JUSTICE SUDIP AHLUWALIA, MEMBER

          This Appeal has been filed by the Appellant/Opposite Party against the Respondent/Complainant challenging the impugned Order dated 07.04.2016 passed by the State Consumer Disputes Redressal Commission, U.T., Chandigarh, in Consumer Complaint bearing No. 208 of 2015.  Vide such Order, the State Commission had partly allowed the Complaint.

2.      The brief facts of the case are that the Complainant had applied for allotment of a Flat comprising of 3 bedrooms vide Application Form No. 14103 under General Self Financing Housing Scheme, 2008,  at Sector 63, Chandigarh, for Rs.70,28,135/- as per the Acceptance-cum-Demand Letter dated 25.11.2011.  It was submitted that the Complainant had paid a total sum of Rs.44,40,547/- and only Rs.25,87,588/- remained as the balance sum. It was the further case of the Complainant that the Opposite Party had failed to issue Allotment Letter due to which there was no time prescribed in the ACD Letter for the delivery of possession. However, it was understood that the Opposite Party could claim the last instalment only on completion of the construction which was due after 18 months of issue of the letter dated 25.11.2011 i.e. by 25.05.2013. But the Opposite Party failed to complete the construction and deliver physical possession within 18 months. Moreover, instead of completing the construction, the Opposite Party issued a Show-cause Notice dated 12.05.2015 to the Complainant regarding Cancellation of Allotment and was given an opportunity to appear before the Opposite Party, but the Complainant was not attended by any competent person on the said date. Again, Show-cause Notices dated 03.06.2015 and 15.06.2015 were issued. Thereafter, the Opposite Party demanded payment of the balance amount of Rs.25,87,588/- and interest/penalty of Rs.51,18,057/- on the delayed payments totalling to Rs.76,05,645/-. Consequently, the Complainant served a Legal Notice dated 01.07.2015 on the Opposite Party. Thereafter, the Complaint was filed before the Ld. State Commission alleging unfair trade practice and deficiency in services by the Opposite Party by seeking directions to the Opposite Party to withdraw the Show-cause Notice and not cancel the Flat, and not to charge the remaining amount of Rs.25,87,588/- and Rs.51,18,057/- from the Complainant since the Opposite Party was unable to complete the construction and deliver possession in time.  The Complainant further prayed for delivering possession of the Flat, Rs.2,00,000/- as compensation,  and Rs.50,000/- as litigation costs.     

3.      The Opposite Party appeared before the Ld. State Commission and resisted the Complaint and denied all the allegations thereby denying deficiency in service on its part. It was contended that the Complainant had defaulted in timely payments as per the schedule of payment provided in Acceptance-cum-Demand Letter. It was stated that as per Clause 13 of the Scheme of Allotment, the Complainant was entitled to delivery of possession of the allotted unit only if he paid all his dues i.e., 100% payment of the allotment price along with interest, and further completed all the formalities and executed all the documents as per the scheme of allotment. There was no such Agreement under the Scheme providing that time was the essence of the contract; rather 100% payment of the entire consideration was the essence. It was the case of the Opposite Party that applications had been invited for allotment of Flats under the Self-Financing Scheme called ‘General Self Financing Housing Scheme, 2008’ which was constructed on the basis of ‘Self-Finance’ of each of the allottee and every allottee was required to make the entire payment before getting the possession because entire construction of the Flat was to be made with the finance/money of all the allottees. Therefore, prior payment of the entire consideration was a mandatory condition for allotment and possession of the Flat. Moreover, in the present case, allotment was sought under 3BR, category-A, Sub-scheme-B plan which postulates an advantage to secure the assured allotment of Flat on Free-hold Basis instead of Lease-hold. It was further stated that the Complainant had only paid a sum of Rs.40,34,408/-. Due to default in payments, the Complainant was issued Show-cause Notice and was given 21 opportunities of hearing wherein though he appeared but failed to clear his outstanding dues. The default in payments also attracted interest for the delay under clause 5 of the Acceptance-cum-Demand Letter and approximately Rs.78 Lakhs were still pending from the Complainant as on the date of filing of the Reply. Therefore, it was stated that the proceedings of cancellation of the Flat were pending with the Opposite Party and in case of failure to clear the outstanding dues, the Flat would be cancelled. Therefore, the Opposite Party prayed for dismissal of the Complaint with costs.  

4.      The Ld. State Commission vide its Order dated 07.04.2016 partly allowed the Complaint and directed the Opposite Party to refund the deposited amount after deducting Rs.7,02,813/- along with interest @ 12% per annum to the Complainant from the respective dates of deposits till  realization, and Rs.50,000 as litigation costs while observing that the matter was kept pending by the Opposite Party and no decision in accordance with the regulations was taken due to which the interest continued to accrue and multiply, making it almost impossible for the Complainant to pay the same. It was further observed that when the complainant defaulted, a decision was required to be taken by the Opposite Party for cancellation of the Unit and inaction by the Opposite Party itself amounted to deficiency. With regard to the Ernest money, the Ld. State Commission relied upon the decision of this Commission in ‘DLF Ltd. v. Bhagwanti Narula’ dated 06.01.2015 and ‘Chandigarh Housing Board v. Surinder Pall Soni’ 2004 (1) CPC 413 (NC), and held that the Opposite Party is entitled to forfeit 10% of the sale consideration of the Flat i.e., Rs.7,02,813/-. And on the issue of interest to be awarded to the Complainant on the deposited amount, it was observed that neither the Allotment Letter was issued by the Opposite Party nor the Complainant was asked to give his consent to the Acceptance-cum-Demand Letter. Further, the Complainant had neither concealed any material fact nor was he registered for allotment on the basis of any false information coupled with the fact that the amount deposited by him remained with the Opposite Party for a substantial period. Hence, the  interest @ 12% per annum was awarded.

5.      Aggrieved by the above Order, First Appeal bearing No. 1134 of 2016 has been filed by Appellant/ Opposite Party against the Respondent/Complainant before this Commission.

6.      It is contended by the Appellant/Opposite Party that the construction of the Flats was completed by September, 2015 and the Appellant proceeded with the issuance of Allotment Letters and handing over of the possession of the Flats. It is further argued that the Respondent filed a frivolous Complaint against the Appellant to avoid the legitimate consequences of his defaults, whereas the Respondent has prayed for dismissal of the Appeal.

7.      Heard the Ld. Counsels for Appellant and Respondent. Perused the material available on record.

8.      To appreciate the controversy in its proper context, it would appear necessary to first of all take notice of the specific provisions pertaining to Surrender or Cancellation of any dwelling Unit/Flat allotted to an Applicant under the applicable Housing Flar Scheme, 2008 of the Appellant/Chandigarh Housing Board, under which the Complainant/Respondent had applied.  These conditions are contained in Clause XI of the concerned Scheme and the relevant extracts of the same are set out as below-

          “XI.     SURRENDER/CANCELLATION

i)          If the refund of the initial deposit is sought before the acceptance of application/registration, either by draw of lots or otherwise, 5% of the amount of initial deposit shall be forfeited to the Board.

ii)         In case the refund of the initial deposit is sought after acceptance of application/ registration, either by draw of lots or otherwise, but within one month of issue of acceptance-cum-demand letter, the amount shall be refunded after forfeiting 10% of the initial deposit.

Iii)        In case payment of registration money or the subsequent instalments are not made by the due date of the payment prescribed in the Acceptance-cum-Demand Letter, the applicant shall have to pay interest @ 18% per annum for the first month, @ 21% for the 2^nd month and @ 24% p.a. for the 3^rd month.  No. extension will be allowed beyond three months and the registration shall be cancelled.  However, the Chairperson, Chandigarh Housing Board may allow an extension beyond three months, or revive registration if the same has been cancelled, as the case may be, in case(s) of exceptional circumstances, on written request subject to payment of interest @ 30% p.a. beyond the period of 3 months.

iv)       If the registration is cancelled either on the applicant’s own request or for non payment of registration money or any of the subsequent instalments with interest, if any, or due to any other reason, the amount deposited with the Board shall be refunded after forfeiting 10% of the initial deposit.  However, where the surrender or cancellation is made after the expiry of 1,2 &3 months from the due date, in addition, interest calculated @ 18%, 21% and 24% p.a. respectively, shall be charged on the due amount remaining unpaid, from the due date till the date of surrender or cancellation.  Where the surrender/cancellation is made after 3 months, interest @ 30% p.a. shall be charged further for the period beyond 3 months.”

9.      Now, under Clause 3 of the Acceptance-cum-Demand Letter issued in favour of the Complainant by the Appellant/Opposite Party dated 25.11.2011, the Complainant was required to make payments towards allotment of Flat as per the following Schedule-

10.    The actual payments made by him, however, were as follows-

11.    It is, therefore, clear that the Complainant had failed to make the requisite payments in accordance with the Prescribed Schedule, and in fact in the short synopsis filed from his side in this Commission, he had explicitly admitted in Para 4 thereof that “the Appellant/Opposite party was well aware that the Respondent/Complainant was defaulter by not making the payment due but it despite issuing Show-cause Notices did not decide the matter…..”.  It is, therefore, clear that while admitting the clear default of payment on his part, the Complainant sought to shift responsibility on the Appellant/Opposite party by contesting that in view of such default, the Appellant had failed to cancel “his allotment” promptly, and on the contrary kept on sending him Show-cause Notices one after another, during which period his default interest arrears continued to multiply, thereby making it virtually impossible to pay up the accrued amount due against him. This contention can only be described as a peculiar and twisted logic.  If the complainant at any stage was unable to pay up the instalments as required in the original Acceptance-cum-Demand Letter issued by the Appellant which happens to be a public Authority, he always had the option to surrender his allotment as soon as he realised that it was not possible for him to pay up the mounting arrears.  This Commission cannot be unmindful of the fact that construction of the allotted Apartments was under a Self-Financing type of Housing Scheme, and consequently, the progress in construction certainly could not be delinked from regular and timely payments by the concerned allottees including the Complainant himself.

12.    Again in Para 3 of his Written Synopsis submitted in this Commission, the Complainant/Respondent had admitted that there was no time limit laid down for completing the construction and delivering possession of the Apartment.  This contention was certainly known to the Complainant since it was very well contained in the original Brochure of the Housing Flat Scheme, 2008, a copy of which is on record as Annexure- A1.   He, therefore, cannot claim that not laying down any time limit for completing construction and delivery of possession of the allotted Apartment could amount to any deficiency on the part of the Appellant/Opposite Party, especially considering that the allottee from his side has himself not been diligent and prompt in making payments required under the original Schedule.

13.    Specific reliance of the Complainant is on the decision of this Commission in the case of “DLF  Ltd. Vs. Bhagwanti Narula, 2015(1) CPJ 319”; in which it was held that only the amount which was paid to the Petitioner/Developer in the said case at the time of concluding of the Contract could be said to be the Ernest money in such a situation, and which alone the Developer could therefore forfeit.  Consequently, the originally deposited amount of Rs. 63,469/- was allowed by this Commission to be forfeited.

14.    But in the present case, such forfeiture would be even less.  This is so because as already seen from Clause XI (iv) of the Surrender/Cancellation conditions, it was specifically provided in the Scheme that in the event of cancellation of registration for any reason including non-payment of the registration money or any of the subsequent instalments with interest, by the allottee, he would be refunded the entire amount deposited by him after forfeiting only 10% of the “initial deposit”, whereas in the case of “DLF  Ltd. Vs. Bhagwanti Narula” (supra) relied upon by the Respondent/Complainant, this Commission held that the entire amount of initial deposit by the allottee could be forfeited.

15.    Ironically, it transpires that Appellant has sought to challenge the impugned decision of the State Commission which had actually permitted forfeiture of an amount much more than what the condition (iv) of the Clause XI of the Scheme provided.  As already seen, the Appellant- Chandigarh Housing Board in the event of cancellation was entitled to forfeit only 10% of the “initial deposit”, the Ld. State Commission in the concluding part of Para 4 of its impugned judgment mistakenly held that “the Opposite Party is only entitled to forfeit 10% of the sale consideration of the Flat in question, and not beyond that.  Therefore, the amount of forfeiture shall come to Rs. 7,02,813/-. The Opposite Parties could forfeit Rs. 7,02,813/- out of Rs. 40,34,408/-, (amount admitted by the Opposite party in its written statement) deposited by the complainant.  It is relevant to mention here that as per complainant, he has deposited Rs. 44,40,547/- whereas the Opposite Party in its written statement has admitted receipt of Rs. 40,34,408/- only.  The Opposite Party shall recheck and if the amount paid by the complainant is more, benefit of same shall be given to the Complainant.  In short, the amount paid by the complainant less (-) Rs. 7,02,813/- shall be refunded alongwith interest @ 12% per annum, from the date(s) of deposit”.”

16.    Now, it is a matter of record that the initial payment in the present case was made by the Complainant on 15.11.2012 and the amount deposited by him (i.e. his initial deposit) at that time was Rs. 15.00 lakhs.  So, the Appellant would have been entitled to forfeit only 10% of the said amount which therefore comes to Rs. 1.50 lakhs only, whereas the Ld. State Commission wrongly permitted to forfeit an amount of Rs. 7,02,813/- being 10% of the “entire sale consideration” of the Flat, and the Appellant in its wisdom has sought to challenge even this Order.

17.    However, the other grievance of the Appellant to the effect that it is not liable to pay any interest on the amount being refundable to the Complainant after cancellation of his allotment does appear to have merit.

18.    In this regard, reliance has been placed on an earlier decision of this Commission in the case of “Chandigarh Housing Board  Vs. Surinder Pall Soni, RP No. 1202 of 2003, decided on 4.11.2003”.  In that case, in an almost identical situation, this Commission had held that in the event of cancellation of an allotment for justifiable reasons, the Petitioner/Chandigarh Housing Board (which incidentally also happens to be the Appellant here) was liable to refund the deposited amount of the concerned allottee after deducting 10% of the amount deposited, but no interest would be payable on the balance amount actually being refunded.  In the Housing Scheme of 2008 covering the facts of the present case also, there is no condition of awarding any interest on the amount refundable to an allottee in the event of cancellation of his allotment.

19.    For the aforesaid reasons, the Appeal is allowed in part.  The Impugned Order of the Ld. State Commission is modified to the extent that while the Appellant is held entitled to forfeit 10% only of the “initial deposit of Rs. 15.00 lakhs, and not of the entire sale consideration as mentioned by the Ld. State Commission, but the Appellant is also held entitled to have no liability for paying any interest on the balance amount as refundable to the Respondent/Complainant.

20.    Parties to bear their own costs.

21.    Pending application(s), if any, also stand disposed off as having been rendered infructuous.