Prateek Realtors Pvt. Ltd vs Vivek Kumar Gupta & Anr

V.K. Jain, J

The complainants / respondents were allotted a residential flat by the appellant in a project namely "Prateek Laurel' which the appellant was to develop in Sector 120 of Noida. The basic cost of the flat was agreed at Rs.39,62,400/-. The complainants made payment of Rs.21,70,803/- to the appellant on different dates. Vide demand letter dated 09.12.2010, the appellant demanded a sum of Rs.4,96,240/- from the complainants, which was payable at the time of third floor casting. The due date for the said payment was 10.1.2011. The aforesaid instalment was not paid by the complainants. According to them, the appellant had agreed to give a 5% rebate to them on payment of 50% of the cost of the apartment and therefore, they requested the appellant for the aforesaid 5% discount, besides intimating their new address to the appellant. According to the complainants, on 18.5.2011, they were informed that the aforesaid 5% discount would not be given and therefore, the said amount was deposited by them on the same date. However, on 04.6.2011, the complainants received an email from the appellant informing that the allotment had been cancelled on 09.4.2011 and that they had not encashed the cheques which they had deposited on 08.5.2011. Being aggrieved from the cancellation of the allotment, the complainants approached the concerned State Commission by way of a consumer complaint, challenging the said cancellation and seeking possession of the allotted apartment, or in the alternative refund of the amount paid by them along with 18% interest.

The appellant filed its written version contesting the complaint and inter-alia pleaded that since the complainants had failed to deposit the instalment of Rs.4,96,240/- demanded vide letter dated 09.12.2010, followed by two reminders, the allotment was cancelled on 09.4.2011 and the flat in question was allotted for another person namely Arvind Kumar Srivastava in March, 2013. The allotment made to Mr. Arvind Kumar Srivastava was also later cancelled and the flat was allotted to another Mr. Ratan kumar Mittal.

It is not in dispute that as per the payment schedule agreed by the complainants with the appellant a sum of Rs.3,96,240/- towards the cost of flat and a sum of Rs.1,00,000/- as additional cost was payable to the appellant. The possession of the flat was to be delivered to the complainants by September, 2012, subject to payment by the complainants of all the dues, on or before the due dates without any default.

It is not in dispute that the complainants received a demand notice dated 09.12.2010 demanding a sum of Rs.4,96,240/-, comprising Rs.3,96,240/- towards part cost of the flat and Rs.1,00,000/- towards additional cost, which were payable on third floor roof casting. The said instalments were payable by 11.1.2011. It is not in dispute that the aforesaid instalments were not paid on or before 11.01.2011.

The case of the complainants is that the appellant was to give 5% discount on their paying 50% of the cost of the flat and that is why on receipt of the aforesaid demand letter dated 09.12.2010, they approached the appellant for the aforesaid discount. However, there is absolutely no documentary evidence of any such discount having been agreed or even offered by the appellant to the complainants. The terms and conditions of allotment contain no such stipulation. In the absence of any documentary proof, the bald assertion made by the complainants with respect to the said 5% discount cannot be believed. Had there been even an oral promise to give 5% discount after payment of 50% of the sale consideration, the least the complainants would have done in the ordinary course of human conduct would be to write a letter to the appellant referring to the alleged promise and also stating therein the name of the person making the said promise and the date and place where it was made. No such letter however, was written by the complainants to the appellant. Therefore, I find no hesitation in holding that no such discount was ever offered to the complainants.

Since the instalments payable on or before 11.1.2011 were not paid, the appellant was fully justified in cancelling the allotment as per the terms and conditions of the allotment letter dated 20.5.2010.

The learned counsel for the respondents / complainants submits that the cancellation of the allotment on account of non-payment of only one instalment was not justified. In support of his contention he relies upon the decisions of the Hon'ble Supreme Court in Teri Oat Estate (P) Ltd. Vs. U.T. Chandigarh & Ors. (2004) 2 SCC 130 and Jagmohan Singh Vs. State of Punjab & Ors. (2008) 7 SCC 38. The learned counsel for the appellant on the other hand submits that this is a case where the payment was not made despite two reminders sent to the complainants. He also points out that the second reminder was sent not only at Noida address but also at the Ghaziabad address of the complainants, which was the second address supplied by them to the appellant. He also submits that the postal receipts whereby the second reminder dated 09.4.2011 was sent to the complainants have already been placed on record. He also submits that the cheques dated 18.5.2011 were not accepted and encashed by the appellant, the same having been left by the respondents on their own, without any commitment from the appellant to accept the same.

In Teri Oat Estates (P) Ltd. (supra) one issue before the Hon'ble Supreme Court was as to whether the exercise of extreme power of resumption and forfeiture by Union Territory was justified in the factual matrix of the case. It was inter-alia held that whether the power had rightly been applied or not would depend upon the factual matrix obtaining in each case and no hard and fast rule can be laid down. It was noted that a letter of allotment had been issued to the appellant in terms of the land sold to him in auction, the appellant had already raised a six storied building and made substantial payment from time to time. In such a situation, if the default is not absolutely wilful or dishonest but occasioned due to a situation which may be beyond one's control, the statutory right of resumption of the land may not be appropriate if the entire dues stands discharged. The factual matrix in the present case is however different. The complainants have made only part payment and have defaulted in payment of the instalment due on 11.1.2011. This is not their case that the said payment could not be made on account of reasons beyond their control. They have taken a false plea alleging an offer of 5% discount by the opposite party. They did not pay the said instalment even after reminder was sent to them by Registered Post at both their addresses available with the appellant. More importantly, the appellant before this Commission is not State within the meaning of Article 12 of the Constitution and therefore the doctrine of proportionality enunciated in the above referred decisions of the Hon'ble Supreme Court would not apply in this case. The appellant being a private builder needs money to complete the construction within the time limit agreed between the parties.

If the instalments are not paid in time, it is not possible for the builder to honour its contractual obligations to the buyer. Therefore, the builder is competent in such a situation to cancel the allotment on account of non-payment of the instalments and forfeit the Earnest Money as per the terms and conditions of allotment. In Jagmohan Singh (supra) also allotment was made by a Development Authority, which was State within the meaning of Article 12 of the Constitution. The appellant in the said case was allotted a plot of land and was required to pay 15% of the sale consideration within sixty days which could be extended by thirty days on his request. He sought permission to mortgage the plot which was rejected but the said decision was not conveyed to him. He therefore, failed to deposit the said amount. An order was passed by the Estate Officer, forfeiting the earnest money but no show cause notice was issued to him before passing the forfeiture order. It was found by the Hon'ble Supreme Court that no show cause notice was issued to him before passing the forfeiture order. In the peculiar facts and circumstances of the case, the Hon'ble Supreme Court remitted the matter back to the revisional authority for considering the case of the appellant in the light of the various orders passed by the said authority as also the High Court. In the course of the judgment, the Hon'ble Supreme Court also referred to its decision in Teri Oat (supra). In my opinion, this judgment does not apply to the present case since the appellant before this Commission is not State within the meaning of Article 12 of the Constitution and therefore, was not required to act in accordance with Article 14 of the Constitution by giving a show cause notice before cancelling the allotment and forfeiting the earnest money.

For the reasons stated hereinabove, the impugned order cannot be sustained and is liable to be set aside. However, the appellant cannot deduct more than the earnest money out of the amount paid to it by the complainants. Moreover, since the appellant has been utilizing the balance amount which was payable to the complainants after deducting the earnest money, it is also required to pay appropriate interest to the complainants on that amount. As held by this Commission in DLF Ltd. Vs. Bhagwanti Narula, I (2015) CPJ 319(NC), (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.

In the present case, the complainants had paid Rs.3,50,000/- to the appellant before the allotment letter was issued. Therefore, only the aforesaid amount can be forfeited by it, while cancelling the allotment. The balance amount therefore is required to be refunded to the complainants, along with appropriate interest with effect from 11.1.2011 when the instalment payable by that date became due and the appellant became entitled to forfeit the earnest money on account of non-payment of the said instalment. The appellant is therefore directed to refund the amount receipt by it from the complainants, after deducting a sum of Rs.3,50,000/- from that amount, along with simple interest @ 10% per annum on the said balance amount, with effect from 11.1.2011 till the date on which the said balance amount is refunded.