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Judgment
R.K. Agrawal, President Member
The present Appeal has been filed against the Order dated 17.10.2017 passed by the Rajasthan State Consumer Disputes Redressal Commission (hereinafter referred to as the State Commission), whereby the Complaint filed by Ranjeet Chaudhary (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 pay ₹41,68,374/- alongwith interest @18% p.a. from the date of deposit to the Punjab National Bank and the Punjab National Bank was directed to pay the balance amount to the Complainant after adjusting their outstanding dues including interest and cost. The Appellant Builder was also directed to pay ₹2,00,000/- towards compensation alongwith cost of ₹25,000/- to the Complainant.
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. Allured by the advertisements and assurances made by the Sales Representatives of the Appellant Builder, the Complainant booked a Flat No. TA-503 admeasuring 1496.30 sq.ft. in the said Project by paying booking amount of ₹1,11,000/- to the Appellant Builder on 04.05.2013. The total cost of the Flat was ₹43,89,022/-. It was alleged in the Complaint that after receiving ₹8,24,720/-, i.e., 20% of the total sale consideration, Builder Buyer Agreement was executed between the Parties on 18.10.2013. The Complainant obtained Housing Loan from Punjab National Bank (hereinafter referred to as the Respondent Bank) for which Tripartite Agreement was executed between the Parties. It was alleged that the terms of the Agreement were biased and only in favour of the Appellant Builder. As per terms of the Agreement, the possession of the flat was to be delivered within 24 months from the date of execution of the Agreement, i.e., by 18.10.2015. The Complainant had deposited a sum of ₹41,68,374/-, i.e., 95% of the total sale consideration with the Appellant Builder upto 27.08.2014. It was alleged that vide letter dated 17.07.2015, the Appellant demanded ₹2,25,000/- towards parking charges, ₹29,925/- towards lease money, ₹2,05,666/- towards HT/LT External Development Charges, ₹67,416/- towards club membership fee and ₹2,65,190/- towards late interest from the Complainant with a request that the said amount be deposited within 30 days, failing which the allotment of the Flat would be cancelled and earnest money would be forfeited. The Complainant objected the said demand and sent reply to the said demand letter to the Appellant Builder informing him that the said demand is illegal and in case of failure to deposit the said illegal demand, the Appellant Builder has no right cancel his allotment of the Flat. The Complainant also met with the officers of the Appellant Builder to sort out the matter. Despite that the Appellant Builder vide Notice dated 17.07.2015 informed the Complainant that the allotment of the flat has been cancelled and the earnest money has been forfeited. 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 24 months from the date of Agreement, i.e., by 18.10.2015 but despite having received 95% 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 the complaint lacks pecuniary jurisdiction of the State Commission; the Complainant defaulted in making payment and the Complainant asked refund of money whereas in terms of the Tripartite Agreement, the money could be refunded to the Bank only. 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:-
“Here in the present case the facts of the case clearly show that in spite of the substantial amount has been paid as sale price in 2014. The possession of the property has not been handed over to the complainant. The documents clearly shows that still the flats are not ready for possession and deficiency of the non-applicant no.1 is writ large clear on the face of the record.
The complainant has rightly pointed out that vide Anx. 9 she was illegally asked to pay the parking charges of ₹2,25,000/- whereas as per the settled law the parking place could not be sold out. The complainant has also rightly pointed out that vide Anx. 9 membership fees for ₹ 67,416/- was asked to pay where earlier it was agreed to charge no money for club membership and vide Anx. 11 it is the admission of the non-applicant that club membership is waived of. These actions of the non-applicant also shows the illegal practice committed by the builder. Non-applicant has submitted Anx. R 1 and estimate cost sheet annexed to R 1 also shows zero amount for club membership whereas vide Anx. 9 excess amount of ₹ 67,416/- is being asked which shows deficiency on the part of non-applicant no.1.
The non-applicant no.1 could not show any reason that why the construction has not been completed and within the stipulated time the possession of the property has not been handed over to the complainant. Hence, deficiency on the part of the non-applicant no.1 is established and complaint is liable to be allowed against non-applicant no.1.
As regard to non-applicant no.2 the facts are not in dispute that housing loan of ₹ 35 lakhs was allowed to the complainant and Tripartite Agreement Anx. 3 was entered between the parties. When amount has not been paid the bank has issued Anx. 19 to the effect that loan account is overdue and non-payment of interest for the month of August and September 2015 Cibil may be effected. When amount was due the credit character of the consumer will influenced automatically. Hence, the bank has not committed any deficiency when amount falls due. As per Tripartite Agreement between the parties the builder is bound to refund the amount to the bank including margin money and borrower's contribution but contention of the builder is that complainant and bank both were asking for refund of the money. He was in fix hence, he has not committed any deficiency in not refunding the amount but this contention has no basis as Tripartite Agreement between the parties is clear that in case of cancellation or otherwise the builder is bound to refund the money to the bank and builder was under the obligation to refund the money to the bank but admittedly builder has not refunded the money to the bank.
Hence, in view of the above the complaint deserves to be allowed only against the builder.
As per contention of the parties the amount of ₹41,68,374/- is paid by the complainant to the builder. Hence, the above amount alongwith 18% interest from the date of deposit (which is charged by the builder in case of delayed payment ) be paid to the bank and as per clause 6 of Anx. 3 the bank after adjusting their outstanding dues including interest and cost, rest of the amount should be paid to the complainant consumer.
In view of the fact that non-applicant no.1 is deficient, he has not delivered the possession of the property in time and even the money has not been refunded, the non-applicant no.1 shall make a payment of ₹2 lakhs as compensation for mental agony and ₹25,000/- as cost of proceedings to the complainant.”
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 submitted that as per terms of the Agreement dated 18.10.2013, the total Cost of the Flat was ₹49,43,199/- plus other charges but till date the Complainant as paid only ₹41,68,374/- after availing Housing Loan from Punjab National Bank. Tripartite Agreement was executed between the Parties. It was submitted that the JDA has issued Completion Certificate on 31.10.2019 w.e.f. 18.05.2015 and in terms of the Rule 16(b) of the JDA Regulations 2000, the Registered Architect of the Project has already issued Completion Certificate on 23.03.2013. It was submitted that the Fire NOCs were issued periodically depending on the stages of the Project and after the Project was completed in 2015, it was renewed periodically. It was further submitted that structure of the Project is not in the funnel of the Airport, therefore, there was no need of NOC from Airport Authority. It was further submitted that as per terms of the Agreement, the possession was to be handed over within 24 + 6 months, i.e., by 18.04.2016. It is only due to default on the part of the Complainant in making the payment despite several reminders dated 24.02.2014, 06.03.2014, 05.04.2014, 20.08.2014 and 04.09.2014, on account of which in terms of Clause 2.9 of the Agreement, vide cancellation notice dated 17.07.215, they cancelled the Allotment of the Complainant and in terms of Clause 6 of the Tripartite Agreement, they are bound to refund the total amount to the Bank who after adjusting the entire outstanding dues including interest, cost and other charges, shall pay the balance amount to the Complainant but vide letter dated 25.04.2016, the Complainant had sought refund of the amount from them. 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.
It was further submitted that similar matter was decided by a coordinate bench of this Commission in the case of “M/s. Narayan Builders & Developers vs. Aparna Choudhary & Anr.” in First Appeal No. 2373 of 2017 Order dated 30.08.2019, in following terms:
“10. 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.”
The Operation of the said Order has been stayed by the Hon’ble Supreme Court in Special Leave to Appeal No. 26255 of 2019 vide Order dated 20.01.2020 and the matter is still pending before the Hon’ble Supreme Court of India.
Per Contra, Mr. Kamal Mehta, 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. Kamal Mehta, 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 17.10.2017 passed by the State Commission is modified to the extent that the amount of ₹41,68,374/- shall be refunded by the Appellant Builder alongwith interest @10.25% p.a. from the date of deposit till realisation. The Appellant Builder shall calculate the payable amount in terms of above directions and out of the said payable amount, the Appellant Builder shall make the payment of outstanding dues in respect of the Complainant to the Respondent No. 2 Bank and thereafter shall pay the balance amount to the Respondent No. 1 / Complainant within 6 weeks from today. Keeping in view the facts and circumstances of the case, there shall be no order as to costs.