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Judgment
Justice Sudip Ahluwalia, Member
This Consumer Complaint has been filed by the Complainants u/s 21 of the Consumer Protection Act, 1986 for grant of a sum of Rs.1,57,82,767/- with interest @ 18% p.a. along with pendente lite and future interest, exemplary damages of Rs.10,00,000/- and litigation costs.
The brief facts leading upto the present Complaint are that the Complainants had booked a residential Flat worth Rs.84,81,626/- in 2012 for their own residence in a project of the Opposite Party namely, “Rise” in Ramprastha City situated at Sector-37 D, Gurgaon, Haryana. They were allotted unit bearing No. 402 on the 4th Floor in Tower/ Block No. B having a super area of about 1765 sq. ft. approx. The Flat Buyer’s Agreement was executed by the Opposite Party in favour of Complainants on 10.01.2013. As per clause 15(a) of the Agreement, the Opposite Party had assured to handover possession of the Unit by September, 2015 with an additional grace period of 120 days for the purpose of obtaining the Occupation Certificate.
The case of the Complainants is that they are ‘Consumers’ as envisaged under the Act and have invoked original jurisdiction of this Hon’ble Commission. It is submitted that the construction/development work at the project site had not been completed even after a delay of more than 6 years despite payment of Rs.73,33,767/- out of the total cost of Rs.84,81,626/- by them towards the Unit. It is averred that such wilful delay by the Opposite Party has caused huge financial losses and mental stress to the Complainants as the Flat is far from completion. It is further averred that as per Clause 17(a) of the Agreement, the Opposite Party has indulged in unfair trade practice by mentioning a compensation Clause of merely Rs.5/- per sq. ft. per month only till date of possession as penalty for delay in handing over possession while as per Clause 14(a), they charge 1.5% per month (i.e. 18% p.a.) as penal interest compounded quarterly in case of delay in payments by the Complainants. Hence, it is submitted that the Opposite Party is liable to pay compensation with interest @18%p.a. as delay penalty since 2012.
It is also averred that most of the clauses mentioned in the Agreement were one sided, unfair and unreasonable and the same were provided to the Complainants after they had already paid a substantial amount of money to the Opposite Party, and any objection to any such Clauses would have resulted in forfeiture of the Ernest Money. It is further averred that the Complainants repeatedly enquired about the status of construction but the Opposite Party always avoided any plausible reply.
Hence, the Complainants filed the present Complaint being aggrieved by the deficiency in services and unfair trade practices of the Opposite Party in failing to deliver the possession of the Unit in time, failing to complete the construction of the Project within committed time period, despite collecting huge sums of money, thus causing harassment and hardships to the Complainants. Therefore, the Complainants have prayed as follows-
“a) Grant a sum of Rs.1,57,82,767/- (i.e. a sum of Rs.73,33,767/- towards principal amount paid along with compensation in the form of interest amounting to Rs.84,49,000/- as calculated upto 31.05.2020) at the rate of 18% per annum along with pendente lite and future interest at the same rate or such higher rate of interest which this Hon’ble Commission may deem fit in the interest of justice, from the date of making payments till the date of actual realization of the payment;
b) Grant exemplary damages to the tune of Rs.10 lacs for the losses, mental agony and harassment suffered by the Complainants;
c) Grant cost of Litigation to the Complainants;
d) Any other order, relief or direction which this Hon’ble Commission may deem fit and proper under the circumstances of the case may kindly be passed in favour of the Complainants and against the Opposite Party.”
The Opposite Party No.1 has filed its written version to resist the present Complaint. The Opposite Party No.1 has at the outset denied all the allegations except those that have been specifically admitted and has raised the following objections-
a. That the present Complaint is not maintainable being below the pecuniary jurisdiction of this Hon’ble Commission i.e. the value of consideration paid in the present case is admittedly below Rs.1 Crore whereas the pecuniary jurisdiction of this Hon’ble Tribunal after coming into force of the Consumer Protection Act, 2019 is Rs.10 Crores or above. The Complainants are not entitled to claim interest prior to the date of default since the amount is payable only on the occurrence of default, and the cost of capital is the exclusive risk of the Complainants;
b. That the present complaint is barred by Limitation. As per averments in the complaint, the alleged cause of action would have arisen in September, 2015 plus 120 days, on account of which the complaint is beyond the limitation period of 2 years. The Complainants have also not filed any Application for condonation of delay and hence, the complaint is liable to be dismissed in limine;
c. That the Complaint is not maintainable since the present Allottees do not fall under the definition of ‘Consumers’ as defined under the Consumer Protection Act, 2019. The Allottees have not discharged their onus of satisfying this Commission that they have not purchased the said Apartment for commercial purposes. The Allottees have not disclosed the details of their ownership of residential properties within the NCT Region. The Complainants have nowhere stated that the said Flat is their only Flat and hence an adverse inference can be drawn that the Complainants are in possession of multiple Flats and the sole intent of purchasing the said flat was for investment purposes. Hence, Complainants are not ‘Consumers’.
d. That the Allottees categorically agreed to the terms and conditions after thoroughly going through each Clause of the Agreement and only after completely satisfying themselves of the reasonability of the Agreement, the Apartment Buyer’s Agreement was signed. The said Agreement is not an Agreement for availing any construction services, rather is an Agreement simpliciter for sale of an Apartment, and the Allottees have agreed to be governed by the Haryana Apartment Ownership Act, 1983;
e. That the Complainants have demanded unreasonable and exorbitant amounts of compensation by way of interest at the rate of 18% per annum. The Agreement clearly specifies the amount of compensation payable by the Opposite Party and the Complainants cannot go beyond the terms of the Agreement;
f. That rate intended to be charged by the Opposite Parties is only prohibitory rate of interest to ensure timely payments and the Opposite Parties have waived the penal interest qua the complainant when there was delay in making payments;
g. That there is no default on the part of Opposite Parties since the date of possession stands extended till 31.12.2020 in accordance with the terms of Agreement. The delay in delivering possession is solely because of reasons beyond control of the Opposite Parties. The clause 15(a) of the Agreement is subject to clause 31 of the Agreement i.e. the Force Majeure circumstances in which case the date of possession shall get extended automatically. Hence, the date of delivery is not a strict and final date but merely a tentative date. Further, the contingency of delay was within the contemplation of the parties as the parties had agreed to clause 17(a) of the Agreement which stipulates that the Allottees will be compensated with Rs.5/- per sq. ft. per month of Super Area in the eventuality of delay. The Article 15(b)(i) of the Agreement entitles the developers for reasonable extension of time if possession was delayed due to circumstances beyond their control;
h. That time is not of the essence when the delivery of possession is concerned. As per clause 13(a), time is of the essence only with respect to the Allottee’s/Complainants’ obligations to pay. And as per clause 15(a), date of delivery was tentative/ proposed and not a firm date;
i. That the reasons that caused delay in delivery of possession by the Opposite Party which were beyond their control are:
i) That the project faced various hindrances including approvals from different authorities,
ii) Active implementation by Government of alluring and promising Social Schemes like NREGA and JNNURM further led to sudden shortage of labour,
iii) Extreme shortage of water and supply of construction material;
j. That the project is a RERA registered project and the question of default in completion needs to be first decided by the RERA/Competent Authority in view of the provisions of RERA, 2016 read with the conditions of registration. This Commission does not have jurisdiction to decide on the question of default of the real estate project which would affect a large number of Allottees of the said project. The present project ‘RISE’ is a project registered vide memo No. HRERA-478/2017/1300 dated 09.10.2017 and hence is subject to adjudication of the Adjudicating Authority under Real Estate Development and Regulation Act. The Hon’ble Haryana RERA has issued Registration Certificate for the project in question. The said registration was valid until 31.06.2019, and its extension had been applied for till 31.12.2020. The Applications for refund have been refused by Haryana RERA till the validity of registration certificate;
k. That this Hon’ble Commission lacks jurisdiction in view of Section 79 of RERA;
l. That the compensation by way of interest is governed by RERA, 2016, and this Commission does not have jurisdiction to award penal interest over and above the prescribed amount under the RERA;
m. That the Complainants herein have no right to claim any amount beyond the amount of compensation provided in the Agreement (Reference has been made to section 74 of Indian Contract Act, 1872);
Hence, the Opposite Party No.1 contends that the complaint is liable to be dismissed.
Rejoinder has been filed on behalf of the Complainants. The Complainants at the outset have denied the contents of the Reply filed by the Opposite Party except the contents which are specifically admitted. The Complainants have stated that the Act of 2019 has prospective effect and therefore, the Opposite Party cannot seek to apply the provisions under the new Act retrospectively. It is further stated that the Complaint is within limitation since the Opposite Parties have admittedly, neither refunded the money, nor completed construction or offered possession. It has been further submitted that the Opposite Party has tried to mislead this Hon’ble Commission by repeatedly referring to the Act of 2019 whereas the present complaint is filed under the Act of 1986. It has also been submitted that the flat was to be handed over by September, 2015 and by no stretch of imagination the said date could have been extended up to December, 2020. It has been further stated that there were no reasons beyond the control of Opposite Party, neither there was any event of force majeure, nor the same have ever been intimated by the Opposite Party to the Complainants. It is further stated that this Commission has got appropriate pecuniary and territorial jurisdiction and the value of relief claimed is more than Rs.1 Crore.
Affidavit in Evidence has been filed by Mr. Sahdev Bhardwaj on behalf of the Complainants. Affidavit in Evidence has been filed by Mr. Ankur Setia on behalf of the Opposite Party No.1.
It has been argued by the Complainants in addition to the above pleadings that in identical matters of the same project being CC/677/2018, this Commission has granted refund along with compensation in the form of interest @9% payable within 4 weeks.
It has been argued by the Opposite Party that no default has occurred on behalf of the Opposite Party since the date of Possession stands extended till 31.12.2023 in terms of Agreement and the present project ‘RISE’ has received an extension for completion of project till 31.12.2023. That the Opposite Party has successfully obtained registration certificate no. 78 of 2017 and further the Opposite Party has received an extension for completion of the project up till 31.12.2023 vide memo no. 278 of 2017/7(3)/2021/2 dated 20.07.2021. Therefore, the date of handover of possession has never arrived in view of extension. The Opposite Party has obtained Occupancy Certificate in majority of its projects. The principles of lex non cogit ad impossibilia and impotentia excusat legem are applicable to the present case at hand. Another major reason contributing to impossibility of performance is that of COVID-19. It is further argued that the interest @18%p.a. is untenable and the impact of Covid-19 has been taken into consideration even by the Hon’ble Supreme Court of India in calculating rate of interest. Even otherwise, combined reading of section 40 of the RERA Act, 2016 and Rule 15 of the Haryana Real Estate Rules, 2017 fixes rate of interest which shall be the State Bank of India highest MCLR plus 2%. It is further argued that the present project “RISE” has received funding from the Government of India under the SWAMIH Funds Scheme for completion and development of project.
Heard the Ld. Counsel for the parties. Perused the material available on record.
Having carefully considered the submissions made on behalf of both the sides alongwith the available material on record, this Court is of the opinion that in view of the inordinate delay in offering possession to the Complainants long after passing of the stipulated date for that purpose, the Complainants would be well within their rights to retract from the Agreement and seek appropriate relief(s).
This is so because it is seen that the Apartment Buyer’s Agreement between the initial allottees and the Opposite Party was executed on 10.01.2013. It provides that the possession would be made over by September, 2015, and with a further grace period of 04 months for applying and for obtaining the Occupancy Certificate.
As such, even after allowing additional grace period of 04 months, the possession ought to have been delivered to the Complainants latest by January, 2016. In the meantime, the Complainants waited for more than four years over and above the promised time line, including the extended grace period.
In such circumstances, the present case would appear to be squarely covered by the decisions of the Hon’ble Supreme Court inC.A No.3182 of 2019 dated 25.03.2019, “Kolkata West International City Pvt. Ltd. Versus Devasis Rudra”, and in C.A. No. 12238 of 2018 dated 02.04.2019 “Pioneer Urban Land & Infra Ltd. versus Govindham Raghavan”, in which it has been observed that a Purchaser/allottee cannot be made to wait for an indefinite time.
In “Kolkata West International City Pvt. Ltd. Versus Devasis Rudra” (supra), it was observed as hereunder:
“…..It would be manifestly unreasonable to construe the contract between the parties as requiring the buyer to wait indefinitely for possession. By 2016, nearly seven years had elapsed from the date of the agreement. Even according to the developer, the completion certificate was received on 29 March, 2016. This was nearly seven years after the extended date for the handing over of possession prescribed by the agreement. A buyer can be expected to wait for possession for a reasonable period. A period of seven years is beyond what is reasonable. Hence, it would have been manifestly unfair to non-suit the buyer merely on the basis of the first prayer in the reliefs sought before the SCDRC. There was in any event a prayer for refund. In the circumstances, we are of the view that the orders passed by SCDRC and by the NCDRC for refund of moneys were justified…….”.
In “Pioneer Urban Land & Infra Ltd. versus Govindham Raghavan” (supra), it was held –
“9. We see no illegality in the Impugned Order dated 23.10.2018 passed by the National Commission. The Appellant-Builder failed to fulfil his contractual obligation of obtaining the Occupancy Certificate and offering possession of the flat to the Respondent- Purchaser within the time stipulated in the Agreement, or within a reasonable time thereafter. The Respondent- Flat Purchaser could not be compelled to take possession of the flat, even though it was offered almost 2 years after the grace period under the Agreement expired. During this period, the Respondent- Flat Purchaser had to service a loan that he had obtained for purchasing the flat, by paying Interest @ 10% to the Bank. In the meanwhile, the Respondent- Flat Purchaser also located an alternate property in Gurugram. In these circumstances, the Respondent- Flat Purchaser was entitled to be granted the relief prayed for i.e. refund of the entire amount deposited by him with Interest”.
In the case of “Subodh Pawar Vs. M/s. IREO Grace Realtech Pvt. Ltd. & Ors”; CC No. 1998 of 2016, decided on 24.9.2018 by this Commission, the Complainant’s claim was allowed even when Occupancy Certificate had been obtained by the builder who thereafter sought to offer possession which was almost two years after the stipulated date according to the Agreement. As such, the contention raised on behalf of the Opposite Party- Developer that since possession of the flat had been offered to the Complainants on 23.10.2019 vide its letter (Annexure-R/5), the Complainants would not remain entitled for refund of the money paid by them towards purchase of the flat, becomes clearly untenable.
The complaint was also resisted by the Opposite Party on the ground that the Complainants are not “consumers” within the meaning of Section 2 (1) (d) of the Consumer Protection Act, 1986in as much as they had booked the property in question for commercial purposes i.e. only for resale. However, in “Kavita Ahuja Vs. Shipra Estates” III (2016) CPJ 31, it has been laid down that the onus of establishing that the Complainant was dealing in real estate i.e. in the purchase and sale of plots in his normal course of business to earn profits, shifts to the Opposite Party, which in the instant case the Opposite Party-Developer had failed to discharge it by any documentary evidence in this regard. Therefore, we are of the considered view that the Complainant is a ‘Consumer’ as defined under Section 2(1)(d) of the Act.
Another ground on which the claim of the Complainant has been resisted is that they are entitled for delay compensation only in terms of Clause 17 (a) of the Buyer’s Agreement which provides for such compensation @ Rs. 5/- per sq.ft. per month of the super area in the eventuality of delay.
A bare perusal of the Agreement makes it clear that the rate chargeable for delayed payment of any instalment on the part of the allottees was to be @ 1.5% per month i.e. 18% p.a., whereas the compensation for delay in delivering possession was provided for only at a rate of Rs. 5/- per sq.ft. super built area which mathematically comes to around only interest @ 1% p.a. This would suggest that the terms of the Agreement are wholly one-sided and unfair. Therefore, the Complainant cannot be made bound to the terms of the Agreement, which is one-sided and unfair in the light of the recent Judgment of the Apex Court in Pioneer Urban Land(supra)wherein it was observed-
“6.7. A terms of a contract will not be final and binding if it is shown that the flat purchasers had no option but to sign on the dotted line, on a contract framed by the builder. The contractual terms of the Agreement dated 08.05.2012 are ex-facie one sided, unfair and unreasonable. The incorporation of such one-sided clauses in an agreement constitutes an unfair trade practice as per Section 2(r) of the Consumer Protection Act, 1986 since it adopts unfair methods or practices for the purpose of selling the flats by the Builder.”
In such circumstances, this Commission has no hesitation in holding that the terms of the Apartment Buyer’s Agreement dated 10.1.2013 were wholly one-sided and unfair to the Complainants/Flat Purchasers. The Opposite Party/Builder cannot seek to bind the Respondent with such one-sided contractual terms. The Opposite Parties have also not succeeded in making out a satisfactory case of intervention of Force Majeure events, since the RERA Act came into operation only in the year 2016, whereas the stipulated time for delivery of possession in terms of the Agreement had already ended in December, 2015. Besides, the grace period of 03 months in the Agreement was also ostensibly provided to enable the Developer to obtain the approvals including Occupation Certificates from the various Authorities, and shortage of labour or water, supply of construction material, which were not at all ascribable to the Complainants, were not sufficient to justify delay exceeding 04 years before they ultimately filed this complaint.
As such, following the principles laid down by the Hon’ble Supreme Court in “Kolkata West International City Pvt. Ltd. Versus Devasis Rudra”(supra) and “Pioneer Urban Land & Infra Ltd. versus Govindham Raghavan”(supra), the Complainants are clearly found entitled for refund of the entire amount deposited by them with damages and compensation.
Consequently, the Opposite Party- Developer is directed to refund to the Complainant ₹Rs.73,33,767/- (Rupees Seventy Three Lakhs Thirty Three Thousand Seven Hundred Sixty Seven only) alongwith interest @9% p.a. from the respective date of each deposit till the date of final payment, within 06 weeks from the date of passing of this Order.
In the event of non-compliance of this Order, the amounts to be paid shall attract an interest rate of 12% p.a. for the same period.
Parties to bear their own costs.
Pending applications, if any, also stand disposed off.