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Judgment
V.K. Jain, J
The complainants in these matters booked residential apartments in a project, namely, "Manor One", which OP-1 Kashish Developers Ltd. was to develop in Sector 111 of Gurgaon. On allotment of residential apartments to them, they executed individual Apartment Buyers Agreement with the Kashish Developers Ltd., M/s Vinman Constructions Pvt. Ltd. and M/s Elite Villas Pvt. Ltd. on different dates incorporating their respective obligations in respect of the said transaction. The agreements were signed by M/s Vinman Constructions Pvt. Ltd. and M/s Elite Villas Pvt. Ltd. as the confirming parties. As per clause 3(a) of the said agreements, the possession of the apartments was proposed to be delivered to the allottees within 36 months from the date of execution of the said agreements, though the Developer also had a grace period of six months available to it for the said purpose.
The following is the payment schedule which the complainants had agreed with the OP:
Installment Payment Plan
On Booking / Booking Amount/Earnest Money
10% OF BSP
Within 45 days Booking
15% OF BSP
Start of Excavation or 90 days of Booking whichever is earlier
10% OF BSP
On completion of Basement Slab
7.5% OF BSP + 25% OF EDC & IDC + 25% of Other Charges
On Completion of Ground Floor Slab
7.5% OF BSP + 25% OF EDC & IDC + 25% of Other Charges
On Completion of 2nd Floor Slab
7.5% OF BSP + 25% OF EDC & IDC + 25% of Other Charges
On Completion of 4th Floor Slab
7.5% OF BSP + 25% OF EDC & IDC + 25% of Other Charges
On Completion of 9th Floor Slab
5% OF BSP
On Completion of 12th Floor Slab
5% OF BSP
On Completion of 15th Floor Slab
5% OF BSP
On Completion of Final Floor Slab
5% OF BSP
On Start of Brick Work
5% OF BSP
On Start of Finishing
5% OF BSP
The grievance of the complainants is that the possession of the allotted flats has not even been offered to them despite they having made substantial payments to OP-1 - Kashish Developers Ltd. which has not disputed the allotments made to the aforesaid complainants, the agreements executed with them and the amount received from them.
The complaints have been resisted by the OP inter-alia on the grounds on which CC No.1739 of 2016 Ashima Sharma & Anr. and connected matters decided on 12.12.2018, were contested. According to the OP, the installment which was payable on the completion of the 12th floor roof slab, has not been paid.
It is also submitted by the learned counsel for the OP that besides having not paid the installment payable on completion of the 12th floor slab, the complainants had also delayed several other previous installments for which no interest was charged from them by the OP.
The decision of this Commission in Ashima Sharma (supra) to the extent it is relevant, reads as under: *
XXXXXXXX The learned counsel for the OP submits that the construction could not be completed within the time stipulated in the agreements as (i) more than 100 flat buyers did not make full payment as per their contractual obligations with the Developer and (ii) there was slump in the real estate on account of demonetization which led to the delay in completing the construction. The learned counsel for OP-1 also states that vide order dated 8.11.2016, the National Green Tribunal had stayed construction activity for a week following heavy smog in Delhi. No other ground is advanced by the learned counsel for the OP to justify the delay in completion of the construction.
As far as the stoppage of work for one week in terms of the order of the NGT is concerned, that would be hardly of any consequence, the duration of the said order being very very short whereas the delay in completion of the construction runs into several years if computed from the date committed by the Developer for the delivery of possession.
As regards the default on account of several flat buyers in making payment to the Developer, the complainants who admittedly did not commit any default cannot be penalised for the default on the part of the other flat buyers. This is more so when the delay in completing the construction is for an unreasonably long period. If there was default on part of other flat buyers, nothing prevented the Developer from cancelling their allotments in terms of the agreements it had with them and then selling those flats to other potential buyers in the market. The Developer could also have arranged the requisite finance from alternative sources but it cannot, in my view, penalise the flat buyers who believing the promise made by the Developer parted with their hard earned money and paid the same to the Developer in the hope of having a shelter on their head, within a reasonable time. Therefore, such alleged default, in my view, cannot justify the delay in completion of the construction.
As far as demonetisation of the currency is concerned, I fail to appreciate how the demonetisation could have in any manner affected the construction of the houses which the Developer was to construct for the allottees. The Developer is expected to account for every payment received by him from the flat buyers and, therefore, there is no way the demonetisation could have affected the pace of construction.
Relying upon the decision of the Hon'ble Supreme Court in Kailash Nath Associates Vs. Delhi Development Authority [(2015) 4 SSC 136] decided on 9.1.2015, the learned counsel for the Developer submits that the complainants having condoned the delay till the date of institution of the complaints by not coming to this Commission immediately after the date committed by the Developer to them for delivery of possession, they are entitled to compensation only as per the contractual rate of Rs.10/- per sq.ft. per month of the super area of the flat. I, however, find no merit in the contention. In para 26 of the Kailash Nath (supra) which is relied upon by the learned counsel for the Developer, the Hon'ble Supreme Court interalia observed as under:-
"26. Similarly in S. Brahmanand v. K.R. Muthugopal, (2005) 12 SCC 764 the Supreme Court held: "34. Thus, this was a situation where the original agreement of 10-3-1989 had a "fixed date" for performance, but by the subsequent letter of 18-6-1992 the defendants made a request for postponing the performance to a future date without fixing any further date for performance. This was accepted by the plaintiffs by their act of forbearance and not insisting on performance forthwith. There is nothing strange in time for performance being extended, even though originally the agreement had a fixed date. Section 63 of the Contract Act, 1872 provides that every promisee may extend time for the performance of the contract. Such an agreement to extend time need not necessarily be reduced to writing, but may be proved by oral evidence or, in some cases, even by evidence of conduct including forbearance on the part of the other party. [See in this connection the observations of this Court in Keshavlal Lallubhai Patel v. Lalbhai Trikumlal Mills Ltd., 1959 SCR 213 : AIR 1958 SC 512, para 8. See also in this connection Saraswathamma v. H. Sharad Shrikhande, AIR 2005 Kant 292 and K. Venkoji Rao v. M. Abdul Khuddur Kureshi, AIR 1991 Kant 119, following the judgment in Keshavlal Lallubhai Patel (supra).] Thus, in this case there was a variation in the date of performance by express representation by the defendants, agreed to by the act of forbearance on the part of the plaintiffs. What was originally covered by the first part of Article 54, now fell within the purview of the second part of the article. Pazhaniappa Chettiyar v. South Indian Planting and Industrial Co. Ltd. [AIR 1953 Trav Co 161] was a similar instance where the contract when initially made had a date fixed for the performance of the contract but the Court was of the view that "in the events that happened in this case, the agreement in question though started with fixation of a period for the completion of the transaction became one without such period on account of the peculiar facts and circumstances already explained and the contract, therefore, became one in which no time was fixed for its performance" and held that what was originally covered by the first part of Article 113 of the Limitation Act, 1908 would fall under the second part of the said article because of the supervening circumstances of the case."(at Page 777)"
It would thus be seen that the Hon'ble Supreme Court in S. Brahmanand (supra) was referring to a case where the promisor seeks postponement of the performance to a future date and the said offer is accepted by the promisee by its act of forbearance and by not insisting upon forthwith performance. However, in the present case, there is not even an allegation of the Developer having sought postponement of the date committed for delivery of possession of the apartments and the flat buyers having accepted such a request of the Developer. Therefore, the reliance upon the aforesaid judgement of the Hon'ble Supreme Court, in my opinion, is wholly misconceived."
As regards the default in payment of the installment which was payable on completion of the 12th floor roof slab, the case of the complainants in their affidavit is that when they visited the site on receipt of the demand letter, they found that no construction work was going on at the site. This is also their contention that some of them had taken loan for payment to the OP but the said loans were not released by the financer on account of the construction work having come to a stand-still at the site. The learned counsel for the OP however, points out that no document from the financer has been filed by the complainants to prove that the release of further installments of the loan was declined.
The OP has not filed any certificate from the Project Architect to prove that the 12th floor roof slab was complete at the time the demand was raised in September 2015. The very fact that the flat buyers found no work going on at the site when they visited the same on receipt of the demand indicates that they are right in saying that the 12th floor roof slab was not complete at the time the demand was raised. The OP however maintains that the 12th floor roof slab was actually complete by the time the demand was raised. The learned counsel for the OP states that they have stated so in the written version filed by them.
A perusal of the schedule of payment agreed between the complainants and the developer would show that the next installment was payable on completion of the 15th floor roof slab. It is an admitted position that the demand on completion of the 15th floor roof slab is yet to be raised. More than 3½ years have already expired from the time the demand payable on completion of the 12th floor roof slab was raised. As per the agreement between the parties, the entire construction work was to be completed within a period of 36 months. If it has taken more than 3½ years for the builder to reach from the stage of completion of 12th floor roof slab to the stage of completion of the 15th floor roof slab, that by itself, is a strong indicator that the work was not going on at the site when the complainants visited the same on receipt of the demand payable on completion of the 12th floor roof slab. I therefore, have no hesitation in holding that the 12th floor roof slab had not been completed by the time the demand was raised. The flat buyers could not be expected to pay the 12th installment if on visiting the site, they found no construction in progress. Consequently, the complainants cannot be penalised for not paying the said installment, on receipt of demand from the developer.
As regards delay on the part of the complainants in making payment of the previous installments, nothing prevented the OP from either cancelling the allotments on account of the said installments having not been paid in time or charging interest for the delayed payment as per the terms of the agreement between the parties. Also, the OP while accepting the delayed payment, could also have made it a condition of condoning the said delay, that the possession of the allotted flat would be delayed on account of they having delayed payment of the said installments. Alternatively, the OP could have arranged the requisite finances if required at the time the said demands were raised, from alternative sources and recovered the interest from the buyers who had not paid the installments in time. Having accepted the delayed payment, the OP cannot take advantage out of the said delay, it having condoned the same by accepting payments at a belated stage, presumably because of the construction having not progressed as per the schedule.
It is also submitted by the learned counsel for the OP that this Commission does not possess the requisite pecuniary jurisdiction to entertain the complaint since the principal amount paid by the complainants is less than Rs.1 Crore. I however, find no merit in this contention. In terms of Section 21 of the Consumer Protection Act, this Commission possesses the requisite pecuniary jurisdiction to entertain a consumer complaint, where the value of the goods purchased or the services hired or availed, as the case may be and the compensation if ay claimed by the consumer exceeds Rs.1 Crore. As held by a Three-Members Bench of this Commission in Ambrish Kumar Shukla Vs. Ferrous Infrastructure Pvt. Ltd. CC No. 97 of 2016, decided on 07.10.2016, which is binding upon this Bench, the value of the services in such a case would mean the sale consideration agreed to be paid by the flat/plot buyer to the developer. Admittedly, the total sale consideration payable for the flats allotted to the complainants and the interest claimed by them by way of compensation, was more than Rs.1 Crore in each of these cases. Therefore, it cannot be said that this Commission lacks the pecuniary jurisdiction to entertain the complaints.
The learned counsel for the OP, relying upon the decision of the Hon'ble Supreme Court in Bharathi Knitting Company Vs. DHL Worldwide Express Courier Division of Airfreight Ltd. (1996) 4 SCC 704, contends that the parties are bound by the terms of the agreement executed between them and therefore, in the event of delay, they are liable to pay only the agreed consideration of Rs.10 p.s.f. per month. However, such a clause in the agreements between the flat/plot buyers and the developers has consistently been held by this Commission to be an unfair trade practice, particularly when the builder, under the agreement can charge interest at a very high rate from the buyer in case of default in making payment to the developer. Such a one-sided clause therefore will not bind the complainant.
In fact, such an argument was also advanced recently before the Hon'ble Supreme Court in Civil Appeal No. 3182 of 2019 Kolkata West International City Pvt. Ltd. Vs. Devasis Rudra decided on 25.03.2019 and was repelled. It was contended before the Hon'ble Supreme Court in Devasis Rudra (supra) that as per the agreement between the parites, the developer was required to pay interest at the prevailing savings bank interest rate of the State Bank of India though in case the buyer was in default, interest could be charged @ 18% per annum. It was held by the Hon'ble Supreme Court that such an agreement was evidently one sided and it was held that such an agreement would not preclude the right and remedy available to the buyer to claim reasonable interest or as the case may be, compensation.
The learned counsel for the OP also relied upon the decision of this Commission in CC No.2557 of 2017 Harshad Jain & Anr. Vs. M/s Unitech Limited decided on 01.02.2019. He refers to the following extract from the above referred judgment:
"8. As regards the alleged economic slowdown and consequent recession in the real estate market, the same cannot be a valid ground for delaying the possession of the flats to the complainants since some of the buyers made advance payment of almost 95% of the sale consideration whereas the other buyers were to make payment linked with the progress of construction and this is not the case of the opposite party that they had defaulted in performing their contractual obligations as regards the payment of the sale consideration. Therefore, it cannot be said, as far as this project is concerned, that the construction was delayed on account of funds not being available with the opposite party."
In my view, reference to the above referred decision of this Commission is wholly misplaced since as noted earlier, nothing prevented the OP from refusing to condone the delay which happened in payment of installments earlier than the installment payable on completion of the 12th floor roof slab and cancelling the allotment on account of non-payment of the said installment. It would be pertinent to note here contention of the learned counsel for the complainants that as per the payment schedule agreed between the parties, 95% of the sale consideration was payable at the stage of super structure itself, whereas the cost of erecting the super structure is much much less. Therefore, it cannot be said that the entire amount received by the developer from the flat buyers, by way of installments, was being utilized only for construction of the super structure being raised by it. Obviously, the surplus amount which would be available to the developer, on account of the cost of super structure being much less than the total cost of the house, was being utilized by the builder for other purposes. Therefore, it would be difficult to accept the contention that the construction got delayed on account of non-payment of the installment by several other flat buyers or on account of the delay on the part of these complainants in delaying the payment of the installments. The learned counsel for the OP states that besides incurring expenditure on super structure, the OP had also made huge payment to the concerned development authorities by way of EDC and IDC. However, the fact still remains that the cost of the internal work and the work other than the super structure is a substantial part of the cost of the house and therefore, it would be difficult to accept that the entire amount received by the OP from the flat buyers, was utilized only on construction of the superstructure.
The learned counsel for the OP relies upon the decision of the Hon'ble Supreme Court in Shivashakti Sugars Limited Vs. Shree Renuka Sugar Limited & Ors. (2017) 7 SCC 729 decided on 09.05.2017, wherein the Hon'ble Supreme Court inter-alia observed as under:
We may hasten to add that it is by no means suggested that while taking into account these considerations, specific provisions of law are to be ignored. First duty of the Court is to decide the case by applying the statutory provisions. However, on the application of law and while interpreting a particular provision, economic impact/effect of a decision, wherever warranted, has to be kept in mind. Likewise, in a situation where two views are possible or wherever there is a discretion given to the Court by law, the Court needs to lean in favour of a particular view which subserves the economic interest of the nation. Conversely, the Court needs to avoid that particular outcome which has a potential to create an adverse effect on employment, growth of infrastructure or economy or the revenue of the State. It is in this context that economic analysis of the impact of the decision becomes imperative.
The above referred observations of the Hon'ble Supreme Court, in my view, would not be of any help to a builder to a case of this nature where the builder is supposed to raise construction as per the schedule promised by him to the flat buyers and utilizing the funds realized from them. The impact of the abnormal delay in completion of the construction on the flat buyers cannot be overlook by this Commission while deciding such Consumer Complaints. Having booked an apartment for the purpose of having a roof over their heads and having waited patiently for years for their dream to materialize, they cannot be pushed to an extreme corner by compelling them to wait for an indefinite period, particularly when they have serious doubt on the credibility of the builder, on account of the builder having already defaulted on the promise made by him.
For the reasons stated hereinabove, I have no hesitation in holding that the OP No.1 has been deficient in rendering services to the complainants.
The next question which arises for consideration is as to what would be the just and fair relief to be granted to the complainants considering the offer being made by the OP to complete the construction and deliver possession of the allotted flats to the complainants on or before 31.12.2009 subject to their obtaining the requisite Occupancy Certificate.
When these matters came up for hearing on 01.04.2019, the complainants were asked as to whether they were ready and willing to accept the offer made by the OP but the proposal was out rightly rejected by them saying that they cannot trust such a promise of the opposite party. I therefore, suggested that if the parties agreed, the OP could be directed to complete the construction of the allotted flats in all respects, obtain the requisite Occupancy Certificate at their own cost and responsibility and then offer possession of the allotted flats to the complainants on or before 31.12.2019 alongwith compensation in the form of simple interest @ 8% per annum, with effect from the committed date of possession till the date on which the possession is offered after obtaining the requisite Occupancy Certificate, on the entire amount which the complainants had paid to the OP No.1 on or before the committed date for the delivery of the possession. Having taken instructions, the learned counsel for the OP states that it will not be feasible for them to accept the suggestion since they cannot be sure of obtaining the requisite Occupancy Certificate and also that they will not be able to offer compensation in the form of simple interest at a rate exceeding 6% per annum. The said proposal is also not acceptable to the complainants, who are not ready to trust the builder. In these circumstances, following the decision of this Commission in Ashima Sharma (supra), these complaints are disposed of with the following directions:
(i) The OP No.1 M/s Kashish Developers Ltd. shall refund the entire amount received by it from the complainants to them alongwith compensation in the form of simple interest @ 10% per annum from the date of each payment till the date of refund. The prayer for refund is being pressed by the complainants only against OP No.1 Kashish Developers Ltd.
(ii) The OP No.1 shall also pay a sum of Rs.25,000/- as cost of litigation to each complainant.
(iii) The payment in terms of this order shall be made within three months from today.