The instant complaint under Section 17 (inadvertently mentioned under Section 12) of the Consumer Protection Act, 1986 (hereinafter referred to as ‘the Act’) is at the instance of a couple/intending purchasers against the developer/builder (Opposite Party No.1) and its Director (Opposite Party No.2) on the allegation of deficiency in services on the part of developer/builder in a consumer dispute of housing construction.
Succinctly put, complainants’ case is that on 24.08.2006 the complainants had applied for allotment of a row house being Unit No.D/07/11 measuring about a built up area of 1983.48 sq. ft. and land area of 166.23 sq. mt. lying and situated at Kolkata West International City (KWIC) on National Highway-6, Bankra, Howrah. On 16.10.2006 an allotment letter was issued by OP No.1 in respect of the said row house in favour of the complainant for a total consideration of Rs.40,03,000/-. After getting allotment letter, the complainants opted for a home loan from State Bank of India and obtained the same followed by a tripartite agreement. On 02.07.2007 the allotment agreement known as Standard Terms and Conditions cum Allotment Agreement (in short, STC) was executed by and between the parties. The complainants have stated that they have paid Rs.36,15,967/- and supposed to pay the remaining amount of Rs.3,87,033/- at the time of handing over/registration of the Row House. The complainants submit that the OP No.1 has failed to adhere to the covenants of the agreement and handover unit within the stipulated period on 31.12.2008 or subsequently by the grace period i.e. by 30.06.2009. On 16.01.2014 the complainants wrote a letter to the developer for cancellation of allotment of the unit. After receipt of the same, the developer neither acknowledged the cancellation request nor took any step for refund of money. On 05.05.2015 the complainants e-mailed the developer claiming entitled to get refund but the developer retained the said amount without even processing the refund. The complainants state that on 06.04.2016 the complainants through their Advocate issued a notice upon the developer asking them to refund Rs.36,15,967/- with 12% interest till date to be calculated from 30.06.2009 and the said letter was duly received by the developer on 08.04.2016. However, on 11.04.2016 the developer suddenly without reference to any communication trail of the legal notice sent a communication stating that they had received the Completion Certificate on 29.03.2016 from the Kolkata Municipal Corporation (KMC) and ready to handover the unit. Hence, the complaint with prayer for following reliefs, viz. – (a) a direction upon the OP/developer to refund Rs.36,15,967/- along with interest @ 12% p.a. to be calculated from 30.06.2009 till the date; (b) for a direction to pay the complainants a sum of Rs.21,00,000/- for loss of rental income of the property for seven years; (c) compensation of Rs.10,50,000/- for mental agony and harassment etc.
The Opposite Party No.1/developer by filing a written version has stated that the complainants cannot be termed as ‘consumer’ as defined in Section 2(1)(d) of the Act and as such this Commission has no jurisdiction to adjudicate the dispute. The OP No.1 has stated that by a letter dated 11.04.2016 they have informed the complainants that they have received Completion Certificate for the said row house on 29.03.2016 from the Kolkata Metropolitan Development Authority (KMDA) and the complainants were invited for a final inspection of the said row house. The OP No.1 has alleged that instead of taking handover of the unit, the complainants have made some false allegations against them through the letter dated 04.05.2016. The OP No.1 has further stated that the allotted row house is ready for possession and they are ready and willing to perform their part of obligations and has not caused any breach of the terms and conditions agreed upon and the delay caused due to some factors beyond the control of the opposite parties.
The Opposite Party No.2 adopted the written version of OP No.1.
In support of their case, both the complainants jointly tendered evidence through affidavit. The reply has been submitted by both the complainants against the questionnaire filed by the opposite parties.
On the other hand, on behalf of Opposite Parties, one Sri Sanjib Banerjee, Authorised Signatory of OP No.1 has filed evidence on affidavit. The said person has also given reply against the questionnaire set forth by the complainants.
Both the parties have relied upon some documents and they have filed brief notes of arguments in support of their respective cases.
On perusal of pleadings, evidence on record including the documentary evidence and brief notes of agreement it has come to surface that in the month of December, 2004 the OP No.1came up with a development of a residential-cum-township project in Mouza-Bankra, Dist- Howrah by way of developing approximately 82.147 acres of land in Phase-I. On 24.08.2006 the complainants had applied for allotment of a row house being Unit No. D/07/11 measuring about a built up area of 1983.48 sq. ft., land area of 166.23 sq. mt. lying and situated at Kolkata West International City (KWIC) on National Highway-6, Bankra, Howrah. On 16.10.2006 an allotment letter was issued by OP No.1 in respect of the said row house for a total consideration of Rs.40,03,000/-. The complainants received the said provisional allotment letter and accepted the terms and conditions by counter signing the said allotment letter on 27.10.2006.
After obtaining allotment letter, the complainants opted for a home loan from State Bank of India and the evidence on record speaks that on 15.11.2006 the State Bank of India has sanctioned termed loan of Rs.38,58,000/- as home loan in favour of the complainants to purchase the Row House. It may be pertinent to record here that at the time of obtaining loan, the developer intimated their no objection, followed by a tripartite agreement and the unit in question was created mortgage in favour of the bank.
On 02.07.2007 the allotment agreement known as Standard Terms and Conditions cum Allotment Agreement (in short, STC) was executed by and between the parties. Evidently, the complainants have already paid Rs.36,15,967/- and supposed to pay the remaining amount of Rs.3,87,033/- at the time of handing over possession. From the evidence on record, it transpires that the total cost mentioned above is firmed, non-escalable and includes cost of land, development, and infrastructure, construction of unit, common portion and installations.
The complainants have categorically alleged that the developer has failed to keep their promise to deliver possession within the time frame and in this regard their letters dated 04.07.2011, 16.01.2014 unattended by the developer for which they compelled to issue a notice through their Advocate on 06.04.2016 for refund of amount. On the contrary, the developer by a letter dated 11.04.2016 stated that they informed the complainants to take delivery of the Row House for which they obtained Completion Certificate from KMDA on 29.03.2016. In this backdrop, let us see whether there was any deficiency in services on the part of the developer.
The fact remains that the complainants have paid the instalments time to time and there is no allegation regarding commitment of default by the complainants. Needless to say, the parties are bound by the agreement. A person who signs a document contain certain contractual terms is normally bound by them even though he is ignorant of their precise legal effect. In a decision reported in AIR 1996 SC 2508( Bharati Knitting Company –vs. – DHL Worldwide 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”
Keeping in view the proposition of law laid down by the Highest Court of the Land, let us consider the relevant terms and conditions of the agreement. Clause - 5.1 relates to schedule of possession of the apartment, which re-writes below:-
“5.1 Unless prevented by the circumstances beyond the control of the company and subject to Force Majeure, the company shall ensure to complete the unit as stipulated in the Provisional Allotment Letter in all respects. In case, possession of the Unit is not handed over after expiry of the time frame as mentioned in the Provisional Allotment Letter, the company will be liable to pay the prevailing Savings Bank rate of interest of the State Bank of India for each month of delay commencing after a grace period of six months from the date of possession as specified in the Provisional Allotment Letter and ending on the date of issuance of letter of Handing Over, on the money paid by the Allottee(s) as compensation. This charges payable by the company would be adjusted at the time of issuance of letter of Handing Over to the Allottee(s). However, no compensation will be paid for delay in delivery of possession on account of Force Majeure”.
What is Force Majeure has been defined in Clause 1.6 which shall include – (a) Acts of God i.e. fire, draught, flood, earth quake, epidemics, natural disasters or deaths or disabilities; (b) explosions or accidents; (c) strikes or lockouts; (d) critical non-availability of cement, steel or other construction materials due to general strikes of manufacturer, suppliers, transporters or other intermediary; (e) war and hostility of terrorism, public unrest, riots or civil commotion; (f) the promulgation of or amendment in any law, rule or regulation or the issue of any injunction, Court order or direction from any Governmental Authority that prevents or restricts the development and implementation of the project.
As per terms of Provisional Allotment Letter, the developer had agreed to handover the possession within 31st December, 2008 with a grace period of six months till 30.06.2009. In their written version, the developer has admitted the delay in handing over possession. It has been stated that the factors causing such delay were and still beyond control of the opposite parties. However, the OP has not explained the circumstances which prevented them to get the building completed within the time frame. The circumstances advanced by the developer do not fall within the category of Force Majeure circumstances. Therefore, the OP No.1/developer was deficient in rendering services as per terms of the agreement.
The complainants have made communication to the developer on 04.07.2011 requesting them to cancel the allotment and refund the money. The developer ignored the said letter. On 16.01.2014 the complainants issued a reminder to the developer and the same was received by the developer on the self-same date but did not think it twice to give a reply to the same. In other words, as per Clause 3.9 of the agreement, the developer did not take any initiative to refund the amount. Clause 3.9 of the Agreement runs as follows –
“3.9. If the allottee(s) cancell/withdraw the allotment anytime after payment of application money by serving a notice of its intention to do so upon the company, the company shall have liberty to deduct an amount of Rs.10,000/- only in case the notice is served upon the company within a period of 30 days from the date of the Provisional Allotment Letter and 5% of the Unit value in case the notice is served upon the company after the expiry of the period of 30 days from the date of the Provisional Allotment Letter. The company shall have the liberty to re-allot the unit to any third party thereafter and the prior allotment to the allottees shall stand cancel and become null and void. All the rights of the allottees under the Provisional Allotment Letter shall also stand terminated”.
Undisputedly, as per terms of Agreement, the OP No.1/developer was under obligation to handover the subject flat to the complainants within 31.12.2008. It would be relevant to record here that in between 24.08.2006 and 01.10.2008 the complainants have paid Rs.36,15,967/-. The fact remains that only on 11.04.2016 the developer informed the complainants about handing over the unit without giving any reply to whatsoever relating to the letter given by the complainants on 04.07.2011 and the reminder dated 16.01.2014.
Therefore, when the OPs could not fulfil their promise in handing over the possession of the unit within the time frame, the complainants have every right to claim refund of the amount and by not giving answer to the letters dated 04.07.2011, reminder dated 16.01.2014 or the legal notice dated 06.04.2016 the developer issued the letter dated 11.04.2016, which not only amounts to deficiency in services but also comes within the definition of unfair trade practices as embodied in Section 2(1)(r) of the Act.
Mr. Abhik Kumar Das with Mr. P.R. Baksi, Ld. Advocates for the opposite parties/developer has submitted that the complainants cannot be categorised as ‘consumer’ within the meaning of Section 2(1)(d) of the Act. Referring to Paragraph-19 of the petition of complaint and Prayer (b) of the Prayer Clause of the petition of complaint, it has been submitted that the object behind purchase of the unit was investment and therefore, the complaint is not maintainable. In support of such contention, Ld. Advocate for the OP has drawn my attention to a decision of this Commission dated 23.05.2016 in CC/26/2010 (Salasar Promoters Pvt. Ltd. – Vs. – KWIC) and a decision of Hon’ble National Commission reported in II (2016) CPJ 626 [P.K. Arora & Anr. – Vs. – DLF Homes Panckula Pvt. Ltd.].
Per contra, Mr. Pulakesh Bajpayee with Ms. Titash Mukherjee, Ld. Advocates for the complainants have contended that the amount of Rs.21,00,000/- shown as rental income on the property for delay of seven years just to quantify the damages suffered by the complainants and the purchase of another flat cannot be termed as investment. In this regard, Ld. Advocate for the complainants has given much reliance to a decision of Hon’ble National Commission in the case of Sri Satish Kumar Pandey & Anr. – Vs. – M/s. Unitech Ltd. delivered on 08.06.2015 in CC/427/2014 along with several other cases.
The decision referred by the Ld. Advocate for the OP/developer in connection with CC/26/2010 passed by this Commission has no manner of application in our case because in the said case a private limited company lodged the complaint for the purpose of investment and nowhere in the petition of complaint, it has been mentioned that the activities carried out by the company for livelihood or self-employment.
Equally, the decision in the case of Promod Kumar Arora & Anr. (supra) is distinguishable with our case because in the said case the complainants being permanent citizens of USA purchased six properties i.e. five plots and one villa from DLF Homes and paid Rs.11,70,03,556/- and they have not explained whether they have any intention to return India. In our case, both the complainants are residents of the city.
In the case of Sri Satish Kumar Pandey & Anr. (supra) referring to the decision of Hon’ble Supreme Court reported in (1995) 3 SCC583 [Laxmi Engineering Works – Vs. – PSG Industrial Institute] the Hon’ble National Commission while discussing on the point in Paragraph-6 has observed thus –
“......... In the case of the purchase of houses which the service provider undertakes to construct for the purchaser, the purchase can be said to be for a commercial purpose only where it is shown that the purchaser is engaged in the business of purchasing and selling houses and/or plots on a regular basis, solely with a view to make profit by sale of such houses. If however, a house to be constructed by the service provider is purchased by him purely as an investment and he is not undertaking the trading of houses on a regular basis and in the normal course of the business profession or services in which he is engaged, it would be difficult to say he had purchased houses for a commercial purpose. A person having surplus fund available with him would not like to keep such funds idle and would seek to invest them in such a manner that he gets maximum returns on his investment. He may invest such funds in a Bank Deposits, Shares, Mutual Funds and Bonds or Debenture etc. Likewise, he may also invest his surplus funds in purchase of one or more houses, which is/are proposed to be constructed by the service provider, in the hope that he would get better return on his investment by selling the said house(s) on a future date when the market value of such house (s) is higher than the price paid or agreed to be paid by him. That by itself would not mean that he was engaged in the commerce or business of purchasing and selling the house(s).”
Therefore, the complainants being doctors in profession for the feature purpose when intended to purchase a flat on consideration and that too after obtaining loan from the Bank, that cannot be consider as investment for commercial purpose. Accordingly, the submission made by the Ld. Advocate for the OP/Developer branding the object of purchase as investment for commercial purpose has no leg to stand upon.
On evaluation of materials on record it becomes manifestly clear that the complainants being “Consumer” within the meaning of Section 2(1)(d) of the Act hired the services of O.P.No.1 upon consideration and the O.P.No.1 was found deficient in rendering services as per terms of the Agreement (STC) within the meaning of Section2(1)(g) read with Section 2(1)(o) of the Act. Therefore, the complainants are entitled to the reliefs of refund of money of Rs.36,15,967/- along with compensation in the form of interest @ 10%p.a. from the date of payments till its realisation . Under compelling circumstances, the complainants had to lodge the complaint for which they are entitled to litigation costs which I quantify at Rs.10,000/-.
In view of above discussion, the complaint is allowed on contest with the following directions:
- The Opposite Parties are jointly and severally directed to refund Rs.36,15,967/- along with compensation thereon in the form of simple interest@ 10% p.a. from the date of each payments till its realisation;
- The Opposite Parties are jointly and severally directed to pay Rs.10,000/- to the complainants as costs of litigation;
- The above payments must be made within 60 days from the date.
