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Judgment
Subhash Chandra, Presiding Member
This appeal under Section 19 of the Consumer Protection Act, 1986 (in short, the Act) assails the order dated 17.03.2016 of the State Consumer Dispute Redressal Commission, Karnataka, Bangalore (in short, the State Commission) in Consumer Complaint no. 118 of 2013 pertaining to the construction of the apartment booked by the appellant with the respondent. The impugned order upheld the complaint and directed as below:
The complaint is hereby allowed with a cost of Rs 5000/-. The complainant as well as OP are hereby directed to approach Corporation Bank, Vontikoppal Branch, Temple Road, Mysore to obtain NOC for the purpose of execution of sale deed of flat no. S 4 apartment in Pratham Pooja. OP is further directed to execute sale deed in favour of complainant in respect of flat no. S 4 in Pratham Pooja within a period of three months from the date of this order within which time both the parties shall obtain NOC from Corporation Bank.
OP is further directed to pay interest @ 8% pa on amount of Rs 17,40,000/- from the date of complaint till execution of sale deed and handing over of possession to the complainant under proper acknowledgement.
The facts of the case, according to the appellant, in brief, are that she entered into an Agreement to Sale (in short, the Agreement) with the respondent on 07.07.2008 in respect of Flat No. G 4, Ground Floor in Pratham Ashirwad, Vijaynagar First Stage, Devaraj Mohalla, Mysore admeasuring 1105.30 sq ft super area for a sale consideration of Rs 18,00,000/-. Appellant paid the sum of Rs 17,40,000/- towards the flat after obtaining a loan of Rs 16,00,000/- from Corporation Bank. The balance 5% was required to be paid at the stage of registration. As per the Agreement, appellant was liable to pay interest @ 18% p.a. for delay in payments as per the schedule while the respondent was liable to pay the appellant Rs 5,000/- per month for delay in handing over possession beyond the specified time of delivery.
Respondent sent a letter of completion on 25.02.2011 but despite several emails by the appellant to register the flat, the respondent conveyed that the flat would not be ready till 16 August 2011 and hence registration was not possible. It was thereafter learnt by the appellant that the landowner of the property was in possession of the flat and was involved in litigation with the respondent.
Under compelling circumstances, respondent agreed to accept allotment of flat no. S 2 in lieu of flat G 4, and entered into another Agreement with the respondent on 16.09.2011. However, this apartment was also subsequently found to have been sold to a third party. Respondent then assured the appellant that flat G 4 would be reallotted and gave an undertaking on 21.08.2012 to hand over vacant possession for registration on or before 15.10.2012, failing which Rs 20,000/- per month would be paid as damages. However, on 05.01.2013 the flat was found to be still occupied by the landowner of the property by the appellant. The respondent then offered flat S 4 and assured registration in 45 days, which he failed to do. Respondent also did not respond to 2 legal notices by the appellant on 22.02.2013 and 17.06.2012 for registration and damages.
Thereafter, appellant filed Consumer Complaint no.118 of 2013 before the State Commission which came to be decided on contest in her favour. The impugned order is, however, challenged on the ground that the State Commission failed to appreciate that the respondent was liable for unfair trade practice and deficiency in service in failing to comply with the terms of the Agreement in handing over flat no. G 4 and that the impugned order was erroneous in requiring an NOC from the Bank when 95% of the payment stood paid. It was also contended that the State Commission erred in not appreciating that the respondent had undertaken to hand over vacant possession of this flat as per undertaking dated 21.08.2012 on or before 15.10.2012 and in lieu thereof, to pay Rs 20,000/- per month till registration of the flat. It was further contended that the impugned order was not implementable since the respondent did not own the flat and was not in position to hand over the same despite the order. The appellant is therefore before us with the following prayer:
1) The respondent may be ordered to get the flat bearing no. S-4, 2nd Floor, Prathma Pooja, No. 1328, Vijayanagar I Stage, Mysore transferred in the name of the appellant within two months or in the alternative direct him to refund Rs 17,40,000/- along with interest at 18% per annum from the date of receiving the amount till the refund of amount
2) To award the compensation as prayed for in the complaint and as based on the agreed compensation by the Respondent
3) Any other relief as the Honble Court may deem fit and proper.
We have heard the learned counsel for the appellant. Despite notice, the respondent failed to be present in person or through a duly authorized counsel to present and argue his case. He was placed ex parte vide order dated 12.04.2023. His submissions before the State Commission are, however, considered as his final submissions although the respondent was ex parte before the State Commission also.
The case of the appellant is that despite the contractual agreement between the parties as per the Agreement for Sale dated 07.07.2008, the respondent failed to hand over vacant possession of the flat no. G 4, Pratham Ashirwad even though it had conveyed completion of the project on 25.09.2011. Its subsequent offer of possession in respect of an alternate flat also did not fructify since this flat, viz., S 2 was found to be occupied by another allottee. The respondent offered to hand over the originally allotted flat, i.e., G 4, Pratham Ashirwad but again failed to comply with this undertaking. Instead, another alternate flat viz., S 2 in Pratham Pooja was offered. This was despite the appellant having paid the entire amount of the sale consideration as far back as on 07.06.2008 as per the payment plan except the balance 5% which was due on registration. The fact of the booking and receipt of instalments is not disputed by the respondent. It is admitted that neither the originally allotted flat G 4 was handed over to the appellant nor the subsequently allotted flat S 4. It is also manifest from the record that flat S 2, Pratham Pooja allotted thereafter has also not been handed over or registered.
According to the respondent, as stated before the State Commission, the complaint was not maintainable as it was for investment purpose and not for personal use. It was stated to be barred by limitation and that the period of limitation could not be extended though the issue of legal notices. In view of the provision of arbitration in Clause 14 of the Agreement, it was argued that the complaint was not maintainable. It was denied that the respondent expressed inability to hand over flat G 4 and instead offered S 2. Instead it was stated that flat G 4 was nearing completion and the respondent was willing to hand over the same. It was also stated that the appellant failed to pay the balance amount and register the flat even though the appellant was directed to do so on 25.05.2011. It was contended that the Bank had not issued an NOC.
The State Commission has arrived at the finding that the execution of the second agreement as well as other documents proves that the respondent was unable to hand over flat no. G 4 in time. On the basis of the respondent's contention that it is prepared to execute the sale deed in respect of flat S 4 subject to an NOC from the Corporation Bank, since a Tripartite Agreement was executed between the parties and the Bank on 31.01.2009, the State Commission has held that compensation @ 18% to the appellant is not justified. It has also been held that the claim for mental agony is vague and not based upon any terms of agreement. Compensation @ 8% has been considered to be reasonable by the State Commission in view of the developments during the course of the proceedings before it.
From the foregoing, it is evident that the respondent failed to comply with its contractual obligation in the Agreement of handing over vacant possession of the allotted flat G 4, Pratham Ashirwad or to hand over the alternative flat (S 4) it subsequently offered. Thereafter, it again failed to hand over flat G 4 as undertaken by it again or to pay Rs 20,000/- per month. Instead, it has now offered to hand over a third flat no. S 2 in Pratham Pooja as another alternative. The State Commission has held that in view of the Tripartite Agreement between the parties and Corporation Bank, the sale deed in respect of this flat be executed subject to an NOC from the Bank within 3 months and that the respondent compensate the appellant @ 8% on the amount of Rs 17,40,000/- from the date of the complaint till the date of handing over of possession with costs of Rs 5,000/-. The appellant has challenged this order and prayed that flat S 4 be handed over within 2 months or the entire amount be refunded with interest @ 18% from the date of deposit till refund.
The preliminary objections of the respondent are addressed at the outset. The contention of the respondent that the appellant was an investor and therefore not a consumer under the Act is a bald assertion that is not supported by any documentary evidence. In view of this Commissions judgment in Kavita Ahuja vs Shipra Estate Ltd. and Jaikrishan Estate Developers Pvt. Ltd. and Ors., I (2016) CPJ 31 (NC) the onus of proof to prove the same lies upon the respondent which has not been discharged. As regards the lack of jurisdiction in view of the arbitration clause in the Agreement, it has been held by the Honble Supreme Court in Emaar MGF land Ltd., vs Aftab Singh (2019) 1 SPJ 5 (SC) that the provisions of the Consumer Protection Act are in addition to and not in derogation of other Acts. Therefore, this argument does not sustain. Also, the fact that the respondent admitted before the State Commission that it was willing to hand possession of flat G 4 which was under completion was an admission that there was a continuing cause of action and hence, as held by the Honble Supreme Court in Meerut Development Authority vs Mukesh Kumar Gupta IV (2012) CPJ 12 decided on 09.05.2012 the appellant could not be non-suited on grounds of limitation. In view of the fact that despite the respondent having intimated the completion of the project as far back as 25.02.2011 it has not been able to hand over possession of either the originally allotted flat (No. G 4) or any other alternate flat in Pratham Ashirwad, deficiency in service under section 2 (1) (g) and unfair trade practice under section 2 (1) (r ) of the Act is writ large on part of the respondent who is liable to compensate the appellant for the same. The contention of the State Commission that the respondent cannot be held liable for compensation for mental agony as it is not covered under the Agreement cannot be accepted. The appellant has waited since 07.06.2008 for the possession of the flat, having admittedly paid 95% of the sale consideration after obtaining a loan from a bank. An allottee can be expected to wait for a reasonable period of time but not inordinately. The cancellation of two allotments after receiving 95% of the sale consideration constitutes harassment and is certainly an unfair trade practice. The failure of the respondent in handing over of possession also constitutes a violation of the contractual terms of the Agreement and is deficiency in service.
The Honble Supreme Court and this Commission have laid down in a catena of judgments notably in Kolkata West International City Pvt. Ltd. Vs. Devasis Rudra, II (2019) CPJ 29 SC decided on 25.03.2021, Pioneer Urban Land & Infrastructure Ltd. Vs. Govindan Raghavan, II (2019) CPJ 34 (SC) decided on 02.04.2019, and Fortune Infrastructure & Anr. Vs. Trevor DLima & Ors. (2018) 5 SCC 442 that an allottee can be expected to wait for a reasonable period but cannot be expected to wait indefinitely for possession and is entitled to seek refund with compensation. It has also been held by the Apex Court in Ghaziabad Development Authority Vs. Balbir Singh, (2004) 5 SCC 65 which held that confirmation should not be a source of profit but equivalent to loss suffered. In Experion Developers Pvt. Ltd. Vs. Sushma Ashok Shiroor, CA No. 6044 of 2019 decided on 07.04.2022 the Honble Supreme Court laid down that the rate of interest has to be both restitutionary and compensatory. In DLF Homes Panchkula Pvt. Ltd., vs D S Dhanda in CA nos. 4910-4941 of 2019 decided on 10.05.2019, the Honble Supreme Court held that the rate of interest shall apply from the dates of respective deposits till the offer of possession. Further, the Honble Supreme Court also held in Wg Cdr Arifur Rahman & Anr. Vs. DLF Southern Homes & Anr, (2020) 16 SCC 512 that in cases where possession is being handed over, the consumer allottee is entitled to compensation @ 6% p.a. from the date of respective deposits till the date of possession.
In the instant case, the impugned order has rightly upheld the prayer of the appellant for possession and ordered the handing over of possession of the alternative flat to the appellant within 3 months. It has not ordered any compensation for the delay which the appellant is entitled to since he had paid the respondent 95% of the sale consideration. In the alternative, refund of the entire amount paid has been ordered with interest @ 8%. It has also ordered that an NOC be obtained from Corporation Bank with respect to the loan obtained by the appellant.
In the light of the foregoing discussion, deficiency in service and unfair trade practice on part of the respondent stand established. The appellant is entitled to possession of the alternate flat (S 2, Pratham Pooja). However, he is also entitled to be compensated for the delay in possession in terms of Wg Cdr Arifur Rahman (supra) @ 6% p.a. till the date of possession. In case the respondent does not hand over possession, the appellant is entitled to refund with interest which should be restitutionary and compensatory in terms of Ashok Sushma Shiroor (supra). The State Commission has also failed to appreciate that the rate of compensatory interest has to necessarily be with reference to the facts of each case. The impugned order has failed to appreciate this and awarded interest @ 8%. In so far as the issue of the NOC of the Bank is concerned, in terms of the Tripartite Agreement, the Bank shall have the first charge on the refund.
In view of the discussion above, and the facts of this case, we find merit in the appeal and allow the same. The impugned order is set aside and it is ordered as under:
Respondent is directed to:
i. Hand over possession of flat no. S 2 to the appellant complete in all respects within 8 weeks from the date of this order with delay compensation @ 6% per annum on the amount deposited from the date of promised delivery (05.10.2012) till the date of registration and handing over;
ii. In the event that possession is not handed over as directed at (i) above, respondent shall refund the amount of Rs 17,40,000/- to the complainants, along with interest @ 9% p.a. from the respective dates of deposits within 4 weeks of this order failing which the applicable rate of interest shall be 12 % p.a. till realization;
iii. The appellant shall provide a valid statement of the loan account to the respondent within two weeks of this order for it to abide by the Tripartite Agreement;
iv. Pay cost of litigation of Rs 50,000/- to the complainant along with the refund as ordered at (ii) above.
Pending IAs, if any, stand disposed of with this order.