Parsvnath Developers Limited vs Seema Jain & Anr

Subhash Chandra, Presiding Member

This appeal under the Consumer Protection Act, 1986 (in short, the ‘Act’) challenges the order dated 03.03.2022 of the State Consumer Dispute Redressal Commission, Haryana, Panchkula (in short, the ‘State Commission’) in complaint case no 366 of 2017 and alleges that the interest awarded by the State Commission for the deficiency in service on part of the respondent while allowing the complaint was not in accordance with law.

The facts of the case, in brief, are that on 24.11.2011 the appellant allotted flat no. T8-203 admeasuring 1740 sq ft in its project “Parsvnath Royale” for a basic cost of Rs 56,55,000/-. A Flat Buyer Agreement was executed on 23.12.2011 under which a Construction Linked Payment Plan was agreed upon. As per Clause 10(a) of the Agreement, possession was to be delivered in 36 months with a grace period of 6 months, i.e. by 23.06.2016. Respondents paid Rs 43,62,112/- and requested for Permission to Mortgage the flat in order to avail a home loan and a Tripartite Agreement was executed on 09.04.2013 between the parties and State Bank of Patiala. However, construction of the project was delayed due to global recession, and this was conveyed on 14.07.2015 to respondents. Subsequent delays were also duly informed to respondents, including the delay in construction of Tower 8 under Phase 3. Compensation was promised in the agreement under Clause 10(c) for the delay. Possession for fit out in the next 4 to 5 months was assured as already done in the other Towers to more than 70 families.

However, the respondents filed a complaint before the State Commission. In these proceedings, according to the appellant, the right of the appellant to file reply and evidence was closed by the State Commission which, without considering the material on record and the contentions herein, vide impugned order dated 03.03.2022 allowed the complaint and ordered as under:

… Having considered the contentions we are of the considered view that the complainants have proved their case that they had booked a flat and made the payment of Rs 43,62,120/- to the opposite parties. Opposite parties did not complete the construction in time and the complainants are entitled to get the refund of deposited amount along with interest. The opposite parties are directed to refund the sum of Rs 43,62,120/- to the complainants along with interest @ 15% p.a. from the date of respective deposits till the date of payment. The interest would be compounded every year and will be added to the principal sum. Opposite parties are further directed to pay Rs 1,25,000/- to the complainants as complainants obtained loan from financial institution. Opposite parties would pay Rs 2,50,000/- as compensation towards mental agony and harassment and Rs 1,00,000/- as litigation expenses. Opposite parties are further directed to pay this amount to the complainants within 30 days from today, failing which complainants would be entitled to get interest @ 18% per annum for the defaulting period. The complaint stands allowed.

The appellants are before this Commission with the prayer to:

A. Pass an order, thereby staying the operation of order dated 03 03 2022 passed by the state consumer disputes redressal commission Haryana Panchkula in consumer complaint number 366 of 217 till the disposal of the captioned appeal;

B. Pass any such other or further orders as this Hon’ble Commission may deem fit and proper in the interest of justice.

We have heard the rival contentions of the learned counsels for both sides and given careful consideration to the submissions made and perused the material on the record.

Learned counsel for the appellant submitted that the delay in the construction of the project was admitted and that the appellant was willing to comply with the order of the Sate Commission subject to the order of the State Commission being amended to direct the payment of a reasonable rate of interest and the removal of the multiple compensations in the impugned order. It was contended that the rate of interest @ 15% p.a. on the amount to be refunded was excessive and contrary to the rate of interest awarded by way of compensation by the Hon’ble Supreme Court and this Commission in similar matters. It was also contended that the award of a compound rate of interest and penal rate of interest @ 18% was also contrary to the established principles of compensation in such matters. It was also submitted that the compensation for the loan, mental agony and litigation separately in addition was also contrary to the compensation being awarded and therefore needed to be reconsidered. During oral arguments, the counsel for the appellant limited his arguments to quantum of compensation and the rates of interest awarded by the State Commission.

Per contra, learned counsel for the opposite party argued that the impugned order did not need any interference as it was fair and just. Reliance was placed on this Commission’s order in Subhash Chander Mahajan & Anr. Vs. Parsvnath Developers Ltd., in CC No. 144 of 2011 dated 05.05.2014 wherein refund was directed with interest @ 18% p.a. from the date of deposit till realization, compensation of Rs 7,00,000/- @ Rs 1,00,000/- per year from 2007 within 90 days for mental agony and harassment with the default interest of 24% p.a. and costs of Rs 2,00,000/-.

From the facts of this case it is manifest that the appellant has delayed the handing over of the possession of the flat booked by the respondents. Against the promised date of possession, including grace period of 6 months no offer of possession has been made so far. It is not the case of the appellant that the respondents defaulted in making payments towards the agreed sale consideration. The Hon’ble Supreme Court has, in a catena of judgments, notably Pioneer Urban Land & Infrastructure Ltd. Vs. Govindan Raghavan, II (2019) CPJ 34 (SC) decided on 02.04.2019, Kolkata West International City Pvt. Ltd. Vs. Devasis Rudra, II (2019) CPJ 29 SC decided on 25.03.2021 and Fortune Infrastructure & Anr. Vs. Trevor D’Lima & Ors. (2018) 5 SCC 442 held that an allottee/consumer cannot be expected to wait indefinitely for possession or be compelled to accept possession and is entitled to seek either refund or possession with compensation and that in case of delay, the allottee can either claim refund with compensation or possession with compensation for the delay at his discretion. In the instant case, the respondents had approached the State Commission seeking refund of the amount deposited with interest/compensation. Reckoned from the promised date of possession, including the grace period of 6 month, i.e. 23.06.2016, the delay in the instant case is admittedly of nearly 8 years as on the date of filing the complaint before the State Commission. This delay is certainly inordinate and warrants compensation for the delay. The impugned order of the State Commission cannot be faulted on this account.

However, the impugned order warrants interference on the grounds that it has awarded compensation separately under various heads and at a rate that is considered both excessive and likely to set wrong legal precedents and contrary to the law laid down by the Hon’ble Supreme Court in more recent judgments. In DLF Homes Panchkula Pvt. Ltd., vs D S Dhanda in CA nos. 4910-4941 of 2019 decided on 10.05.2019 the Apex Court has laid down that the award of multiple compensations for a singular act of deficiency is not justified and therefore, the award compensation Rs.2,50,000/- towards mental agony is found to be not tenable. In Experion Developers Pvt. Ltd. Vs. Sushma Ashok Shiroor, Civil Appeal No. 6044 of 2019 decided on 07.04.2022 the Hon’ble Supreme Court laid down that that “the interest payable on the amount deposited (should be) restitutionary and also compensatory (and) interest has to be paid from the date of deposit of the amounts” and held that simple interest @ 9% p.a. on refund of deposits was considered fair and just. While the Hon’ble Supreme Court has awarded both higher and lower rates in different cases, based upon exceptional circumstances, these are exceptions and depend upon the facts of the case. In the case on hand, we find that the circumstances do not warrant either the award of a higher rate of interest or the interest to be a compounded rate. It is considered necessary to balance the equities of both the parties in such matters and not set precedents that lead to profiting.

In view of the foregoing, and in the facts and circumstances of this case, we find merit in the appeal and consider it liable to succeed. The appeal is accordingly allowed in part and ordered as under:

(i) The appellants are directed to refund the sum of Rs.43,62,120/- to the respondents along with simple interest @ 9% p.a. from the date of respective deposits till the date of payment within 6 weeks of this order, failing which the rate of interest will be 12% p.a. simple interest.

(ii) The directions regarding interest to be compounded every year and added to the principal sum, payment of Rs 1,25,000/- to the respondents for the loan obtained, Rs 2,50,000/- as compensation towards mental agony and harassment and interest @ 18% per annum for the defaulting period are set aside.

(iii) The litigation cost of Rs 1,00,000/- is modified to be Rs. 50,000/-.

Pending IAs, if any, also stand disposed of with this order.