M/s Narayan Builders & Developers & Anr vs Kiran Jain

Sudip Ahluwalia, Member

This Revision Petition has been filed against the impugned Order dated 17.07.2017 passed by the Ld. State Consumer Disputes Redressal Commission, Rajasthan in First Appeal No. 1260 of 2016, vide which the Appeal filed by the Petitioners was dismissed and the Order of the Ld. District Forum was upheld with certain modified directions.

The factual background in brief, is that the Complainant, Kiran Jain, influenced by the advertisements issued by the Petitioners, booked a residential flat on 26.08.2006 in the "Narayan Infinity, Hazel Nut" project situated at Village Madrampura, Tehsil Sanganer, Jaipur, Rajasthan. She deposited Rs. 2,00,000/- as advance towards the flat, and Receipt No. 106 dated 26.08.2006 was issued. The project was launched on 04.05.2007, and the Complainant was demanded Rs. 2,00,000/- as Allotment Money, with an offer to execute the Flat Buyers Agreement. On 04.06.2007, the Complainant deposited Rs. 2,00,000/-, and Receipt No. 3383 was issued. The Complainant was allotted Flat No. 601 at the 6th Floor in Tower B Block, measuring 1098.25 Ft2. After receiving a total of Rs. 4,00,000/-, the Petitioners did not correspond or undertake any development work in the project until February 2011. On 01.03.2011, the Petitioners demanded the due instalments, threatening to impose penal interest at 18% p.a. if payments were not made by 15.03.2011. The Allotment Agreement specified completion within 36 months from the sanction of the Building Plans/Revised Building Plans, i.e., 04.05.2010. Clause 3.3 of the Agreement entitled the complainant to compensation if the project was not completed on time. Following a Legal Notice dated 23.05.2011, where the Complainant sought possession and compensation, the Petitioners threatened to cancel the booking and deduct 15% from the total deposited amount. The Complainant then deposited Rs. 3,49,505.28/- through a cheque dated 28.05.2011, but the Petitioners continued to demand instalments with interest, and no possession has been offered till date. Aggrieved by the lack of possession and alleged breaches, the Complainant filed her complaint before the Ld. District Forum-II, Jaipur.

The Ld. District Forum vide its Order dated 08.09.2016 allowed the Complaint and directed the Petitioners to give possession of the Flat to the Complainant and in the alternative, if giving possession is not possible, then to refund the deposited amount of Rs. 7,49,505.28/- with interest @9% p.a. from the date of filing of complaint till the realization of the amount, along with Rs. 1,00,000/- towards mental agony and Rs. 5,000/- towards litigation costs. The Petitioners filed their Appeal before the Ld. State Commission which, vide the impugned Order dated 17.07.2017, disposed off the Appeal by modifying the Order of the Ld. District Forum, and directing the Petitioners to refund the amount deposited along with other ancillary reliefs as in the Order of the Ld. District Forum. The relevant extracts of the impugned Order are set out as below –

“…It is not in dispute that formal buyer's agreement has not been executed. The agreement produced on record does not bear signatures of any of the parties. We are of the view that though the formal agreement was not executed but still the intention of the parties was to act as per the terms of the agreement. Initial booking amount was paid by the complainant and another installment was paid at the time of launching the project. After that first installment of 10% of the cost was to be paid at the time of laying the foundation but it is not on record as to when the foundation was laid down. It was the duty of the opposite party to produce evidence on this point. Similarly another 10% was to be paid when the ground floor roof was cast. This is also not on record when it was done. First time after four years in May 2011 the opposite party raised the demand for 20% of the amount which was duly paid by the complainant and accepted by the opposite party. Another cheque of Rs.4,25,000/- was paid by the complainant in August 2011 which was duly acknowledged by the opposite party though the cheque was not encashed but this shows the intention of the parties to act as per the agreement though none of the parties insisted for executing the agreement. In view of  this it cannot be held that for non-execution of formal agreement the complaint was liable to be dismissed.

The intention of the parties was indicative of its compliance. The opposite party has not produced any evidence in support of the fact that construction had progressed and flats were ready for possession and complainant could not handed over the possession for default. Hence, the question of any penal interest being levied on the complainant cannot be considered. No completion report has been filed by the opposite party. No other evidence is on record with regard to progress of construction. In its reply the opposite party has not stated that flats were ready for possession. Even during arguments the progress of the construction is not known.

In view of the above we do not think that opposite party would be able to handover the possession to the complainant within two months and complainant be awarded compensation for late possession @ Rs. 5491/- per month. It would be in the fitness of the things that alternate order of the learned DCF be maintained and the opposite party is ordered to refund the amount of Rs. 7,49,505.28. We would like to modify the order in respect of interest to be paid on this amount. The interest @12% p.a. be paid on the amount deposited with the opposite party from the date of payment. The order with regard to compensation for mental agony and prosecution cost is maintained.

With these directions the appeal is disposed of as indicated above.”

Ld. Counsel for Petitioners has argued that a large number of people are living in the township from the year 2014 onwards, having all the requisite facilities. The conduct of the Respondent is solely to continue avoiding her commitment and not executing the Flat Buyer Agreement by raising issues at each stage of the present litigation without any concrete basis, and which is contrary to the actual position. The Project was completed well in advance and about 650 families have already moved in and are residing in the complex; That the construction on the Project site was initiated in the year 2008 by the erstwhile group known as “Narayan Group” and that the said Project was in distress till the year 2010. Thereafter, in the year 2010, the present group, i.e. “Urbana Group” had taken over the construction of the Project and completed it; That the Petitioner had made several correspondences regarding the payment of instalments when no payments were made by the Complainant.  She paid no heed to the communications and filed her Complaint before the District Forum despite being aware of the status of the Project; That since the Complainant did not perform her obligations, the Petitioners issued Notice dated 12.10.2012 requesting her to execute the Flat Buyer Agreement within the stipulated as mentioned in Clause 10.2 of the Agreement. Another Notice dated 20.11.2012 was issued requesting the Complainant to send signed copies of the Agreement within 15 days from the date of notice failing which, the Petitioner would be constrained to cancel the booking of the Respondent; The Complainant then replied to the said Notice and informed the Petitioner about the pendency of the case before the District Forum; That the Complainant had booked the Flat for commercial and for the purpose of earning profit which is indicated by the admitted fact by the Complainant that she forgot about the Project and therefore failed in making the payments; That the case cited by the Complainant, i.e. “M/s Narayan Builders and Developers v.Giriraj Verma, RP No. 422 of 2020” is completely dissimilar from the instant matter. In the said case, both the Flat Buyer Agreement and the Supplementary Flat Buyer Agreement were executed and substantial payments towards the cost of Flat was also made, which is not the case in the present matter.

Ld. Counsel for Respondent has argued that as per Clause No. 3.3 of the Builder Buyer Agreement, in case of any delay in the construction, the Flat buyer is entitled to compensation of Rs. 5/- per square of the Built-up area of the Flat; That even after filing of the complaint, the Complainant deposited an amount of Rs. 4,25,000/- through cheque dated 30.08.2011 which was not encashed by the Petitioners after becoming aware of the pendency of the Complaint; That the communication regarding starting the construction was made only in 2011 without showing any approval/permission of construction/other legal requirements and even at the time of filing the evidence before the District Forum, the Petitioner in the year 2014 filed only certain photographs showing progress of the construction which would go to show that the construction had been done only partially, and not completed; That the Project suffers from a number of irregularities for which the other allottees are also taking legal recourse before different Fora and Authorities including but not limited to this Commission as well; That the Petitioner while presenting the Petition not only concealed the material facts but also sought to mislead this Commission by not showing the present status of the Project and necessary legal documents regarding its completion; That a very identical view was taken by this Hon’ble Commission in Giriaj Verma (supra) in which the larger bench had dismissed the identical Revision Petition filed by the Petitioners.

This Commission has heard both the Ld. Counsel for Petitioners and Respondent, and perused the material available on record.

The decisions of both the Ld. Fora below are virtually concurrent. In fact, the Ld. State Commission in disposing off the Appeal filed by the Petitioners/Opposite Party by directing the refund of the amount paid by the Respondent/Complainants alongwith interest @ 12% per annum, since admittedly there had been an inordinate delay in handing over the possession to the Allottee/Complainants and there was no convincing material available before the State Commission to indicate that the Petitioners/Appellants were in any position to actually deliver possession to the Complainants/Respondents when six years had passed after lapsing of the original date of scheduled possession.

Such approach and view of the Ld. Commission was certainly proper in view of the ratio of the decision of the Hon’ble Supreme Court in “C.A No.3182 of 2019 dated 25.03.2019, Kolkata West International City Pvt. Ltd. Versus Devasis Rudra”, in which it had been observed inter alia-

“…..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…….”.

However, the compensation by way of refund along with interest @ 12% per annum in favour of Complainants does appear to be somewhat excessive and against the spirit of the Apex Court in a similar matter in view of the Hon’ble Apex Court’s judgment in “Experion Developers (P) Ltd. v. Sushma Ashok Shiroor, (2022) 15 SCC 286”, the relevant extract of the judgment are set out as below –

“32. 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 (P) Ltd. v. D.S. Dhanda [DLF Homes Panchkula (P) Ltd. v. D.S. Dhanda, (2020) 16 SCC 318] 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 interests 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.”

Consequently, this Revision Petition is disposed off by allowing it partially. The impugned Order passed by the Ld. State Commission is therefore, modified by directing that the interest by way of compensation as awarded vide the impugned Order is reduced from 12% per annum to 9% per annum. In addition, the Respondent/Complainants are held entitled to a consolidated amount of Rs. 50,000/- as litigation costs.

Pending application(s), if any, also stand disposed off as having been rendered infructuous.