over possession. The Respondent purchaser ought not to be allowed to reap the benefits of her own delay in taking possession. In the light of the aforesaid discussion, the period of compensation of interest must be computed from 1.5.2014 till 30.4.2016 at the rate awarded by the Commission. The Order of the Commission is modified only to the extent mentioned hereinabove. The Appeals are disposed of accordingly.”
We have heard the learned Counsels for both the parties and carefully perused the material available on record.
It is an admitted position that the Appellants and the Respondent No. 2 have entered into an agreement for sale/ purchase of Flat No.901 admeasuring 425 sq. ft. carpet area on 9th Floor of B-1 Wing of Divyam Heights building at Plot No.5, Survey No.105, Gilbert Hill, Andheri(W), Mumbai on 15.02.2006 for an agreed consideration of Rs. 18,04,820/-. The Respondent No.2 had paid Rs.4,15,108/- and was ready to pay the remaining dues in terms of the Agreement, as per the progress of the construction. In terms of Para-8 of the said Agreement between the parties, the possession was to be handed over by the end of June, 2008.
It is the contention of the Appellants that some PILs and litigations were filed in Hon’ble Bombay High Court and thus the construction of the project did not progress. The Appellants have brought on record three Orders of Hon’ble Bombay High Court viz PIL No. 904/2005 filed by Ehsanul Haque A. Nadvi Vs. Union of India & Ors, which was dismissed on 20.02.2008; PIL Writ Petition No.123 of 2006 filed by Gavdevi Durga Devasthan Trust Vs UoI & Ors, which was disposed of on 06.02.2008; and PIL No.57 of 2011 filed by Shail Rane & Ors Vs. State of Maharashtra & Ors, which was also disposed of on 09.02.2012.
It is manifestly clear that the PIL No.904/2005 was filed prior to the Appellants entering into the subject Agreement with the Respondent No.2 in the matter on 15.02.2006. When queried by us, the learned Counsel for Appellants specifically clarified that there was no stay granted by the Hon’ble Bombay High Court in any of these cases against any construction activity, especially in respect of the construction project under dispute. In any case, the project ought to have been completed and possession was to be handed over to the Complainant No.2 by end June, 2008. Therefore, the PIL filed vide No. 57/2011 which in any case was disposed of on 09.02.2012 was of no consequence to the present case. Thus, the contention of the Appellants claiming that construction project was effected due to certain litigations before Bombay High Court is entirely unacceptable and misleading.
It is also intriguing to notice that, on one hand the Appellants claimed that the progress of the project was impacted on account of certain PILs and other litigations, on the other hand they also claimed that vide letters dated 21.03.2006, 28.02.2008, 03.07.2008 and 03.10.2012, they sought payment of installments from the Respondent. Notwithstanding the fact that the demand for payment of installment by the Appellants is uncorroborated, the claim itself is questionable because, as per their own version, the project was affected on account of litigations and thus did not progress. If that is so, there could not have been any requirement of scheduled installment payments from Respondent No. 2. The Appellants have also failed to bring on record any notice issued to the Respondent pertaining to the situation as claimed by they themselves resulting in delay in the completion of the construction project and no review of terms of subject contract or extending the timelines was done. There is also nothing on record to indicate that the contract with the Respondents was duly cancelled on account of delay or any other reason and the amounts paid by the Respondents were refunded in time. Thus, there was unreasonable and unjustified delay by the Appellants/ OPs in completing the construction and they have not provided any reasonable justification for delay as well as failure to comply with the terms of the contract. Therefore, Complainant is entitled for fair relief and reasonable compensation for such untenable actions and misleading contentions by the Appellants.
At the same time, it is also observed from the learned State Commission in its Order dated 21.06.2016 directed the present Appellants to pay Rs.42,70,523/-, if they fail to handover the flat in dispute. While determining the amount of compensation, the State Commission considered the market rate of the said flat in dispute to be Rs.56,60,235/-, as per the prevailing ready reckoner. From this amount, it deducted Rs.13,89,712/- which was the balance due to be paid by the Respondent No. 2 to the Appellants of the original sale price of Rs.18,04,820/- (Rs.4,15,108 was already paid on 12.02.2006). In our view, such considerations as well as calculations are questionable. Even if such consideration is otherwise permissible, at best, the relief that could have been granted to the Respondent No. 2 was proportionate to the actual payment of Rs.4,15,108 made by her vis-à-vis the total agreed consideration of Rs.18,04,820/-.
ORDER
In view of the foregoing, the Order of State Commission dated 21.06.2016 is modified with the following directions. The Appellants/ Opposite Parties shall, jointly and severally: -
FA 995/ 2016
a) Hand-over the vacant and peaceful possession of the said flat to Respondent No. 2 by accepting the balance amount of Rs. 13,89,712/- towards total agreed consideration of Rs. 18,04,820/-. They shall also execute a registered Sale Deed in favour of Respondent No. 2 upon acceptance of the said balance consideration payable within a period of one month from the date of this order.
b) If the Appellants/OPs are unable to complete the construction and thus deliver the possession as directed at para (a) above, they shall, within a period of two months from the date of this order, refund Respondent No. 2, an amount of Rs. 4,15,108/- along with interest @ 9% per annum from the date of deposit on 12.02.2006 till the date of payment. In the event of default, interest @ 12% per annum shall be applicable for such period beyond two months, till the realization of the entire amount.
c) Pay Rs. 2,00,000/- as costs to Respondent No. 2 for misleading her and keeping her in dark for over five years as regards the progress and completion of the construction of the said flat and citing untenable reasons. This amount shall be paid within a period of one month from the date of this order. In the event of default, the amount payable shall carry interest @ 12% per annum from the date of expiry of the stipulated period of one month till the realization of the entire amount.
d) Pay the costs of litigation quantified as Rs. 25,000/- to Respondent No. 2. This amount, along with interest @ 9% per annum from 01.01.2017 till the date of payment, shall be paid within a period of one month from the date of this order. In the event of default, the amount payable shall carry interest @ 12% per annum from the date of expiry of the said one month till the realization of the entire amount.
FA 996/ 2016
a) Hand-over the vacant and peaceful possession of the said flat to the Respondent No. 2 by accepting the balance amount of Rs. 21,21,827/- towards total agreed consideration of Rs. 28,67,335/-. They shall also execute a registered Sale Deed in favour of Respondent No. 2 upon acceptance of the said balance consideration payable within a period of one month from the date of this order.
b) If the Appellants/ OPs are unable to complete the construction and thus deliver the possession as directed at para (a) above, they shall, jointly and severally, within a period of two months from the date of this order, refund Respondent No. 2, an amount of Rs. 7,54,808/- along with interest @ 9% per annum from the date of deposit on 12.02.2006 till the date of payment. In the event of default, the amount payable shall carry interest @ 12% per annum from the date of expiry of stipulated period of two months till the realization of the entire amount.
c) Pay Rs. 2,00,000/- as costs to the Respondent No. 2 for misleading her and keeping her in dark for over five years as regards the progress and completion of the construction of the said flat and citing untenable reasons. This amount shall be paid within a period of one month from the date of this order. In the event of default, the amount payable shall carry interest @ 12% per annum from the date of expiry of stipulated period of one month till the realization of the entire amount.
d) Pay the costs of litigation quantified as Rs. 25,000/- to the Respondent No. 2. This amount, along with 9% interest per annum from 01.01.2017 till the date of payment, shall be paid within a period of one month from the date of this order. In the event of default, the amount payable shall carry interest @ 12% per annum from the date of expiry of stipulated period of one month till the realization of the entire amount.
All the pending Applications, if any, are also disposed of accordingly. The statutory amount deposited by the Appellants, if any, be refunded to them.