Omaxe Limited & Anr vs Vinay Dua & 2 Ors

Avm J. Rajendra, Avsm Vsm (Retd.), Presiding Member

The present First Appeal has been filed under Section 19 of the Consumer Protection Act, 1986 (hereinafter referred to as “the Act”) against the Order dated 19.08.2016 passed by the learned Punjab State Consumer Disputes Redressal Commission, Chandigarh (hereinafter referred as “the State Commission”), in Consumer Complaint No.82 of 2014 whereby the State Commission directed OP-1 & 2 to refund the deposited with interest @18% p.a. from the date respective deposits to the Complainant.  The OP-3 also directed to pay Rs.35,000 as compensation for deficiency in service to the Complainant.

For convenience, the parties in present matter are hereinafter referred to as per position held in the Consumer Complaint.

Brief facts of the case are that the the complainants booked a residential Flat No. 702 in Tower No. 5 at Omaxe Royal Residency, Ludhiana for a sale consideration of Rs. 49,35,500 in July 2008. They paid Rs. 4,95,000 at the time of booking, and the flat was to be delivered fully furnished within 30 months from the agreement date. Omaxe Ltd. (OP-1 & 2), also facilitated a loan for the complainants from Bank of India (OP-3), which disbursed Rs.20,00,000 towards the flat's payment. Despite having paid over 50% of the flat's price, the construction of Tower No. 5 never commenced. The complainants were subsequently informed that they had been allotted flat No. 702 in Tower No. 1, which was done without their consent and in violation of the agreement. When they visited the site in 2011, they found that construction of Tower No. 1 was also stalled. As a result, they requested either a refund or possession of a completed flat in an alternate building.  In April 2012, Bank of India served them a notice requesting Title Deed or threatening to recall the loan with penal interest, even though they had been regularly paying the EMIs. When the complainants sought clarification from the OPs regarding flat possession, they asked the balance amount to be paid by November 30, 2012, and in return, Rs.8,10,948/- in interest would be waived. The complainants asked the bank to disburse the balance amount, but the bank declined due to project delays. After further failed attempts to get a commitment from Omaxe regarding possession, the OP-1 & 2 issued a cancellation notice on March 11, 2014, demanding Rs. 18,98,170/- plus Rs. 27,97,943/- in interest within 10 days, or the allotment would be cancelled and amounts forfeited.  The complainants served a legal notice in April 2014 demanding possession or a refund. The OP-1 & 2 failed to respond, leading the complainants to file the present case, alleging deficiency in service and unfair trade practices on the part of Omaxe Ltd seeking the following reliefs:

i. Delivery of flat possession on receipt of the balance amount; or

ii. Rs. 24,96,000 refund with 18% interest p.a from date of deposit.

iii. Rs. 50,000/- as compensation for mental agony and harassment.

iv. Rs. 10,000/- as litigation expenses.

In their reply before the State Commission, OP-1 & 2 admitted that the initial allotment of a flat in Tower No. 5 and the execution of the agreement and changing the flat's location to Tower No. 1. They asserted that this was done in compliance with the agreement and after informing the complainants. The change of was also reflected in a demand letter issued in 2009, to which the complainants did not object. They failed to adhere to the agreed payment schedule, which was essential to the contract. Due to the complainants' default in paying the remaining balance, they exercised its right to cancel the allotment and retain the earnest money as per the agreement. The OP-1 & 2 claimed that the complainants were aware of the location change and the payment schedule but chose not to make timely payments. They also disputed the complainants' status as ‘consumers’ under the Act and asserted that the complainants were investors rather than genuine consumers of the residential project. There was no deficiency in service, as the complainants had not adhered to the payment plan, and thus the possession of the flat could not be delivered to them. They also denied receiving any communications from the complainants regarding the status of construction or the location change. They argued that the refund of any amount would be processed according to the terms and conditions of the contract, and they requested dismissal of the complaint with costs.

The OP3 did not file any reply before the State Commission.

The learned State Commission vide Order dated 19.08.2016, partly allowed the Complaint with costs and directed the Appellants/ Opposite Parties No.1&2 and the Respondent No.3/OP3 as under:-

“(i)   Opposite party nos.1 & 2 are directed to refund the amount of Rs.24,95,000/- along with interest at the rate of 18% per annum from the date of deposit of the different amounts till the date of payment (The amount which is payable by the complainants to the Bank on account of the loan amount, shall be paid to the Bank and only the balance amount shall be paid to the complainants); and

(ii)    Opposite party No.3 is directed to pay Rs.35,000/-, as compensation for deficiency in service on its part.

The opposite parties are directed to comply with this order within 30 days of the receipt of the certified copy of the same.”

Being dissatisfied, the Appellants/ OP-1 & 2 filed the present Appeal and in his arguments, the learned Counsel for the Appellants/ OP-1 & 2 reiterated the contentions made in the Appeal.  He submitted that the Complainant is a chronic defaulter so he is not entitled to any equitable relief.  The action of the OP-1 & 2 of cancelling the allotment of the Flat for non-payment of the entire agreed amount and forfeiting the earnest money is within the terms of the contract and well settled law of the land. He further submitted that the compensation awarded by the State Commission is excessive and without any adjudication.  He has relied upon Pittar Chand Mittal vs. M/s. Unitech Ltd. & Ors., FA No.138 of 2012, decided on 01.04.2013 by the NCDRC; and Satish Batra vs Sudhir Rawal, (2013) 1 SCC 345 in support of his arguments.

On the other hand, the learned Counsel for the Complainants/ Respondents No.1 &2  argued in support of the impugned order passed by the State Commission.  He sought to dismiss the First Appeal with costs. He has relied upon Puneet Malhotra vs. Parsvnath Developers Ltd., C.C. No.232 of 2014 with connected matters decided on 29.01.2015 by the NCDRC; and Kushal K. Rana vs. M/s. DLF Commercial Complexes Ltd., C.C. No.88 of 2012, decided on 09.09.2014 by the NCDRC in support of his arguments.

The learned Counsel for the OP-3 contended that the OP-3 has no role to pay in the present First Appeal as the only issue remaining to be decided in this Appeal is with regard to the payment of interest between the Appellants and the complainants. He further contended that there is no deficiency in service on the part of the Bank as per the agreement executed between the parties.  He further argued that the State Commission erred in awarding the amount of compensation of Rs.35000/- as there was no deficiency in service on the part of the Bank.  He sought to dismiss the complaint qua the Bank.

I have examined the pleadings placed on record and the associated documents and thoughtfully considered the detailed arguments advanced by the learned Counsels for both the parties.

In this case, the main issue revolves around cancellation of the flat in question by the OP-1 & 2 on the grounds of non-payment by the complainants, who in turn sought a refund of their deposit on grounds of significant delay in the project’s completion.

The State Commission had ruled in favour of the complainants, directing the developer to refund the amount deposited with interest and compensation. The developer appealed this order, arguing that the complainants were defaulters and thus not entitled to any relief.

It is an admitted position that as per the agreement executed between the parties dated 15.07.2008, the flat in question was allotted for the sale consideration of Rs.49,35,600 to the complainants and the same was to be delivered by OP-1 & 2 by 15.01.2011. Admittedly, the Complainants have also deposited Rs.4,95,000 as earnest money and Rs.20 Lakh was disbursed to OP-1 & 2 by the Bank through loan they obtained. Undisputedly, the flat in question allotted to them has not been constructed and the OP-1 & 2 changed the said allotment of flat, without their consent. Thereafter, the complainants have not made any further payments.  There is no deficiency on the part of the OP-3/bank and it has no role to hand over the possession of the flat in question or refund of the deposited money.

It is undisputed that there has been delay in the handing over possession of the Flat as per the Agreement and the OP had cancelled the allotment to the Complainant. In these circumstances, the OP is bound to refund the amount paid by the Complainant as consideration towards the purchase of the said Flat. In number of cases, the Hon’ble Supreme Court and this Commission have decided favorably on the right of the buyers to get a refund of their money in case of delay by the Developer in giving possession in terms of the Agreement and cancellation of allotment.

In the case of Emmar MGF Land Ltd. & Ors. Vs. Amit Puri- {(II 2015 CPJ 568 (NC)}, decided on 30.03.2015, this Commission has held as under:

“After the promised date of delivery, it is the discretion of the Complainant whether to accept the offer of possession, if any, or to seek refund of the amounts paid by him with some reasonable compensation and it is well within his right to seek for refund of the principal amount with interest and compensation.”

As regards the rate of interest applicable and the scope for compensation in such matters, the Hon’ble Supreme Court in Experion Developers Pvt. Ltd. Vs. Sushma Ashok Shiroor, in Civil Appeal No.6044 of 2019 decided on 07.04.2022 has held 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.”

Considering the facts of the case, the submissions made by the learned Counsels for both the parties and the established precedents by the Hon’ble Supreme Court in the matter, the impugned Order dated 19.08.2016 passed by the learned State Commission, is modified with the following directions: -

ORDER

I. The Appellants/OP-1&2 shall refund Rs.24,95,000 to the Complainants, along with simple interest @ 9% per annum from the respective dates of deposit till the date of entire payment, 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 one month till the realization of the entire amount.

II. The Appellants/OP-1&2 shall pay cost of litigation quantified as Rs.50,000 to the Complainants, within one month from the date of this order.

Consequently, the instant First Appeal No. FA/1210/2016 stands disposed of. All the pending Applications, if any, also stand disposed of accordingly. The statutory amount deposited by the Appellant, if any due, be refunded as per law, after due compliance of the order.