Sanjay Roy Chaudhary & Anr vs M/S. Uppal Housing Pvt. Ltd. & Anr

M. Shreesha, J

This Complaint has been filed under Section 21 (a) (i) of the Consumer Protection Act, 1986 (in short "the Act") against M/s. Uppal Housing Pvt. Ltd., having its office at S-39A, Panchsheel Park, New Delhi-110017 and M/s. Umang Realtech Pvt. Ltd., having its office at D-64, IInd Floor, Defence Colony, New Delhi-110024, seeking the following reliefs:

Allow the present complaint and declare that the respondent no. 1&2 are guilty to deficiency in service and unfair trade practices;

Direct the Respondents to jointly/ severally refund the amount of Rs.1,56,02,031/- (Rs. One crore Fifty Six Lakh Two thousand and Thirty One) (including interest @18% i.e. the rate of interest charged by the respondent for delay; calculated from 01.04.2014 to 30.06.2018) along with pendent lite and future interest @ 18% per annum till the date of repayment;

Direct the respondents to refund an amount of Rs.9,56,000/- paid by the complainants as interest to the bank on the loan taken along with pendent lite and future interest @ 18% per annum till the date of repayment;

Pay an amount of Rs. 13 lakh paid by the respondents towards rents after 31.03.2014 along with pendent lite and future interest @ 18% per annum till the date of repayment;

Order the Respondents to jointly and severally pay an amount of Rs. 30 Lakh towards loss of opportunity along with 18% interest from the date of filing of the complaint till the date of payment by the Respondents;

Order the Respondents to jointly and severally pay an amount of Rs.5 lakh towards mental agony along with 18% interest from the date of filing of the complaint till the date of payment by the Respondents;

Cost of litigation, conservatively valued at Rs.5 lakh be awarded in favour of the complainant and against the Opposite Parties;

Pass any such further order(s) as this Hon'ble Court may deem fit and proper in the interest of justice."

The brief facts as set out in the Complaint are that the second Opposite Party launched a project by the name of "Winter Hills" situated near Dwarka Morh Metro Station, New Delhi. It is stated that the project was initially launched by the first Opposite Party in the year 2006 and later in 2009 by the name of Uppal's Metro Park Luxury Apartments. Thereafter the first and second Opposite Parties entered into an alleged Collaboration Agreement, whereby the first Opposite Party assigned its development and marketing rights to the second Opposite Party. Accordingly, the second Opposite Party launched the same project in 2011 by the name of 'Winter Hills'. The project was widely advertised by the Opposite Parties and it was promised by the executives of the Opposite Parties that the Apartment would be delivered by March 2014. Lured by the advertisements and promises made by the officials of the Opposite parties, the Complainants booked a 2 BHK Apartment admeasuring 1153 sq. ft. (super area) in the said project vide Application dated 09.11.2011 and the advance payment of Rs. 6,00,000/- was made through cheques as registration and booking amount. At the time of booking, the second Opposite Party specifically stated that the project would be completed and handed over by March 2014. An Apartment Buyer's Agreement was entered into on 02.02.2012 for a total sale consideration of Rs. 86,25,125/-. It is stated that the first Opposite Party was a confirming party to the Agreement. It is averred that as per the Apartment Buyer's Agreement, the possession would be delivered by 31st March, 2014 but till the filing of the Complaint, the same was not delivered. It is further averred that the second Opposite Party, raised the demands, from time to time, which were duly met by the Complainants and in total the Complainants have paid an amount of Rs. 88,29,678/-, which is more than the amount agreed to in the Apartment Buyer's Agreement. It is pleaded that the Complainants have obtained a loan from the State Bank of India for an amount of Rs. 43,00,000/- to make the payment of the sale consideration @ 9.40% p.a., for which the Complainants are paying EMIs and have paid an amount of Rs. 9,56,000/- as interest till date. After the promised date of delivery the Complainants approached the Opposite Parties with a request to move out of the project as they have lost faith in the project. The Opposite Parties again promised and assured them that the project would be completed very soon and the possession would be delivered within a very short span of time. The Complainants visited the office of the Opposite Parties and met the concerned officials but no satisfactory reason was given for the inordinate delay nor was any date given for handing over of the possession of the Apartment and the Complainants were threatened by the Opposite Parties that the Complainants can move out of the project but they will not be entitled for any refund. The Complainants received a final demand letter dated 28.10.2017 from the Opposite Parties asking the Complainants to come forth and make the payments, but no amount was mentioned in the final demand letter. On 06.01.2018, the Complainants visited the project site and took the photograph, but were shocked to see that the project was far from completion and yet the Opposite Parties were claiming to be in receipt of the Occupancy Certificate. The Complainants wrote several letters and emails to the Opposite Parties and requested them to refund the amount paid. The Complainants sent a legal notice to the Opposite Parties seeking refund of the amount paid along with interest @ 18% p.a. together with other costs. The Opposite Parties replied to the legal notice on 09.05.2018. In their reply they stated that they are bound by the terms and conditions of the Agreement and are ready to pay penalty for the delay in accordance with Clause 8.6 of the Agreement.

Vexed with the attitude of the Opposite Parties, the Complainants approached this Commission seeking the aforenoted reliefs, as the value of all goods and services is more than Rupees one crore and attracts the Pecuniary Jurisdiction of this Commission.

The first Opposite Party filed its reply stating that the first Opposite Party is not a necessary party in the present Complaint and that the Complaint is liable to be dismissed on the ground of mis-joinder of parties. It is averred that the first Opposite Party entered into a Lease Agreement dated 19.05.2006 with the Delhi Metro Rail Corporation Limited for a period of 90 years expiring on 19.05.2096 for development of a residential complex on the plot of land admeasuring approx. 21,954.8 sq. mts. located near Dwarka City, New Delhi; that the first Opposite Party entered into a Collaboration Agreement dated 18.01.2010 after obtaining No Objection Certificate dated 13.01.2010 from Delhi Metro Rail Corporation Limited; that as per the Collaboration Agreement the second Opposite Party is entitled to construct and develop the housing complex on the said land; that as per Clause 9.1.1 of the said Collaboration Agreement it was agreed that the second Opposite Party shall be liable to indemnify the first Opposite Party against any claims, action, demand, liability, civil or criminal including agreements entered into with the prospective buyers etc.; that the first Opposite Party was only a consenting party in an Apartment Buyer Agreement dated 02.02.2012; that as per the said Flat Buyer Agreement the second Opposite Party is solely responsible for grant of possession of the flat and that the dispute raised by the Complainant is only between the Complainant and the second Opposite Party, therefore the first Opposite Party seeks dismissal of Complaint qua them.

The second Opposite Party filed its Written Version admitting to the booking of an Apartment, receipt of the amount of Rs. 88,29,678/-, execution of the Flat Buyer's Agreements dated 02.02.2011 and to Clause 8.1 of the Flat Buyer's Agreements dated 02.02.2011, wherein the Opposite Parties have agreed to apply for the Completion Certificate by 31.03.2014 subject to a grace period of six months. It is averred that the project is complete and the Opposite Parties have obtained the Completion Certificate from SDMC on 16.10.2017. It is stated that the delay in possession is to be dealt with as per clause 8.6 of the Flat Buyer's Agreement dated 02.02.2011, according to which the second Opposite Party would pay a sum of Rs. 10/- square foot per month, provided that the delay is not on account of existence of any force majeure event. It is further averred that the delay in giving possession was directly attributed to the reasons which are beyond the control of the Opposite Parties such as lack of adequate sources of finance, shortage of labour approvals and procedural difficulties, extreme shortage of water in the region, shortage of bricks unexpected demonetization, recession in economy etc. All the other averments made in the Complaint have been denied. It is stated that the project is at the stage of fit outs and Completion Certificate has already been obtained and that the Opposite Party has already issued offer of possession vide offer letter dated 28.10.2017. Therefore, there is no deficiency of service on their behalf and prayed for dismissal of Complaint with exemplary costs.

The Complainants filed their Affidavit by way of Evidence and marked Exhibits CW-1/1 (Copy of the Brochure), CW-1/2 (copy of the Application form dated 09.11.2011), CW-1/3 (Copy of the Apartment Buyer's Agreement dated 02.02.2011), CW-1/4 (Copy of the Payment receipts), CW-1/5 (Copy of the statement of Payments), CW-1/6 (copy of the account statement of Loan Account), CW-1/7 (copy of the letter dated 28.10.2018), CW-1/8 (copy of Photographs taken on 06.01.2018), CW-1/9 (Copy of the email dated 10.01.2018 sent by the Complainants to the Opposite Parties), CW-1/10 (Copy of the statement), CW-1/11 (copy of the photographs taken on 23.02.2018), CW-1/12 (Copy of the letter dated 20.03.2018), CW-1/13 (Copy of the emails and letters sent to the Opposite Parties), CW-1/14 (Copy of the charge documents obtained from the website of the Ministry of Corporate affairs), CW-1/15 (Copy of the email dated 29.05.2018), CW-1/16 (Copy of the email dated 08.06.2018), CW-1/17 (Copy of the email dated 28.04.2018), CW-1/18 (Copy of the massages and chats shared by the occupants of the project), CW-1/19 (copy of the letter dated 27.04.2018 sent by the OP-2 to the Complainant), CW-1/20 (copy of the letter dated 17.05.2018 sent to the OP-2 by the Complainant), CW-1/21 (copy of the legal notice dated 03.04.2018), CW-1/22 (Reply to the legal notice by the OP-1), CW-1/23 (Reply to the legal notice by the OP-2), CW-1/24 (Copy of the emails exchanged between the Parties), CW-1/25 (Copy of the relevant pages of the annual returns of the OP-1), CW-1/26 (Copy of the documents showing shareholding of the Opposite Parties), CW-1/27 (Copy of the show cause notice issued by the Real Estate Authority to OP-2) CW-1/28 (Copy of the emails and messages shared amongst the residents), CW-1/29 (coy of the Affidavit of OP-1), CW-1/30 (copy of the latest photographs), CW-1/31 (Copy of the reply filed before the National Commission in another case), CW-1/32 (Copy of the email dated 05.08.2018), CW-1/33 (Copy of the RTI Application submitted to SDMC), CW-1/34 (Copy of the response to the RTI Application) and CW-1/35 (Copy of the photographs of peaceful protests conducted by the residents of the project) on their behalf.

The first Opposite Party filed its Affidavit by way of Evidence and marked Exhibits OP-1/1 (copy of the Board Resolution), OP-1/2 (copy of the NOC) and OP-1/3 (Copy of the collaboration Agreement dated 18.01.2010) on its behalf.

The second Opposite Party filed its Affidavit by way of Evidence and marked Exhibits OP-2/1 (copy of the Board Resolution), OP-2/2 (copy of the final call letter dated 28.10.2017 offering possession) and OP-2/3 (Copy of the demand letters and reminders) on its behalf.

Heard counsel for the parties at length.

It is an admitted fact that the Complainants booked 2 BHK Apartment admeasuring 1153 sq. ft. (super area) in the project namely Winter Hills, Dwarka Morh vide application dated 09.11.2011 and paid a sum of Rs. 6,00,000/- through cheques as registration and booking amount. An Apartment Buyers' Agreement was executed between the Complainant and the Opposite Parties on 02.02.2012. It is also an admitted fact that the Complainant totally made a payment of Rs. 88,29,678/-, as per the demands made by the Opposite Parties. While so, the first Opposite Party entered into a lease Agreement with DMRC for a period of 90 years for development of residential complex.

Learned counsel appearing for the Opposite Parties contended that for the subject land DMRC granted a No Objection Certificate dated 13.01.2010 to the first Opposite Party for entering into a Collaboration Agreement with the second Opposite Party for the construction and development of the residential complex and sale of saleable space thereof. On 18.01.2010, admittedly both the Opposite Parties entered into a Collaboration Agreement whereby the second Opposite party was entitled to construct and develop a housing complex and is entitled to book, sale, allot, transfer or otherwise deal with the lease hold right in the dwelling units and other saleable areas in the said complex. Learned counsel vehemently contended that the first Opposite Party is not a necessary party to the present Complaint as they have no liability towards any parties in terms of the Clause 9.1.1 Collaboration Agreement and sought a direction for deletion of the first Opposite Party from the array of parties.

It is the case of the learned counsel appearing for the Complainants that though the first Opposite Party projected before the Buyers that it has entered into a Collaboration Agreement/ joint venture with the second Opposite Party for developing said project, but in fact the Collaboration Agreement was only with respect to development and construction on the land in accordance with terms and conditions contained in the lease deed entered into between DMRC and the first Opposite Party. The first Opposite Party cannot side-line itself from the said project on the ground of Collaboration Agreement entered into between both the Opposite Parties as the second Opposite Party was incorporated as a subsidiary of the first Opposite Party and the first Opposite Party holds 45% shareholding in the second Opposite Party. Learned Counsel also contended that Apartment Buyer's Agreement was executed between the parties on 02.02.2012, according to which the Promised date of delivery of possession of the said Apartment was 31.03.2014. It is the case of the Complainants that though more than 4 years have passed but there is still no sign of completion and delivery of the subject project.

It is evident from the record that as on the date of filing of the Complaint in July, 2018, there was no Completion Certificate given by the Opposite Parties. The contention of the learned counsel for the Opposite Parties that the delay is not deliberate or wilful and that the extension of time is attracted by Clause 8.1 and 8.2 of the Agreement is untenable as the reasons stated in these two Clauses is only subject to force majeure conditions and there is no documentary evidence on record to substantiate that the reasons were beyond the control of the Opposite Parties or that they fall within the definition of 'force majeure'.

The Complainants have also sought information under RTI on 18.05.2018 with respect to whether the second Opposite Party received the Completion Certificate; if any inspection was conducted by their office; if environmental clearance was still valid as on the date of grant of Completion Certificate; if BSES/ Delhi Vidyut Board were asked whether the requisite load to meet the size of the project had been provided; if any NOC stand received from the Delhi Fire Service, Airport Authority of India; whether the water pipelines, sewerage treatment plans were inspected and whether the project had all the requisite clearance/sanctions as required by the concerned authorities. In reply to this Application the South Delhi Municipal Corporation has stated on 28.05.2018 that as per their records the first Opposite Party has applied for Completion Certificate and before issuing the NOC, site is to be inspected by the concerned area staff and that they have no information regarding the other clearance. Form the aforenoted information the only aspect which can be gleaned is that the Completion Certificate was applied for as on 28.05.2018.

Learned counsel also relied on Clause 8.6 of the Apartment Buyers' Agreement and submitted that the liability of the second Opposite Party on account of delay is limited only to that extent. For better understanding of the Clause, the same is reproduced as hereunder:

"8.6 In case any delay is caused by the Company in offering possession of the Said Apartment to the Buyer beyond the stipulated time period, the Company shall be liable to pay a sum of Rs.10 per square foot of super area of the said Apartment per month as penalty provided this delay not on account of existence of any force majeure event."

As per this clause, the Developer is liable to pay a sum of Rs. 10 per sq. ft. of super area of the said Apartment per month as penalty. This Compensation is for the period of delay provided the Complainant accepts possession. But in the instant case, the Complainants are seeking refund of the amount paid, as the amounts were paid way back in the years 2011 to 2017 and there was no Completion Certificate as on the date of filing of the Complaint. The Complainants do not want to take delivery of possession of the subject Apartment because of the delay in completion of the Project. It is also an admitted fact that the Opposite Party charged interest @ 18% p.a. for any delayed payments made by the purchasers and there is no justification in offering a meagre Rs. 10 per sq. ft., which is only a paltry percentage of what the Opposite Party are charging for any delayed payments. Clause 8.6 in our opinion does not apply to the facts of this case because the Complainants on account of the delay on the part of the Opposite Parties in completing the flat is no more interested in the flat, which is a subject matter of the Agreement and seek refund of the amounts paid. In any case such a Clause (8.6), where the seller, in case of default on the part of the buyer seeks to recover interest a 18% p.a. but offers only Rs. 10 per sq. ft. for any delay in delivery of possession, amounts to unfair trade practice since it gives an unfair advantage to seller over the buyer. We may note here that the enumeration of unfair trade practice in Section 2 (o) of the Act is inclusive and not exhaustive. This Commission in Emmar MGF Land Ltd. & Ors. vs. Amit Puri [II (2015) CPJ 568 NC], has laid down that once the promised date of delivery of possession is exhausted, it is the discretion of the Complainant to exercise his choice to take refund or wait for the delivery of possession. This ratio has attained finality and in the instant case, the Complainants have sought for refund of the amount paid with interest @ 18% p.a.

The next question which arises for consideration is how much interest is to be paid to the Complainants on the principal amount. Logically, if the seller is charging interest from the buyer @ 18% p.a., we should have no hesitation in awarding the same rate. Though the learned counsel appearing for the Complainant has relied on the judgement of the Hon'ble Supreme in Ghaziabad Development Authority vs. Balbir Singh [2004 (5) SCC 65] and judgement of this Commission in Shri Puneet Malhotra Vs. M/s Parsvnath Developers Ltd. reported in Consumer Case No.232 of 2014 decided on 29.06.2015, wherein interest @ 18% p.a. was awarded. Having regard to the fact that Banks have lowered the interest rate and the Hon'ble Supreme Court has been awarding interest keeping in view the current market situation and considering the recent decline in the cost of borrowing and return on the investments made with the Banks, we are of the view that interest @ 12% p.a. would meet the ends of justice, together with compensation of Rs. 1,00,000/- and costs of Rs. 25,000/-.

Now we address ourselves to the liability of the first Opposite Party. Learned counsel for the first Opposite Party strenuously argued that since the Collaboration Agreement is dated 18.01.2010 and the Application for allotment is dated 09.11.2011 and the Apartment Buyers' Agreement is dated 02.02.2012, the first Opposite Party cannot be made liable to refund any amounts as the entire amount was accepted by the second Opposite Party. A perusal of the Application Form shows that the project was being developed by the second Opposite Party under lawful arrangement with the first Opposite Party, who is the owner of the lease hold rights of the subject land. It is pertinent to note that the Apartment Buyer's Agreement dated 02.02.2012, signed by both the Opposite Parties, defines the first Opposite Party as the 'Confirming Party'. Clause 3.1 of the Collaboration Agreement dated 18.01.2010 specifies that the sharing of the Revenues realised from the sale of the developed saleable area would be in the ratio stated in Clause 5.1.1 of the Agreement. For better understanding of the consideration paid/ shared by both the Opposite Parties Clauses 3.1 and 5.1.1 of the Collaboration Agreement are reproduced as hereunder:

"3.1 That the subject matter of the Agreement is collaboration between Uppal and Umang for the execution of the Project by Umang on the Land admeasuring 21954.8 sq. mtr. Near Dwarka Morh Metro Station, Delhi more particularly described in the Schedule C, and the sharing of the revenue realised from the sale of the Developed Saleable Area (defined herein below) in the ratio as provided hereinafter in clause 5.1.1 of this Agreement. The Project shall be developed by Umang in a manner that is fully complaint with the terms and conditions contained in the Lease Deed and all relevant approvals at all times and any activity which may be in conflict with any obligation or duty contained therein shall not be undertaken at any time.

5.1.1 In consideration of the contribution of the Land by Uppal for execution of the Project and Umang bearing the costs, expenses and responsibility of execution of the Project and on simultaneous payment to Uppal by way of non refundable security deposit, a sum of Rs.75,00,00,000 ("Security Deposit") and discharge of their respective obligations by the parties under this Agreement, the Parties shall share the proceeds from the lease, sale, and/or transfer of Developed Saleable Area under the Project, in the ratio mentioned hereinbelow:

(i) Uppal : 15%

(ii) Umang : 85% "

From the aforenoted Clauses, it is crystal clear that there is a consideration which has been paid by the second Opposite Party to the first Opposite Party and as far as the purchaser is concerned the first Opposite Party is the Confirming Party and the Collaboration Agreement is mentioned in the Apartment Buyers' Agreement, which is a Tripartite Agreement entered into between all the three Parties and therefore the contention of the learned counsel appearing for the first Opposite Party that the second Opposite Party alone should be made liable is untenable. For all the aforenoted reasons, both the Opposite Parties are liable jointly and severally to refund the amounts received. Any other arrangement is only inter se between the Opposite Parties and shall not bind the Complainants.

In the result, this Complaint is allowed in part directing both the Opposite Parties jointly and severally to refund the amount paid by the Complainant i.e. Rs. 88,29,678/-, with interest @ 12% p.a. from the respective dates of deposit till the date of realisation together with compensation of Rs. 1,00,000/- and costs of Rs. 25,000/-. This amount is directed to be paid within four weeks from the date of receipt of a copy of this order, failing which, the amount shall attract interest @ 14% p.a. for the same period.