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Judgment
These appeals have been filed by the appellant M/s. Truly Creative Developer Pvt. Ltd. against the separate orders dated 16.09.2016 passed in consumer complaints Nos.CC/13/573, CC/13/574, CC/13/575, CC/13/576, CC/13/580,CC/13/585,CC/13/587, CC/13/588, CC/13/589, CC/13/590, CC/13/591, CC/13/593, CC/13/594, CC/13/596, CC/13/597, CC/13/577, CC/13/578, CC/13/579, CC/13/581, CC/13/582, CC/13/583, CC/13/584, CC/13/586,CC/13/592 & CC/13/595.
The State Commission vide common order dated 16.09.2016 allowed the complaints filed by the complainants in Complaint Case Nos. CC/13/573 to CC/13/597. Briefly put, facts relevant for the disposal of these appeals are that the respondents/complainants had booked flats in the project "Rajendra Kunj" S/7-B at Rajendra Nagar, Datta Pada Road, Village Magathane, Borivali (East), Mumbai to be developed by appellant OP for different considerations which were below Rs.6,00, 000/-. Agreements were registered and the complainants have paid different amounts against the consideration amount. In a typical case, CC No. 13/591 the complainant paid Rs.3,89,200/-. The OPs failed to deliver possession of the flats even after a long gap of time and also demanded additional amount. The OPs specifically wrote to the complainants that all the necessary approvals, sanctions and permissions from the relevant authorities have been obtained. The opponents furnished copies of various documents of title and made the complainants to believe that the Development Project will be started soon and will be finished within the stipulated period. The complainants are the employees of the Excel Industries. They were assured by the OPs that the construction would be of good quality and the possession will be delivered in time. OPs started taking booking amounts and issuing Allotment Letters from the year 1994 onwards. This project was a part of the slum redevelopment plan declared and sanctioned under the Slum Redevelopment Scheme of the Government of Maharashtra. Almost 112 employees of the Excel Industries had booked and invested in the proposed scheme. However, on one pretext or the other, the OPs have indefinitely delayed the construction of the proposed said project beyond the limits. The OPs had initially promised that they will be starting the construction from October, 1997 on the said premises. Complainants were later informed that the construction will be started in June 1998. The complainants and other flat purchasers were asked to make further payments and all of them paid the amount in time. On 6/5/2000, the OPs issued Revised Allotment Letters to the complainants. In the said letter, OPs admitted their liability once again to complete the project in time and expressed their obligation and commitment towards the said project. Again it was mentioned in the said letter that the escalation charges are to be borne by the complainants. On 24.7.2004, meeting was held between the complainants and OPs. On 17.9.2004, again a meeting was held and various issues were discussed, mainly the delivery of possession of the newly constructed flats and the completion of construction. It was being promised by the OPs that the construction would be completed and possession will be given by December, 2005 to the complainants and other purchasers. The option of continuing booking and cancellation of bookings was discussed in the said meeting. On 24.12.2005, OPs reissued Booking confirmation and Flat Allotment Letters setting out the details of the flats. Additional payment was demanded apart from society and other maintenance charges. In a typical case, the complainant stated that a sum of Rs.3,89,200/- was paid to the OPs in various installments upto 25.05.2000 and a payment of Rs.57, 375/- was also made to the OPs on account of Development charges, water & Electricity charges, Legal & society charges etc. The OP claimed that the redevelopment activity could not be accomplished by the OPs due to the litigation process against the OPs. The process continued for approximately 6 years and on 28.11.2011, it was communicated to the complainants either to pay the cost of the flat as per the current rate or to drop out and resign from the membership by accepting the refund with mutually agreed interest. By letter dated 1.7.2013, OPs admitted their inability to complete the construction of said project due to reasons beyond their control. Complainants then filed the consumer complaints alleging deficiency in service on the part of the OPs. The complaints were resisted by the opposite parties/appellants by filing the written statement. Apart from raising the preliminary objections that the complaints were barred by limitation and the complainants were investors and not the consumers as defined in the Consumer Protection Act, 1986, the opposite parties stated that the complainants have not paid the remaining instalments, hence they are defaulters and they cannot file the complaints. It was also stated that it was not possible to give the flats at the original price as the original bookings were made in 1994 and since then the prices have increased manifold. The State Commission vide order dated 16.9.2016 held the OPs liable for deficiency in services and directed OPs as under:-
"7. In all above 25 consumer complaint, the opponent/builder to hand over lawful possession of the flats along with agreed amenities to the complainants within a period of two months from the date of this order.
In each of these consumer complaints, the opponents shall pay to the complainants, an amount of Rs.50,000/- (Rupees Fifty Thousand only) by way of compensation towards mental agony and harassment besides reasonable costs of litigation quantified to Rs.15,000/- (Rupees Fifteen Thousand only). However, the opponents are at a liberty to appropriate these amounts payable as compensation towards balance consideration receivable from the complainants, in each of these consumer complaints, and after such appropriation, surplus amount, if any, shall be paid to the complainants."
Hence the present appeals.
Heard the learned counsel for the parties and perused the record. Learned counsel for the appellants stated that the complainants are the employees of Excel Industries. 45 persons have already got the possession, however, about 30 remaining persons could not get the possession. The complaints were not maintainable before the State Commission on the ground of pecuniary jurisdiction because price of one flat was not more than Rs.6,00,000/- at the time of booking. As these complainants wanted possession so there should be no question of adding interest on the total consideration, though some compensation can be allowed. Even then, the total figure does not cross Rs.20,00,000/- in each complaint case and therefore, the State Commission did not have the pecuniary jurisdiction to consider these complaints.
Apart from the pecuniary jurisdiction, the learned counsel also raised the issues relating to limitation and commercial purpose. It was stated that the State Commission has not considered the limitation aspect as the complainants have not clearly stated the date of arising of the cause of action. The last agreement was signed by the parties in the year 2005 and the possession was expected by 2007. Even from this date, the complaint should have been filed by the year 2009, but the complaint has been filed in the year 2013. Thus, the complaint should have been dismissed only on this count. It was further stated that the complainants are the employees of the Excel Industries and they have booked these flats for investment purposes as they are already living in their homes. Thus, the complainants are investors and not the real consumers. The State Commission has not considered this aspect also.
This is a redevelopment project where a major portion of the land is to be redeveloped and construction is to be made as per the directions of Slum Development Authority for settlement of the slum dwellers and the remaining land from which the slum has been removed will be given to the builder for development and this will be the project of the builder. This area was declared as Slum under Section 4(1) of the Maharashtra Slum Area Improvement Clearance and Re-development Act, 1971 assessed by Municipal Corporation under R/N Ward No.8007(3)(4) (hereinafter referred to as :the said premises").
Appellant/OP alleges that the complainants have not deposited the installments as per schedule in said agreement, though the appellants have repeatedly demanded the balance payment vide different letters issued to them. Appellant/opposite party relied upon the judgment of this Commission in Randhir Singh & Anr. vs. Omaxe Chandigarh Extension Developers Pvt. Ltd. I (2015) CPJ 514 (NC) that when the complainants themselves were the defaulters therefore, in such circumstances not entitled for any interest on the principal amount. The learned counsel further relied on another judgment in Banglore Development Authority Vs. Syndicate Bank (2007) 6 SCC 711 wherein Hon'ble Supreme Court has held that "mere delay in delivery cannot be automatically equated with deficiency in service as the appellant development authority explained the delay being on account of its contactor stopping work and raising a dispute also the houses were being constructed on "No Profit No Loss Basis". The Apex Court has further held that if the allotee does not pay all installments, he cannot obviously expect completion of construction and any delay that the developer may have to explain can only be computed from after the date on which the final installment has been paid. The Appellant further says that the State Commission overlooked clause 11 of the Agreement which allowed the developer reasonable extension of time for giving delivery of the unit. Clause 2 of the agreement also provided for escalation in the consideration fixed under the agreement.
Learned counsel further pointed out that the State Commission should have realised that when the complainants are not willing to pay the additional cost which is result of price increase, then the only remedy available to the complainants would have been the refund of amounts paid by the complainants. The complainants in their complaints themselves have asked for refund in the alternative, though they have asked for the market value of the flat. It was further stated by the learned counsel that the principle of refund on the basis of market value is not an accepted principle by the Hon'ble Supreme Court or by this Commission and the accepted principle is to refund the amounts with appropriate interest for which the appellants are already ready.
The original bookings were made in the year 1994 onwards and due to one reason or the other, building could not be completed so far, therefore, the price has increased manifold and it is not possible to complete the building in the original price. Hence the appellants are ready to refund the amounts paid by the complainants along with 18% p.a. interest. If the complainants are not interested in taking refund along with interest, the appellants have already submitted a proposal before this Commission that the building will be constructed by December, 2020 if the building starts in the year 2017 provided the complainants pay the increased amount of the cost. The appellants do not intend to make any profit out of this project by selling the flats to the complainants, but the basic cost of construction needs to be recovered from the complainants. From this point of view, this proposal has been given to the complainants.
Earlier the allotment to these complainants was in building no.7B, which has since been demolished by the order of the competent authority and now it is proposed in building No.5B where the complainants can be accommodated. In the proposal, two types of flats are proposed for consideration and purchase by the complainants. The price, which is to be charged from the complainants, and its market evaluation has been pointed out by the learned counsel as follows:-
MARKET EVALUATION (TABLE A)
AREA OF SALE COMPONENT IN SQM
COST AS DEVISED BY TCDPL (in Rs.)
COST AS PER READY RECKONER + GST (in Rs.)
MARKET RATE AS PER MAGICBRICS (TOI DATED 30.09.2017) (in Rs.)
RATE/ SQM
COST
RATE/SQM
COST
RATE/SQM
COST
58
101171
5898294
209450
12210935
195991
11426270
81
101171
8157618
209450
16888300
195991
15803071
Learned counsel for the appellants stated that it is not possible to implement the order of the State Commission due to cost escalation and therefore, the appeals need to be allowed. Appellants are ready to give flats in building No.5B as per the cost given in the above table or the appellants are also ready to refund the amounts paid by the complainants along with 18% p.a. interest.
It was further argued by the learned counsel that just for an example, in complaint No.573 of 2013 the complainant himself in the prayer has asked Rs.52,00,000/- in the alternative as market price of the flat. Thus, the complainant has himself agreed that the evaluation of the flat is about Rs.52,00,000/-, but the complainant is not willing to spend this amount rather the complainant wants the flat at the old price. It was further stated by the learned counsel that even as per the valuation given by the complainant, the project costing in the proposal given by the appellant as detailed above is reasonable and seems authentic. The prices in Mumbai are on steep rise and therefore, if the complainants pay as per the proposal, they will still be in an advantageous position as reflected in Table A. The learned counsel for the appellants has also mentioned the order passed by this Commission on 22.8.2017 wherein the OPs/appellants have given the offer to the complainants with each and every specification of proposed flats in question along with approximate cost of construction of each flat. The OPs have not received any response from the complainant's side till date.
On the other hand, learned counsel for the respondents/complainants stated that the matter started in the year 1994 when the bookings were taken by the appellants and after the complainants applied, the appellant issued the allotment letters. The learned counsel narrated the whole sequence of events as mentioned in the brief facts given in the body of this judgment. The last agreement to sell was signed in the year 2005. The appellant had promised that the possession will be given within two years. However, this date was extended many times by the appellant and finally it was promised that the possession will be given within four years as communicated by letter dated 28.11.2011.
In a typical agreement dated 19.10.2005, in CC No.CC/13/591 the date of giving possession of the unit as described in clause '3' of the agreement shall be within two years from the date of completion of plinth of the respective building.
The possession was originally to be given in the Building 7B, however, the said building has been demolished in the year 2015 under the order of the competent authority. This fact was not disclosed before the State Commission by the appellant and therefore, the order of the State Commission is based on the fact that the appellant would give the possession in Building 7B. The appellants have now changed the plan and they have proposed to give possession in the Building 5B and they have again escalated the cost of the flats. As the appellants have already taken so many years to complete the building and to hand over said flats, there is no guarantee that even if the complainants agreed for the proposal submitted by the appellant, whether they would be able to get the possession of the flats in question within a reasonable time. If the appellants again did not hand over the possession in the promised time frame, then more money of the complainants will be blocked with the appellants. It was argued by the learned counsel for the complainants that the agreement is binding on both the parties and if the opposite party does not handover the possession in time or within the extended time, escalation in cost due to this delay cannot be burdened on the complainants because the delay has occurred due to inefficiency on the part of the appellants. In fact, no proper ground for delay in construction has been submitted by the appellants. The State Commission has appreciated all the facts in the present dispute and has then passed the impugned order. This Commission in many cases has granted compensation for delay in handing over the possession in terms of interest on the amount deposited by the complainants from the due date of possession till the date of actual possession, but in the present case, the appellant is seeking more funds from the complainants to compensate for increase in costs due to this delay. Therefore, instead of getting compensation from the opposite party/appellant, the complainants are required to pay more to the appellant/opposite party if the proposal given by the appellant is accepted, which will be against the spirit of the Consumer Protection Act, 1986.
It was stated by the learned counsel for the complainants that the conduct of the appellants has not been inspiring in the past and therefore, their proposal does not inspire confidence in the complainants. To illustrate the earlier conduct, the learned counsel stated that vide letter dated 06.05.2000 appellant/opposite party informed that the construction work was going to start soon and even suggestions were invited for additional facilities which the complainants needed. There was a meeting between appellant and complainants on 28.09.2004 and it was informed that the work was going to start soon. Most importantly, the appellant wrote letter dated 28.11.2011 mentioning the following:-
"As soon as phase is completed, we would shift hutment dwellers from transit and those who are on rental basis. This will enable us to clear the site of hutments in a phased manner. The completion of rehab would generate proportionate FSI which would enable us to start with sale building. In our candid opinion, it would be around the end of 2013 we hopefully wish to commence sale building construction. It would be again in phased manner and expect completion over a period of four years. We think the agreement for the flats could be signed at this stage, around end of 2013. Please note, as per amended MOFA the agreement could be executed only after obtaining CC with mandatory date of possession.
We are sincerely grateful to all those who booked the flats, paid upfront and waited patiently for all these year. As a gesture of goodwill, we have decided to offer you flats at then prevailing cost, on "no profit or loss" basis, irrespective of the prevailing market price. However, should you opt to withdraw your booking with deposit at this stage; we shall refund the deposit with mutually agreed rate of interest, to be calculated on simple basis until the date of payment. We have convened a meeting of all member on 9th December, 2011, 5.00 p.m. at office of Excell Cropcare Ltd., Virvani Industrial Estate, Goregaon, Mumbai to discuss and appraise you to latest situation, please make it convenient to attend."
The learned counsel for the complainants argued that from the above, it is clear that the developer promised to give the flats on the same price. Therefore, the appellant cannot raise the prices of the flats. Then the opposite party circulated an application for cancellation to all the members wherein they have mentioned the proposed refund along with 18% p.a. interest. However, these complainants did not fill the cancellation application.
It was further pointed out by the learned counsel for the complainants that in the written statement filed by the opposite party, they have not explained the reasons for delay in the project. It has been mentioned that the delay has occurred due to court cases, however, the fact is that court cases can explain for only a short period of delay, rather than the whole period of delay.
It was further stated that in compliance of the impugned order dated 16.9.2016, on 19.9.2016, each of the respondents (original complainants) addressed a letter through their advocate to the appellant forwarding the demand draft of the balance consideration amount which was payable by them. But the advocate of the appellant refused to accept the said balance consideration amount. On 10.10.2016, the complainants addressed a letter to the Registrar of the State Commission to deposit the balance consideration amount with the Registry of the State Commission.
I have carefully considered the arguments advanced by both the learned counsel and have examined the material on record. The appellant has taken three preliminary grounds in his appeal, which relate to pecuniary jurisdiction, limitation and commercial purpose. So far as the pecuniary jurisdiction is concerned, it is seen that in a typical complaint , which was referred by the learned counsel for the appellants the market value of the flat i.e. Rs.52,00,000/- has been asked as compensation in case the appellants were not able to give the possession of the flat. Thus, the compensation demanded in each case is more than Rs.20,00,000/- and therefore, the State Commission had the pecuniary jurisdiction to decide these complaints, Clearly, when the State Commission decided these complaints, the judgment of this Commission in Consumer case no 97of 2016 Ambrish Kumar Shukla and others vs. Ferrous Infrastructure Pvt Ltd. decided on 7.10.2016 (NC) had not come by that time, therefore, the State Commission proceeded as per the previous practice where the valuation of a complaint depended on the relief sought. Even as per the judgment of larger Bench of this Commission in Ambrish Kumar Shukla and others vs. Ferrous Infrastructure Pvt Ltd. (supra), the value of goods or services along with compensation is to be considered for deciding the pecuniary jurisdiction. As the market value of the flat was sought in these complaints as compensation which was more than Rs.20,00,000/-,therefore, the State Commission had the jurisdiction to decide these complaints.
Coming to the question of limitation, the argument of the learned counsel for the appellants is that agreement was signed in the year 2005, wherein the promise was made to complete the construction and to handover the possession within two-three years and therefore, the complaint should have been filed by the year 2008. However, the complaint has been filed in the year 2013. Now, it is an accepted principle of law that if the opposite parties have neither given the possession nor have refunded the amount, then the cause of action would be treated to be continued. Thus, in the present case, neither the possession was offered nor amount paid by the complainants was refunded, therefore, the cause of action continued till the filing of the complaint.
Another objection raised by the appellants is that complainants are employees of Excel Industries and they are already living in good accommodation and they booked these units for earning profit. Thus, they are investors and not the consumers within the purview of the Consumer Protection Act, 1986. It is not the case of the appellants that these complainants have booked more than one unit. This Commission has already taken a view that if a person has booked more than one unit for use of his family members and if he is not trading in flats or plots, then he will be considered as consumer. This view is reflected in the following cases
Aashish Oberai Vs. Emaar MGF Land Limited, Consumer Case No. 70 of 2015, decided on 14.09.2016 (NC)
Kavit Ahuja Vs. Shipra Estate Ltd. & Jai Krishna Estate Developers Pvt. Ltd., I(2016) CPJ31(NC),
Rajesh Malhotra & Ors. Vs. Acron Developers & 2 Ors., First Appeal No. 1287 of 2014, decided on 05.11.2015 (NC)
On the basis of the above view taken by this Commission, the complainants would be treated as consumers within the purview of the Consumer Protection Act, 1986. In the present case, it is seen that the flats were booked by the complainants in the year 1994 under the project which is basically a part of slum rehabilitation project. After rehabilitation activities, whatever land is vacated and given to the builder/appellants for taking up their own residential project, these complainants would be entitled to get the possession of their flats in this project. Originally the bookings were made in building 7B, however, the same has been demolished under the order of the competent authority and now the appellant/builder is saying that they will be able to accommodate the complainants in another building 5B. It is true that the appellants have promised many times during the period from 1994 till 2011 that they will be starting the construction and will be handing over the possession of the flats to the complainants within 2-3 years. However, the appellants could not do it. Even on 28.11.2011 when the court cases were over, the appellants again gave the assurance to the complainants that they will be providing accommodation within a period of four years at the same price. In this letter an offer of refund was also given to the complainants by the opposite party. In the consequent application for cancellation circulated by the appellants, refund with 18% p.a. interest was mentioned. Even during the arguments, learned counsel for the appellants stated that the appellants are ready to refund the amounts paid by the complainants along with 18% p.a. interest.
Clearly, as earlier building 7B in which flats were to be provided to the complainants has been demolished under the orders of the competent authority, the complainants cannot be given possession of the flats immediately. The appellants are now promising to give possession in building 5B provided the complainants agree for the increased cost of construction for these flats. In this regard, the appellants have given a proposal wherein it has been proposed to construct two types of flats with the following details.
Table B
Sr. No.
Area of flat in SQM
Proposed cost (in Rs.)
1.
58
5898294
2.
81
8157618
As the original booking was made in the year 1994 and the building 7B has been demolished, the contention of the appellants seem to be convincing that either the complainants should get refund of their paid amounts alongwith 18% p.a. interest or they should be ready to pay more for the flats as the appellants are ready to construct the flats on "no profit no loss basis". It is seen that vide letter dated 28.11.2011, the appellants wrote to the complainants that they were going to start the construction in the project. The learned counsel for the complainants has stated that the appellants promised to construct and hand over the flats to the complainants on the same price, whereas the contention of the learned counsel for the appellants is that the flat would be given on the current price. In fact the following portion of this letter is being perhaps interpreted differently by two parties:-
"As a gesture of goodwill, we have decided to offer you flats at then prevailing cost, on "no profit or loss"
These lines are to be interpreted in the context of the letter and the context is given in just the above para wherein it is mentioned that the project is likely to take four years and the commencement is likely to be made by the end of 2013. It is also written in this letter that agreement for the flat may be signed around end of 2013. There is no reference to the time of booking in this context. Therefore, it cannot be interpreted as if the appellants have given offer of providing flats at the original cost. Clause 2 of the agreement clearly states that the total consideration may change. The clause 2 reads as under:-
"that the total consideration mentioned in clause 7 of the schedule 'z' shall be subject to the changes in the prices on account of the additional amenities, increase in the costs of the construction material (the basic cost of all the important construction material is given in Annexure X annexed herewith) the payment that shall be made by the DEVELOPERS to Government or any other public authorities and local authorities time to time and any other charges including taxes paid to Government or any other authorities as permitted and actually spend by the DEVELOPERS other than mentioned in the present agreement."
Thus, it is clear that there is a provision of increase of cost in the agreement. Similarly Clause 11 of the agreement provides that if there is a delay in project, the opposite parties will refund the amount paid along with simple interest of 18% p.a. on demand. Thus, the proposal of the appellants does not seem to be against the provisions of the agreement.
If the complainants want to continue with the bookings, they have to pay more cost because the construction cost has increased since the time of booking of the flats. The appellants had also given the option of refund in the year 2011, however, these complainants did not come forward for taking the refund. As this project was linked to the rehabilitation project of slum dwellers for which the approval of Slum Area Development Authority was to be obtained and that has taken time, the delay in the project cannot be solely attributed to the deficiency and negligence on the part of the appellants as some time has also been lost due to court cases. However, if the complainants want to continue with the booking, the proposal submitted by the appellants needs serious consideration by the complainants.
As the building 7B has already been demolished, it is difficult to implement the order of the State Commission for giving possession of the flat to the complainants. In the facts and circumstances of the case only feasible solution seems to be that the money paid by the complainants be refunded to them along with 18% p.a. interest from the date of respective deposits till actual payment. If any complainants are interested to continue with their bookings, they can pay the amounts mentioned in the proposal given by the appellants after adjustment of the earlier amount paid by them alongwith interest @9% p.a. from the date of deposit till the date of this order.
Based on the above discussion, the First Appeals filed by the appellants are partly accepted and the impugned orders of the State Commission are set aside and it is ordered that the money paid by the complainants will be refunded by the appellants to the complainants within a period of eight weeks from service/receipt of this order along with 18% p.a. interest (as agreed by the appellants) from the date of respective deposits till actual payment to those complainants who agree to take the refund and who apply for refund to the appellants within a period of 30 days or within extended period agreed to by the appellants. However, those complainants, who do not want to take refund and want to continue with the booking, may pay the remaining cost calculated on the basis of the proposed cost as given in the proposal (Table B) along with option of the flat. The remaining amounts to be paid by the complainants will be calculated after adjusting the paid amount by the complainants along with 10% p.a. interest from the date of respective deposits till the date of this order. The remaining cost will be paid in six monthly three equal instalments. First instalment of the remaining cost shall be paid by the respective complainants within the period given by the appellants which will not be less than 90 days.