M/s Narayan Builders & Developers vs Lalit Kumar Goyal

R.K. Agrawal, President Member

The present Appeal has been filed against the Order dated 06.09.2019 passed by the Rajasthan State Consumer Disputes Redressal Commission (hereinafter referred to as the State Commission), whereby the Complaint filed by Lalit Kumar Goyal (hereinafter referred to as the Complainant) before the State Commission was allowed and the M/s. Narayan Builders & Developers (hereinafter referred to as the Appellant Builder) was directed to refund ₹24,54,479/- alongwith interest @18% p.a. from the date of deposit to the Complainant. The Appellant Builder was also directed to pay ₹2,00,000/- towards compensation alongwith cost of ₹20,000/- alongwith interest @9% p.a. from the date of filing of the complaint.

Brief facts of the case are that the Appellant Builder launched a Group Housing Project in the name and style of “Urbana Jewells” (hereinafter referred to as the Project) located near Guhana Mandi, Village Madrampura, Tehsil Sanganer, Jaipur. The Original Allottee, Mr. Devendra Kumar Goyal booked a 2 BHK Flat No. O-208 in the said Project by paying booking amount of ₹4,00,000/- to the Appellant Builder in the year 2008. The Complainant got transferred the said flat in his name by paying ₹4,00,000/- to the original allottee. Flat Buyer Agreement was executed between the Appellant Builder and the Complainant on 29.03.2012. As per Cost Sheet attached with the Agreement, the total cost of the Flat was ₹19,42,560/-. As per terms of the Agreement, the possession of the flat was to be delivered within 36 months from the date of execution of the Agreement, i.e., by 28.03.2015. The Complainant had deposited a sum of ₹24,55,199/- with the Appellant Builder upto 28.03.2014. It was alleged that vide letter dated 25.03.2014, the Appellant demanded ₹4,46,769/- towards interest on delay payment, which was objected by the Complainant. The Complainant also met with the officers of the Appellant Builder to sort out the matter. Despite that the Appellant Builder issued Cancellation Notice dated 21.02.2015 informing the Complainant that the allotment of the flat would be cancelled if the outstanding amount is not paid within 30 days. It is the case of the Complainant that as per terms of the Agreement, the possession of the flat was to be handed over within 36 months from the date of Agreement, i.e., by 28.03.2015 but despite having received substantial part of the sale consideration, the Appellant Builder has not completed the construction and failed to obtain Completion Certificate from Jaipur Development Authority; No Objection Certificate from Indian Airport Authority and Fire Department rather the Appellant Builder had threatened to cancel the allotment of the Flat for not paying the illegal demand made by the Appellant Builder. Alleging deficiency in service on the part of the Appellant Builder, the Complainant had filed a Consumer Complaint before the State Commission.

The Appellant Builder contested the Complaint before the State Commission by submitting that despite several reminders the Complainant defaulted in making payment. They are ready to give possession but after making payment of the outstanding dues. There is no deficiency in service on their part.

After hearing both the Parties and perusal of material on record, the State Commission allowed the Complaint in aforementioned terms by observing as under:-

“As per doctrine propounded by Hon’ble Supreme Court and the Hon’ble National Commission – if possession of flat is not given by the Builder on time and he does not get its registration, then the Complainant is entitled to get interest @18% p.a.In this matter also, the situation is same.So the Complainant is entitled to get interest @18% per annum from the date of deposit of the amount till the date of realization.”

Aggrieved by the Order passed by the State Commission, the Appellant Builder has filed the present Appeal.

Ms. Suchitra Kumbhat, learned Counsel appearing on behalf of the Appellant Builder submitted that as per terms of the Agreement, the possession was to be handed over within 36 + 6 months, i.e., by 29.09.2015. It is only due to default on the part of the Complainant in making the payment despite several reminders, on account of which in terms of Clause 2.9 of the Agreement, vide cancellation notice dated 21.02.215, they warned the Appellant to cancel the Allotment of the flat in case of failure to deposit the outstanding dues within 30 days. It was also submitted that in terms of the Clause 2.9 of the Agreement, they are entitled to forfeit the earnest money. It was further submitted that the State Commission erred in directing to refund the entire amount whereas in the Complaint the Complainant had sought possession of the Flat. It was prayed that the Order passed by the State Commission be set aside and the Appeal be allowed.

Per Contra, Mr. Nitin Mittal, learned Counsel appearing on behalf of the Complainant supported the Order passed by the State Commission as according to him the State Commission has passed a well-reasoned order which is based on a correct and rightful appreciation of evidence and material available on record and does not call for any interference.

I have heard the Ms. Suchitra Kumbhat, learned Counsel for the Appellant, Mr. Nitin Mittal, learned Counsel appearing on behalf of the Respondent/Complainant, and have given a thoughtful consideration to the various pleas raised by them.

All the contentions raised by the Appellant Builder have been dealt in detail, by a coordinate bench of this Commission in “M/s. Narayan Builders & Developers vs. Aparna Choudhary & Anr.” in First Appeal No. 2373 of 2017 Order dated 30.08.2019” by observing as under:-

“5. Once the opposite party / appellant herein has given advance cancellation notice dated 17.07.2015 and complainant did not deposit amount in compliance of that notice, obviously notice became absolute even without passing any other order / notice by the appellant / opposite party. Thus, the appellant cannot say that they were ready to give the possession. The State Commission has considered this aspect as same was mentioned in the written statement filed by the opposite party. The State Commission reached to the conclusion that possession cannot be given in the present case and refund has been ordered. It is seen that in the last prayer of the complaint, the following prayer is made by the complainant / respondent:-

“X. Any other relief which may be allowed and deemed fit to be provided by the Hon’ble Consumer Forum may be granted.”

From the above part of the prayer, it is clear that the State Commission has not passed order unauthorizedly rather prayer has been made to grant any other relief as may be deemed fit by the State Commission. Therefore, the State Commission was well within its right to pass the order of refund.

Learned counsel for the appellant states that issue of earnest money was raised in the written statement, however, the State Commission has not considered the same.First of all, it is seen that forfeiture of 15% as earnest money is totally illegal as held by this Commission in its judgment dated 06.01.2015 in R.P. No. 3860 of 2014, DLF Ltd. vs. Bhagwanti Narula, that forfeiture of more than 10% of the amount is illegal and cannot be forfeited. It reads as under:-

“13. For the reasons stated herein above, we hold that (i) an amount exceeding 10% of the total price cannot be forfeited by the seller, since forfeiture beyond 10% of the sale price would be unreasonable and (ii) only the amount, which is paid at the time of concluding the contract can be said to be the earnest money.The Petitioner Company, therefore, was entitled to forfeit only the sum of Rs.63,469/-, which the complainant had deposited with them at the time of booking of theapartment. - - -”

For making claim on earnest money, the opposite party has to prove that there has been loss due to non-performance of the part of the agreement by the complainant. The Hon’ble Supreme Court in Civil Appeal No.193/2015, M/s. Kailash Nath Associates vs. Delhi Development Authority & Anr., has held that the opposite party is entitled to forfeiture of the earnest money only when the opposite party has suffered loss and proof has been placed for such loss. The Hon’ble Supreme Court has observed as follows:

“29. Based on the facts of this case, it would be arbitrary for the DDA to forfeit the earnest money on two fundamental grounds. First, there is no breach of contract on the part of the appellant as has been held above. And second, DDA not having been put to any loss, even if DDA could insist on a contractual stipulation in its favour, it would be arbitrary to allow DDA as a public authority to appropriate Rs.78,00,000/- (Rupees Seventy Eight Lakhs) without any loss being caused. It is clear, therefore, that Article 14 would apply in the field of contract in this case and the finding of the Division Bench on this aspect is hereby reversed.

In the present case, nothing is mentioned in the written statement of the opposite party / appellant herein that it has suffered any loss with respect to the flat in question which can justify forfeiture of the earnest money.As no evidence has been filed in this regard, rather the chances are that the flat is sold at a higher price, I do not find any reason that earnest money could be forfeited by the opposite party/ appellant.

Now coming to the question of payment of interest, it is seen that interest @18% per annum on the amount of ₹41,68,374/- has been awarded by the State Commission, which is neither justified in the present interest scenario nor is being practiced by this Commission or by the Hon’ble Supreme Court. Recently, the Hon’ble Supreme Court in Kolkata West International Pvt. Ltd. Vs. Deva Asis Rudra, II (2019) CPJ 29 (SC) has reduced the rate of interest of 12% p.a. granted by this Commission to interest @ 9% p.a. on the amount of refund. This Commission has been awarding 10% interest per annum on the amount of refund in its recent orders. The respondent / complainant states that bank is charging interest @ 10.25% per annum on the loan amount taken by her from the bank. Therefore, at the most, interest @ 10.25% per annum can be allowed instead of interest @ 18% per annum.

On the basis of above discussion, F.A. No. 2373/2017 is partly allowed and the order dated 17.10.2017 passed by the State Commission is modified to the extent that amount of ₹41,68,374/- shall be refunded by the opposite party / appellant herein alongwith interest @ 10.25% per annum instead of interest @ 18% per annum. Rest of the order of the State Commission remains unchanged and is upheld.”

Respectfully following the Order passed by the Coordinate Bench of this Commission in “M/s. Narayan Builders & Developers versus Aparna Choudhary & Anr.” (supra), present Appeal is partly allowed and the Order dated 06.09.2019 passed by the State Commission is modified to the extent that the amount of ₹24,54,479/- shall be refunded by the Appellant Builder alongwith interest @10.25% p.a. from the date of deposit till realisation to the Respondent / Complainant within 6 weeks from today. Keeping in view the facts and circumstances of the case, there shall be no order as to costs.