Saurav Sanyal & Anr vs M/s Ireo Pvt. Ltd

Heard Mr. Saurabh Suman Sinha, Advocate, for the complainants and Mr. Rahul Ahuja, Advocate, for the opposite party.

Saurav Sanyal and Jayanta Sanyal have filed above complaint for directing M/s. IREO Pvt. Ltd. (i) for declaring letter dated 06.06.2016, terminating the allotment of the complainants and forfeiting earnest money, as illegal, (ii) to refund Rs.9390150/- with interest @18% per annum, from the date of deposit till the date of payment, (iii) to pay Rs.1000000/- as compensation for mental agony and harassment, (iv) to pay Rs.2/- lacs, as the cost of litigation and (v) Any other relief which is deemed fit and proper, in the facts and circumstances.

The facts, as stated in the complaint and emerged from the documents attached with it, are that the opposite party (the developer) was a company, incorporated under the Companies Act, 1956 and engaged in the business of development and construction of residential and commercial buildings and selling its unit to the prospective buyers. In the year 2011, the developer launched a project of group housing in the name of “The Grand Arch” at Golf Course Extension Road, Sector-58, district Gurgaon. The complainants were looking for a residential flat in that locality and they were attracted with the presentation of the developer. The complainants booked a flat, in this project and were allotted Flat No.-F-1-202 (area 2156 sq.ft., basic sale price of Rs.28707140/-and total sale price of Rs.30294816/-) by an allotment letter dated 19.12.2014. According to the payment plan, 10% of the basic sale price had to be paid at the time of allotment and 20% of the basic sale price and 50% of the other charges had to be paid within 50 days of the booking and remaining amount had to be paid at the time of possession. The complainants deposited Rs.9390150/- and Apartment buyer’s Agreement was executed in their favour on 12.02.2015. The developer obtained “Occupation Certificate” on 17.12.2015 and issued notice of possession dated 23.12.2015, requiring the complainants to complete the formalities of documentation and paying balance amount of Rs.21912325/- as basic sale price, Rs.2009500/- as stamp duty charges, Rs.215600/- in favour of Grand Arch Resident Welfare Association, Rs.239305/-, in favour of Quick Real Estate Pvt. Ltd., Rs.6000/-, in favour of Sakha Services Private Ltd. and Rs.221337/-in favour of Salvato India, on or before 22.01.2016. The complainants visited the office of the developer on 28.12.2015 and found that construction work was going on but the officers gave assurance that it would be completed before 22.01.2016. The complainant approached Citibank for grant of loan, from where loan of Rs.9000000/- was sanctioned on 16.02.2016, for which a tripartite agreement dated 24.02.2016 was executed. Citicorp Finance (India) Limited sanctioned loan of Rs.10000000/- on 02.03.2016. However, the construction was not complete in all respect, the complainants asked the developer to complete the construction and then payment would be done as at that time water leakage was found in master bedroom & bathroom and guest bedroom & bathroom, number of stones were broken in the flooring of living room, double glazed window glass was broken and Interior not having been painted or polished. The complainants apprised the builder about the defects vide email dated 18.02.2016. The complainants requested the developer to extend time for deposit of the money till the completion of the construction. The developer, vide letter dated 06.04.2016, gave last opportunity to the complainants to deposit the amount of Rs.24604067/- along with delayed interest and holding charges within 30 days. The complainants offered a cheque of Rs.2/- crores and requested to postpone the demand of balance amount till completion of the construction and also gave a letter dated 05.05.2016, in this respect. But the developer, vide letter dated 06.06.2016, terminated the allotment/agreement and forfeited the money deposited by the complainants on account of earnest money, brokerage, delayed interest and service tax etc. The complainants made a complaint before Confederation of Real Estate Developers Association of India on 25.06.2016, however vide email dated 14.09.2016, (communicated to the complainant on 29.09.2016) CREDAI dropped the complaint. The complainants issued a legal notice dated 13.10.2016 to the developer, which was replied by the developer on 05.12.2016. Then this complaint was filed on 16.03.2017, alleging deficiency in service and unfair trade practice on the part of the developer.

The developer contested the complaint and filed its written reply on 22.05.2017, in which, material facts have not been denied. It has been stated that the complainants themselves chose the “Possession Linked Payment Plan” at the time of booking, under which 30% of BSP along with taxes had to be paid within 50 days of the booking and 70% BSP along with taxes had to be paid at the time of possession. After completion of the construction, the developer applied for issue of “Occupation Certificate” which was issued on 18.09.2015 and 17.12.2015. The developer issued notice of possession dated 23.12.2015, requiring the complainants to complete the formalities of documentation and pay balance amount on or before 22.01.2016. The complainants instead of paying the balance amounts raised frivolous defects in the construction. All the defects, as pointed out by the complainants were removed. However, the complainants failed to deposit balance amount and sought for extension of the period. The developer gave sufficient time to the complainants to deposit the balance amount but they failed to deposit it. As such final notice was given on 06.04.2016, giving last opportunity to the complainants to deposit the amount of Rs.24604067/- along with delayed interest and holding charges within 30 days. Even final notice was also not complied with. Then the developer vide letter dated 06.06.2016, terminated the allotment/agreement and forfeited the money deposited by the complainants on account of earnest money, brokerage, delayed interest and service tax etc., in accordance with Clause-21.1.2 of Apartment buyer’s Agreement dated on 12.02.2015. The allegations that the construction was not complete in all respect at the time of offer of possession or any unfair trade practice being committed, have been denied.

The complainant filed their rejoinder reply on 30.01.2018, in which, the material facts stated in the complaint were reiterated. The complainant filed Affidavit of Evidence of Saurav Sanyal. The developer filed Affidavit of Evidence and Affidavit of Admission and Denial of Documentary Evidence of Subhasis Lahiri. Both the parties have filed various documentary evidence. Both the parties have filed their written arguments.

We have considered the arguments of the counsel for the parties and examined the record. According to the developer, after completion of the construction of the tower, they had applied for issue of “Occupation Certificate” which was issued on 18.09.2015 and 17.12.2015. Then the developer issued notice of possession dated 23.12.2015, requiring the complainants to complete the formalities of documentation and pay balance amount on or before 22.01.2016. They gave sufficient time to the complainants to deposit the balance amount but they failed to deposit it. As such final notice was given on 06.04.2016, giving last opportunity to the complainants to deposit the amount of Rs.24604067/- along with delayed interest and holding charges within 30 days. Final notice was also not complied with. Then the developer vide letter dated 06.06.2016, terminated the allotment/agreement and forfeited the money deposited by the complainants on account of earnest money, brokerage, delayed interest and service tax etc. in accordance with the terms of the Apartment buyer’s Agreement.

Clause-21.1.2 and 21.5 of Apartment buyer’s Agreement dated on 12.02.2015 are quoted below:

21.1.2 In all other cases not covered under the Clause 21.1.1, the Company shall give to the Allottee a notice calling upon it to exercise the option or rectify the breach set out in the said notice within the time given therein. In the event that the Allottee fails to establish to the satisfaction of the Company that the said failure or breach has been rectified by it or the option has been exercised by it within the stipulated time, the Company may proceed to terminate this Agreement in the manner set out in Clause 21.1.1 above and to the same effect.

21.5. The Allottee understands, agrees and consents that upon such termination, the Company shall be under no obligation save and except to refund the amounts already paid by the Allottee to the Company, without any interest, and after forfeiting and deducting the Earnest Money, interest on delayed payments brokerage/ commission/ charges, service tax (if any) and other amounts due and payable to it, only after resale of the said apartment. Upon termination of this Agreement by the Company, save for the right to refund, if to the extent agreed hereinabove, the Allottee shall have no further right or claim against the Company and/or the Confirming Parties which, if any, shall be deemed to have been waived off by the Allottee and the Allottee hereby expressly, consents thereto. The Company shall thenceforth be free to deal with the said Apartment in any manner whatsoever, in its sole and absolute discretion and in the event that the Allottee has taken possession of the said Apartment, then the Company shall also be entitled to re-enter and resume possession of the said Apartment and everything whatsoever contained therein and in such event, the Allottee and/or any other person/occupant of the said Apartment shall immediately vacate the said Apartment and otherwise be liable to immediate ejectment as an unlawful occupant/trespasser. This is without prejudice to any other rights available to the Company against the Allottee.

The complainants do not dispute issue of “Occupancy Certificate” on 17.12.2015. “Occupancy Certificate” is the proof of completion of construction. So far as paint and polish were concerned, normally it is done after deposit of money on offer of possession. On these grounds, payment cannot be denied/delayed. As such, it cannot be said that the cancellation letter dated 06.06.2016 was illegal.

However, the fact remains as to what amount was liable to be forfeited. The developer has not stated that any brokerage was given by them to anyone. So far as the taxes are concerned, only Service Tax and VAT might have been paid on the deposit of the complainants. Other taxes attach to the Flat. After cancellation of allotment, other taxes cannot be charged from the complainants. So far as earnest money is concerned, Supreme Court, in Maula Bux Vs. Union of India, (1970) 1 SCR 928 and Kailash Nath Associates Vs. Delhi Development Authority, (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 Consumer Case No.438 of 2019, Ramesh Malhotra & Ors. Vs. EMAAR MGF Land Ltd. & anr., decided on 29.06.2020 and Consumer Case No.3328 of 2017, M rs. Prerna Banerjee & anr. Vs. Puri Construction Pvt. Ltd., decided on 07.02.2022 held that 10% of basic sale price is reasonable amount to be forfeited in the name of “earnest money”.

ORDER

In view of aforementioned discussions the complaint is partly allowed. The opposite party is directed to refund entire amount deposited by the complainant with interest @9% per annum, from the date of respective deposit till the date of refund, after adjusting 10% of Basic Sale Price and Service Tax and VAT if any paid on the deposit of the complainant within a period of two months from the date of this judgment.