The instant complaint under Section 17 of the Consumer Protection Act, 1986 (for brevity, ‘the Act’) is at the instance of a couple/intending purchasers against the Developer/Builder on the allegation of deficiency in rendering services on the part of them in respect of a flat and car parking space in a dispute of housing construction.
Succinctly put, the Complainants’ case is that following a Letter of Intent (LOI) dated 20.07.2008, on or about 24.07.2008, the complainants jointly entered into an Agreement for Sale with the Opposite Party No.1 to purchase of an apartment being numbered 1904 on the 18th floor, Tower No. 01 having a super built-up area of 1574 sq. ft more or less together with one covered car parking space with proportionate undivided share of land at ‘Uniworld City Harmony’ at New Town, Kolkata at a total consideration of Rs. 57,15,957/-. The complainants have stated that they have already paid total sum of Rs. 15,38,661/- to the O.P. adhering strictly to the terms and conditions of the Agreement. The opposite party was under obligation to deliver possession by 30.09.2011 but they failed to keep their promise. The complainants time and again requested the O.P. to deliver possession, but all their requests and persuasions including several emails went in vain. On the contrary, on 03.12.2014 the OP suddenly issued a letter regarding cancellation of booking and forfeited the sum of Rs.15,38,661/- and claimed a further sum of Rs.67,90,875/- from the complainants which the OPs are not entitled at all. On 06.08.2016 the complainants issued a registered letter by speed post addressed to the OPs and sought refund of the principal amount together with interest @ 18% p.a. from 20,.07.2008 i.e. the date of application money till realisation within 15 days from the date of receipt thereof but it yielded no result. Hence, the complainants have lodged the complaint with prayer for following reliefs, viz.- (a) to direct the OPs to refund the principal sum of Rs.15,38,661/-; (b) to direct the OPs to pay interest @ 18% p.a.; (c) to direct the O.Ps. to pay further sum amounting to Rs.10,20,370/- etc.
The opposite party by filing a written version has admitted the existence of agreement between the parties in respect of property in question and also admitted the factum of payment of Rs. 15,38,661/- by the complainants but it has been stated that they are ready and willing to complete the project and perform its obligation in terms of the agreement and in this regard they will pay compensation to the purchaser @ Rs. 5 per sq. ft. per month for the period of delay in offering the delivery of the same and the period indicated in the agreement. The OPs have stated that time and again they have issued demand letters asking the complainants to pay instalments but inspite of receiving demand letters, the complainants deliberately failed and neglected to make payments. Accordingly, on 03.12.2014 they issued a final cancellation letter to the complainants for cancellation of the allotment and informed the complainants that they have forfeited the amount of Rs.15,38,661/- paid by them. The OPs have stated that after a lapse of more than one and half years, the complainants issued legal notice on 09.09.2016 and demanded the amount along with interest. The OPs have also stated that as there was an arbitration clause, the complaint is not amenable before a Forum constituted under the Act. Therefore, the complaint should be dismissed.
Both the parties have tendered evidence on affidavit. They have also given reply against questionnaire set forth by their adversaries. At the time of final hearing, both the parties have also filed brief notes of arguments in support of their respective cases.
Having heard the Ld. Advocates appearing for the respective parties and on perusal of pleadings and the evidence available on the record, it transpires that on the basis of advertisement published by OP Company, complainants made a formal application on 20.07.2008 to the OPs for hiring their services for construction of a residential flat/apartment with a covered car parking space in the complex “Harmony” in Uniworld City to be developed by OPs on the plot of land situated in Main Arterial Road, Action Area-III, New Town, Kolkata – 700156 along with one A/C payee cheque amounting to Rs.5,12,888/- bearing No.654431 drawn on ICICI Bank Ltd., Kolkata dated 20.07.2008 in favour of OP No.1 being part consideration of the services hired for construction of the residential apartment. On 21.07.2008 the OP No.1 had issued one allotment letter along with payment schedule on receipt of a sum of Rs.5,12,888/-.
Evidently, on 24.07.2008 an Agreement was executed between the complainants and the OP No.1 and the OP No.1 had agreed to construct and transfer an apartment having super built up area of 1574 sq. ft. being Apartment No.1904 on 18th floor at Tower No.1 along with one covered car parking space on the ground floor in the complex of “Harmony” in Uniworld City to be developed by OP on the plot of land situated in Main Arterial Road, Action Area-III, New Town, Kolkata – 700156 at a total consideration of Rs.58,15,957/-. It remains undisputed that the complainants have already paid Rs.15,38,661/- as part consideration amount towards the said total consideration of Rs.58,15,957/-.
As per terms of the Agreement, the OP Company was under obligation to handover the subject flat to the complainants within 30.09.2011. Admittedly, even after expiry of long 8 years after the committed date of possession, the O.P. No.1 has failed to deliver the possession. In this regard, O.P. No.1 has also failed to advance any Force Majeure circumstances which prevented them to comply with the terms and conditions of the agreement.
It is undisputed proposition of law that the parties are bound by the terms of agreement. When either of the parties did not pick up any quarrel with the terms and conditions of the agreement, they are certainly bound to follow the terms and conditions as contained in the agreement. In a case reported in AIR 1996 SC 2508 (Bharti Knitting Co. – vs. – DHL World Wide Express Courier Division of Airfreight Ltd.) the Hon’ble Supreme Court has observed thus:-
“It is seen that when a person signs a document which contains certain contractual terms, as rightly pointed out by Mr. R.F.Nariman, Ld. Senior Counsel, that normally parties are bound by such contract; it is for the party to establish exception in a suit. When a party to the contract disputes the binding nature of the signed document, it is for him to prove the terms in the contract or circumstances in which he came to sign the documents need to be established. The question we need to consider is whether the District Forum or the State Commission or the National Commission could go behind the terms of the contract? It is true, as contended by Mr. M.N.Krishanmani, that in an appropriate case, the Tribunal without trenching upon acute disputed question of facts may decide the validity of the terms of the contract based upon the fact situation and may grant remedy. But each case depends upon it own facts. In an appropriate case where there is an acute dispute of facts necessarily the Tribunal has to refer the parties to original Civil Court established under the CPC or appropriate State law to have the claims decided between the parties. But when there is a specific term in the contract, the parties are bound by the terms in the contract”
Ld. Advocate for the Complainants has submitted that non-delivery of possession within the stipulated period itself amounts to deficiency in services, more particularly, when no Force Majeure circumstances has been advanced by the O.P. He has further submitted that the amount of compensation for the delay as mentioned in Clause 5.c.ii of the agreement which provides compensation of Rs. 5/- per sq. ft. per month for the delay in offering delivery of the said apartment is much less than the amount of 18% claimed by the O.P. in case of delay in payment of instalments within time. Placing reliance to a judgement/final order of the Hon’ble National Commission in CC/1046/2015 [Vikas Kaul & Anr. – Vs. – M/s. Unitech Ltd.] he has submitted that considering the abnormal delay on the part of OP in completing the construction and inability to offer possession as on today, the complainants have committed clear deficiency in rendering services. Therefore, according to him, the complainants are legally entitled to seek refund of money which they have paid to OP No.1 along with appropriate compensation. He has also placed reliance to a judgement of the Hon’ble National Commission in CC/398/2015 [Sipra Thomas –Vs. – Bengal Unitech Universal Infrastructure Pvt. Ltd.] and claimed refund of the amount along with interest @18% p.a.
On the other hand, Ld. Advocate for the O.P. has contended that due to delay in payment of instalments by the consumers, the developer/builder is facing difficulties in constructing the project. However, referring Clause-2.f of the Agreement, Ld. Advocate for OPs submitted that the OP No.1 Company has the authority to cancel the agreement in the event of allottees fails to pay any instalment with interest within 90 days from the due date. Ld. Advocate for the O.Ps has submitted that O.P.No.1 had issued several demand letters and reminier letters dated 28.01.2010, 23.04.2010, 14.06.2010, 12.11.2010, 13.04.2011, 04.05.2011, 13.09.2011, 10.11.2011, 15.06.2012, 06.11.2012 and 24.09.2011 for the payment of instalment till completion of masonry work to the complainants and in spite of receiving those letters, complainants deliberately neglected to make payment in terms of the demand letters after payment of two instalments of Rs.5,12,887/- each. Referring to Clause 5.c.ii of the Agreement, Ld. Advocate for OP Company submits that under such a circumstances, the O.P.No.1 issued final cancellation letter dated 03.12.2014 to the complainants for cancellation of the allotment and forfeited the amount of Rs.15,38,661/-.
For appreciation of the situation, Clause 5.c.ii of the Agreement is reproduces below : -
“That the Developer would pay to the Purchaser compensation @ Rs. 5/- per sq. ft. per month for the period of delay in offering the delivery of the said Apartment beyond the period indicated in clause 5.a.(i), save and except for reasons beyond the reasonable control of the Developer and the Force Majeure events specified in this Agreement. These charges would be adjusted at the time of final notice of possession. The Developer will not be under any other liability to pay damages or any other compensation to the purchaser.”
On reading of clause 5.c.ii, it appears that this clause is applicable only in cases where the Opposite Party fails to deliver possession of the apartment within the stipulated time and the compensation is to be paid every month for the delay.
In our case, for ascertaining the actual state of affairs, it would be proper to have a look to the reply given by OP Company against the questionnaire set forth by complainants. In Question No.14, it was put by the complainants – ‘what according to you are the causes for delay in completing the project and deliver up possession of the apartment/flat within 30.09.2011?’ to which it was replied – ‘the delay in construction of Harmony is attributed to delays in obtaining statutory infrastructural provisions pertaining to road, electricity, water, sewerage, sanctions etc. beyond the control of the opposite party’ .
From the statement of OPs, it appears that at the time of entering into agreement with complainants, OP No.1 had no sanctioned plan for the project. In a decision reported in III (2007) CPJ 7 [Kamal Sood – Vs. – D.L.F. Universal Ltd.] the Hon’ble National Commission relied on the judgement of Hon’ble Supreme Court reported in II (2000) CPJ 1 [Ghaziabad Development Authority – Vs. – Union of India] had observed that it is unfair trade practice on the part of developer/builder to collect money from prospective buyers without obtaining the requisite permissions such as Zoning Plan, Lay Out Plan etc. It is the duty of the builder to obtain the requisite permission or sanctions, in the first instance and, thereafter, recover the consideration money from the purchaser. Admittedly, the OP did not obtain require permission at the time of issuance of allotment letter on 14.01.2008 or the date of agreement on 18.01.2008. This act on the part of OP not only construes deficiency in service but also falls under unfair trade practice, as defined under Section 2(1)(r) of the Act.
The OPs in their written version took a plea that in view of Clause 13.b of the agreement the parties agreed to refer the dispute to the Arbitrator appointed by the developer in accordance with the provisions of the Arbitration and Conciliation Act, 1996 unless it can be amicably settled. Therefore, the complaint should be rejected in view of the provisions of Section 8 of the said Act. Whether despite arbitration clause, a dispute is amenable before a Forum constituted under the Act was considered in the case of DLF Ltd. - vs. - Mridul Estate Pvt. Ltd. reported in III (2013) CPJ 439, where the Larger Bench of Hon’ble National Consumer Commission considering several decisions of Hon’ble Supreme Court reported in – (1) the case of SBP & Co - vs.- M/s. Patel Engineering Company Ltd. & Anr., AIR 2006 SC 450; (2) National Seeds Corporation Ltd. - vs. - M. Madhusudan Reddy & Anr., I (2012) CPJ 1 (SC); (3) Lucknow Development Authority - vs. - M.K. Gupta, III (1993) CPJ 7 (SC) and several other judgements has observed that the Consumer Fora constituted under the C.P. Act are not bound to refer the dispute raised in the complaint on an application filed under Section 8 of the 1996 Act seeking reference of the dispute to an Arbitral Tribunal in terms of valid arbitration clause in the agreement entered into between the parties. The OP in CC/188 of 2010 preferred an appeal in the Hon’ble Supreme Court and the Hon’ble Supreme Court in the case of Rosedale Developers Pvt. Ltd. - vs. - Aghore Bhattacharya reported in (2015) 1 WBLR (SC) 385 has held that the National Commission did not commit any error by holding that the remedy of arbitration available to the complainant does not bar the jurisdiction of the Consumer Fora and the Consumer Fora are not under an obligation to refer the matter to the Arbitral Tribunal.
After amendment to Section 8 of Arbitration Act, 2015 a bunch of applications filed by the developers/builders and in disposing of the same by the Larger Bench of the Hon’ble National Commission reported in III (2017) CPJ 270 (Aftab Singh - vs. - EMAAR MGF Land Ltd. & Anr.) has observed that in the context of consumer jurisprudence, the Hon’ble Supreme Court has not disturbed the earlier opinion regarding the arbitrarily of consumer disputes rendered in the pre-amendment era rather it has affirmed the protection granted to the consumers from private resolution. After a detailed discussion with reference to several judgement of the Hon’ble Supreme Court including the decision reported in (2016) 10 SCC 386 (A. Ayyasamy - vs. - A. Paramasivam & Ors.) the Hon’ble National Commission has arrived at the conclusion that in light of overall architecture of the Consumer Act and Court - evolved jurisprudence, amended Sub Section (1) of Section 8 cannot be construed as a mandate to the Consumer Forums, constituted under the Act, to refer the parties to arbitration in terms of the arbitration agreement. Consequently, the Hon’ble National Commission reject the arguments on behalf of the builder and hold up that an arbitration clause between the complainant and the builder cannot circumscribe the jurisdiction of a Consumer Forum, notwithstanding the amendments made to Section 8 of the 1996 Act.
In view of the Authority recorded above, it can be safely hold that an arbitration clause in the agreement cannot stand in the way of a Forum constituted under the Act to decide a dispute, if it is otherwise maintainable.
It remains undisputed that the O.P. has failed to deliver possession of the apartment even after 8 years after the expiry of committed date of possession. Thus, in my view, this is a case of O.P. not being in a position to offer possession of the apartment as an allottee cannot be expected that a buyer will go on paying the instalments as per demand, admittedly when there is no progress in construction. therefore, it is quite clear that the O.P. No.1 had issued notice of cancellation just to shark off their responsibility to refund the amount along with compensation, as per terms of the agreement. In other words, a buyer cannot wait for possession of an apartment for an indefinite period. In that perspective, any order for a direction upon the OP to deliver possession or to execute the Deed of Conveyance on receipt of balance consideration amount will be a futile attempt. Therefore, the justice of the case would be sub served by passing an order for refund of money which already been paid by the complainants to the OP for hiring their services. Accordingly, the complainants are entitled to refund of Rs.15,38,661/-.
For the purpose of adjudication on the point of compensation, in our case, it would be relevant to regard Clause 5.e which provides alternative property/compensation. The said clause reproduces below –
“That if for any reason the Developer is not in a position to offer the Apartment herein applied for allotment, the Developer shall offer the Purchaser an alternative property or refund the amount in full with simple interest @ 10% per annum without any further liability to pay any damages or compensation.”
On perusal of the above, it is quite clear that if for any reason, the O.P. is not in a position to offer possession of the apartment as an alternative relief, the O.P. shall refund the amount of Rs. 15,38,661/- along with compensation in the form of simple interest @ 10% p.a. without any further liability.
Therefore, in view of the above clause, the O.P. is liable to pay simple interest @ 10% on the deposited amount as compensation for their default in paying respect to the terms of agreement between the parties.
Considering the facts and circumstances of the case, the complaint is disposed of on contest with the following directions:
- The Opposite Parties shall refund the entire amount of Rs. 15,38,661/- received from the complainants along with compensation in the form of simple interest @10% per annum from the date of each payment till the date on which the entire amount along with compensation in terms of this order is paid;
- The Opposite Parties shall pay Rs.10,000/- as cost of litigation to the complainants;
- The payment in terms of this order shall be made within 60 days from date.
