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Judgment
Ram Surat Ram Maurya, Presiding Member
Heard Mr. Shekhar G. Devasa, Advocate, for the complainants and Mr. Aditya Narayan Mahajan, Advocate, for the opposite parties.
Raveen Kewal and Smt. Riyaza Abubakar have filed above complaint, for directing the opposite parties to (i) refund Rs.19595444/- with interest @24% per annum from the date of respective deposit till the date of refund; (ii) pay Rs.3019286/- with interest @24% per annum (the amount which was paid by the complainants to Axis Bank); (iii) pay Rs.5000000/- as compensation for mental agony and harassment; (iv) pay costs of litigation; and (v) any other relief which is deemed fit and proper in the facts and circumstances of the case.
The complainants stated that Divya Sree Infrastructure Projects Private Limited (opposite party-1) (the developer) was a company, registered under the Companies Act, 1956 and engaged in the business of development and construction of group housing project. R. Nagaraj (opposite party-3) was the owner of the project land. Opposite party-3 and opposite party-1 entered into a Development Agreement dated 31.03.2011, for development of a group housing project in the name of “77 degree Place”, which comprises 362 premium apartments at Amani Bellandur Khane Village, Varthur Hobli, Bangalore East Taluk, Bangalore. On the application of the developer, Bangalore Development Authority approved the project vide order dated 10.10.2013 and Bruhat Bangalore Mahanagara Palike approved the building layout plan on 17.01.2014. The representatives of the developer approached the complainants and gave rosy pictures of the amenities and facilities of the project. Believing upon their representations, the complainants booked an apartment on 01.07.2014 and deposited booking amount of Rs.500000/- through cheque dated 01.07.2014 and Rs.1680000/- through cheque dated 15.07.2014. The developer allotted Residence No.D-0921, admeasuring 2627 sq.ft. Opposite parties-1 and 3 executed an Agreement for Sale dated 17.09.2014, for 1050.8 sq.ft. undivided share in the project land for a consideration of Rs.4859950/-. The developer executed a Construction Agreement dated 17.09.2014, in which cost of construction was Rs.16392480/-. Payment plan was “construction link payment plan”. In order to make timely payment, the complainants took loan of Rs.18300000/- from Axis Bank on 20.10.2014. The developer realized Rs.19595444/-, i.e. total 11 instalments till 01.06.2016. Clause-5-1 of the Construction Agreement provides timelines for completion of the construction up to 31.03.2016 and a grace period of six months. The developer, through letter dated 10.08.2016, raised a demand of Rs.1924175/- of “completion level twelve top slab”, through letter dated 16.12.2016, raised a demand of Rs.899820/- of “ within 10 days of completion of block work”, through letter dated 15.01.2017, raised a demand of Rs.1924175/- of “completion level sixteen top slab”, through letter dated 02.02.2017, raised a demand of Rs.1876696/- and reminders dated 09.02.2017 and 03.04.2017. After completion of block work, only demands remained for “completion of flooring” and “offer of possession” and these demands were not in accordance with payment plan and unauthorised. The complainants therefore gave a legal notice dated 17.04.2017, to the developer, for refund of their money with interest as per clause-10.2 of the Construction Agreement. The developer gave a reply notice dated 13.06.2017 and asked to clear the dues as per earlier demands. Axis Bank gave a legal notice dated 18.09.2017 to the complainants, for deposit of Rs.18113797.86. Due to inordinate delay in handing over possession, the complainants were suffering with grave hardship. Then this complaint was filed on 05.12.2017.
The developer filed its written reply on 07.08.2018, in which, allotment of the unit to the complainants, execution of Agreement for Sale and Construction Agreement dated 17.09.2014 and deposits made by them, have not been disputed. The developer stated that opposite parties-2 and 3 have been wrongly impleaded in the complaint. The complainants initially booked Residence No.B-0751 on 11.07.2014, after appreciating its location. Thereafter, they asked to allot Residence No.D-0921 instead of Residence No.B-0751 with various modifications in interior construction, which was accepted on 12.07.2014. The complainants again vide emails dated 10.08.2015 and 22.08.2015 asked to allot B-0503 luxury in place of D-0921 and asked for various modifications in interior construction, which was accepted by the developer. In January, 2016, the complainants asked to retain D-0921. The complainants, vide email dated 26.07.2016, again asked for modification in bathroom. The complainants, vide email dated 06.10.2016, requested to refund their money. The developer processed for refund and vide email dated 07.10.2016, informed to sign TDS certificate for refund but the complainants, vide email dated 14.10.2016, asked for not to cancel their allotment and waive the modification charges. The developer then raised demand dated 15.01.2017. The complainants again vide email dated 09.02.2017, requested for modification in internal construction, without paying the balance amount. Construction of Unit No.D-0921 was completed in June, 2017. After completing construction of Blocks-B, C and D, the developer applied for issue of “occupation certificate” on 28.06.2017. All amenities necessary for habitation were available. BBMP inspected the project on 27.06.2018 and issuance of “occupation certificate” is awaited. Due to change of unit and asking for modification in internal constructions by the complainants several times, the construction was delayed. The complainants malafide tried to implicate the developer in criminal cases. The complainants, voluntarily stopped paying EMI of the Axis Bank, due to which, Axis Bank has filed Original Application No.177 of 2018, for recovery of the loan amount, in which, the developer was also impleaded as the opposite party. The developer is not responsible to pay loan/EMI of Axis Bank. Legal notice of the complainants has been replied by the opposite party on 13.06.2017. The complaint is liable to be dismissed.
The complainants filed Rejoinder Reply and Affidavit of Evidence of Raveen Kewal and documentary evidence. The opposite party filed Affidavit of Evidence of Shaifali Singh and documentary evidence. The developer filed “occupation certificate” which was issued on 03.09.2018. Both the parties have filed their written synopsis.
I have considered the arguments of the parties and examined the record. Clause-5-1 of the Construction Agreement provides timelines for completion of the construction up to 31.03.2016 and a grace period of six months. According to the developer, construction of Unit No.D-0921 was completed in June, 2017. After completing construction of Blocks-B, C and D, the developer applied for issue of “occupation certificate” on 28.06.2017. All amenities necessary for habitation were available. BBMP inspected the project on 27.06.2018 and issued of “occupation certificate” on 03.09.2018. There is about nine months delay in completing the construction, which is not unreasonable. The developer attributed the cause of delay upon the complainants as after the agreement, the complainants, vide emails dated 10.08.2015 and 22.08.2015 asked to allot B-0503 luxury in place of D-0921 and asked for various modifications in interior construction, which was accepted by the developer. In January, 2016, the complainants asked to retain D-0921 and vide email dated 26.07.2016, again suggested for modification in bathroom. The complainants vide email dated 06.10.2016, requested to refund their money. The developer processed for refund and vide email dated 07.10.2016, informed to sign TDS certificate for refund but the complainants, vide email dated 14.10.2016, asked for not to cancel their allotment and waive the modification charges. The developer then raised demand dated 15.01.2017. The complainants again vide email dated 09.02.2017, requested for modification in internal construction, without paying the balance amount. All these facts are proved by filing copies of emails written by the complainants. The complainants, vide email dated 14.10.2016, asked for not to cancel their allotment and waive modification charges and vide email dated 09.02.2017, requested for modification in internal construction, it show that delay was not in issue between the parties rather modification charges was in issue. As modifications were done on the request of the complainants, they are liable to pay its charges.
As the complainants commit breach of the contract, their earnest money is liable to be forfeited. Supreme Court in Maula Bux Vs. Union of India, (1970) 1 SCR 928 and Sirdar K.B. Ram Chandra Raj Urs Vs. Sarah C. Urs, (2015) 4 SCC 136, held that forfeiture of the amount in case of breach of contract must be reasonable and if forfeiture is in the nature of penalty, then provisions of Section-74 of Contract Act, 1872 are attracted and the party so forfeiting must prove actual damage. After cancellation of allotment, the flat remains with the developer as such there is hardly any actual damage. This Commission in CC/438/2019 Ramesh Malhotra Vs.EMAAR MGF Land Ltd. (decided on 29.06.2020), CC/3328/2017 Mrs. Prerana Banerjee Vs. Puri Construction Ltd. (decided on 07.02.2022) and CC/730/2017 Mr. Saurav Sanyal Vs. M/s. IREO Grace Pvt. Ltd. (decided on 13.04.2022) held that 10% of basic sale price is reasonable amount to be forfeited as “earnest money”.
ORDER
In view of aforesaid discussions, the complaint is partly allowed. The opposite party-1 is directed to refund entire amount deposited by the complainants with interest @9% per annum from the date of respective deposit till the date of refund, after forfeiting 10% of basic sale price of land and construction, within a period of two months from this judgment. It shall be open of opposite party-1 to satisfy the loan of Axis Bank first and refund balance amount to the complainants.