PER SUBHASH CHANDRA

1.     This appeal under the Consumer Protection Act, 1986 (in short, the ‘Act’) challenges the order dated 26.11.2018 of the State Consumer Dispute Redressal Commission (in short, the ‘State Commission’) in complaint case no CC/308/2015 and alleges that the interest awarded by the State Commission for the deficiency in service on part of the respondent while allowing the complaint was not in accordance with law. 

2.     The facts of the case, in brief, are that the appellant/complainant had booked a residential row house in the project Kolkata West International City Township promoted and developed by the respondent/opposite party on 14.07.2006 and paid the booking amount of Rs 3,40,000/-. On 07.10.2006 Row House C/05/10 including land of 120 sq m comprising built up area of 1910.18 sq ft was allotted to him for a sale consideration of Rs 34,46,500/-. Possession of the unit was promised by 30.06.2008 or, with a grace period of 6 months, by 31.12.2008. A payment schedule of 9 instalments with a final instalment of Rs 3,44,650/- on possession was agreed upon with the total cost being fixed. Respondent was liable to pay the prevailing Savings Bank rate of State Bank of India for each month of delay on the deposit as compensation in case of delay in construction. Appellant was required to pay interest @ 18% for default in instalments, subject  to a maximum of 2 months, failing which allotment was to be cancelled with deduction of 5% as earnest money. The Allotment Letter was signed by the appellants on 04.11.2006 since payment had already been made. Subsequently, on 02.07.2007 a Standard Terms & Conditions cum Allotment Agreement (‘Buyer’s Agreement’) was signed as per the draft prepared by the respondent. Appellants paid Rs 31,01,850/- till 30.06.2008 as per the Allotment Letter against due acknowledgement. Despite several letters to expedite handing over, respondent intimated completion of construction of structure only on 24.05.2014. Respondents issued a final notice dated 12.06.2015 and invited appellants to visit the site on 24.07.2015 to review the internal work in progress. According to the appellants, this was an admission of the construction not having been completed. On 11.04.2016 respondents intimated receipt of Completion Certificate and indicated that a letter for handing over of the flat would be issued. The appellants approached the State Commission alleging unfair trade practice and deficiency in service which, vide the impugned order directed respondents to pay compensatory interest @ 4% p.a. which is contested by the appellants as paltry and contrary to the terms of the Buyer’s Agreement. The appellants rely upon this Commission’s order in Subhash Chander Mahajan Vs. Parsvnath Developers Ltd. in CC No. 144 of 2011 which awarded interest @ 18% p.a. along with compensation of Rs 7 lakhs and litigation costs of Rs 2 lakhs. Reliance is also placed on the Hon’ble Supreme Court’s judgment in Lucknow Development Authority Vs. M.K. Gupta, AIR 1994 SC 787 which laid down that not delivering possession within the stipulated period amounts to denial of service. It is contended that inclusion of vastly different rates of interest rates in the Allotment/Buyer’s Agreement was void under Section 23 of the Indian Contract Act as held by the Apex Court in Central Inland Water Transport Corporation Ltd. & Anr. Vs. Brojo Nath Ganguly, (1986) 3 SCC 156 and LIC of India & Anr. Vs. Consumer Education & Research Centre & Ors. , AIR 1995 SC 1811. The appellants are before this Commission praying to:  

(i)     set aside the impugned order dated 26.11.2018 passed by the Hon’ble State Consumer Disputes Redressal Commission, West Bengal in Complaint Case No. CC/308/2015;

(ii)    award rate of interest @18% per annum;

(iii)    pass an order cancelling the period of interest ending on 11.04.2016 suitably and to direct computation of interest up to the date of actual physical handing over of possession;

(iv)   litigation charges of Rs 25,000/-;

(v)    pass such other order or further orders as deemed fit and proper in the circumstances of the instant case.

3.     The respondent has not filed a reply denying the averments made by the complainant; however, he has filed a short synopsis of arguments. Both the sides filed their written synopsis of arguments and case laws relied upon. We have heard the rival contentions of the learned counsels for both sides and given careful consideration to the submissions made and the material on the record.

4.     The State Commission has, after hearing both the sides, arrived at the finding that:

Therefore, it is palpably clear that the non-delivery of the subject unit within the stipulated period with grace period till 31.12.2008 indicates gross negligence and deficiency in services on the part of OP. In AIR 1994 SC 787 [Lucknow Development Authority – Vs. – M.K. Gupta] the Hon’ble Supreme Court has held that when possession of the property is not delivered within stipulated period, the delay so caused is denial of service on the part of builder.

The Complainants have raised question as to enhancement of area of the unit from 1910 sq. ft. to 2030 sq. ft. The authorised representative of the complainants by filing brief notes of argument has stated that regarding enhancement of area, no notice was given and as such the developer is not entitled the value of enhanced area, if any of the subject unit. We are unable to accept the same because it is evident that by sending letters, the OP Company asked the complainants to visit the site and make final inspection but the complainants did not adhere to the same.

On evaluation of materials on record, it transpires that the complainants being ‘consumer’ as defined in Section 2(1)(d) of the Act hired the services of OP on consideration and OP has failed to fulfil their part of obligations as per Agreement and thereby deficient in rendering services towards the complainants within the meaning of Section 2(1)(g) read with Section 2(1)(o) of the Act. Therefore, the complainants are entitled to some reliefs. In our view, direction upon the OP to deliver possession and to execute the Sale Deed within 60 days will meet the ends of justice. Despite payment of almost entire consideration amount, when the complainants were deprived from having a roof of their own over their head for long ten years, certainly it caused tremendous mentally agony and harassment for which they are entitled to compensation and considering the terms of the Agreement, the complainants are entitled to compensation as per prevailing savings bank interest of the State Bank of India and as such we assess the compensation in the form of simple interest @ 4% p.a. from committed date of possession i.e. from 01.01.2009 (inclusive of six months grace period) till the date of issuance of intimation of handing over the unit dated 11.04.2016 after obtaining Completion Certificate. Under compelling circumstances, the complainants have to approach this Commission and therefore, complainants are entitled to litigation cost which we quantify at Rs.10,000/-.

        Based on its findings extracted above, the State Commission has directed as under:

1. The opposite Party is directed to deliver Possession and to execute the Deed of Conveyance in respect of the unit as per provisional Allotment Letter dated 07.10.2016 and the Buyers’ Agreement dated 02.07.2007 in favour of complainants within 60 days from date;
2. The Opposite Party is directed to pay compensation in the form of simple interest @ 4% p.a. from the committed date of possession i.e. from 01.01.2009 (inclusive of six months grace period) till 11.04.2016;
3. The Opposite Party is directed to pay Rs.10,000/- as cost of litigation to the complainants;
4. The balance amount payable by the complainants, if any, shall be adjusted by OP out of the compensation payable to them in terms of this order.

5.     Learned counsel for the appellant submitted that despite acting in a bona fide manner and not defaulting in the making of the requisite payments in time, the appellants have been deprived of the use of the row house booked by them for 14 years by the respondent and the impugned order of the State Commission has erred in granting a meagre compensation in the form of simple interest at 4% from the committed date of possession for the loss and injury caused to the appellants due to the delay in the handing over of the possession of the house. It is contented that the letter dated 11.04.2016 issued by the respondent was neither a letter for delivering possession of the unit nor a letter of handing over and the appellants are entitled to compensation till the actual date of possession. The Learned Counsel for the appellants submitted that the respondent did not produce a copy of the completion certificate of the said unit and therefore interest payable is required to be calculated up to the actual date of delivery of possession which was 18.06.2022 and not 11.04.2016. It was argued that as per settled law, parties to a contract ought to be on the same footing and should have the same bargaining power as also held by the Hon’ble Supreme Court in Jacob Punnen Vs. United Insurance Co Ltd, (2022) SCC 655. It was also argued that considering unfair trade practice on part of the respondent in a completely one-sided and biased contract, the restitutionary right of the appellants while awarding compensation needs to be considered. Reliance in this regard was placed on IREO Grace Realtech (P) Ltd Vs. Abhishek Khanna, (2021) 3 SCC 241, NBCC Vs Shri Ram Trivedi, (2021) 5 SCC 273 and Wg Cdr Arifur Rahman Khan Vs DLF Southern Homes (P) Ltd., (2020) 16 SCC 512. Counsel for appellants also argued that the interest awarded by the State Commission was required to be enhanced due to the delay in delivery of the possession of the unit based upon the judgements of the Hon’ble Supreme Court in Lucknow Development Authority (supra) and this Commission’s judgement in Subhash Chander Mahajan (supra).

6.     Per contra, learned counsel for the respondent argued that admittedly possession was offered to the complainant on 16.04.2016 and the State Commission had directed vide the impugned order to pay the appellants compensation at 4% per annum from 01.01.2009 till 11.04.2016. However, the appellants accepted possession only on 18.06.2022. At the time of accepting possession the appellant had been paid a compensation of Rs.8,99,112/- in terms of the State Commission’s order which was approximately 25% of the total sale consideration of Rs 36,24,116/- paid by the complainant. It is contended that any enhancement of the rate of interest would prejudice the stand of the respondent and other home buyers. It was also contended that after the offer of possession, based upon the receipt of the completion certificate, the respondent had been incurring charges for maintaining the unit since 16.04.2016 and this expense @ Rs 1.76 per sq ft amounting to Rs 1,01,191.69 had been borne by the respondent. It was also argued that, in addition, various amenities had been provided by the respondent such as the facilities of a club and first aid room with doctor and ambulance service for which the appellant has not been charged. It was argued that the impugned order did not deserve to be disturbed since proof of loss or injury is a prerequisite for claiming compensation under section 14(1)(d) of the Act which has not been discharged. Reliance was placed on the judgement of the Hon’ble Supreme Court in Utpal Trehan Vs. DLF Ltd., MANU/SC/0845/2022 that compensation be paid as per agreed terms and conditions; Puneet Malhotra Vs Parsvanath Developers, MANU/CF/0076/2015 to argue that the contractual rate of compensation is applicable in cases where despite delay possession is accepted by the complainant and DLF Home Panchkula Pvt Ltd Vs DS Dhanda & Ors., MANU/SC/0744/2019 to argue that there cannot be multiple heads to grant damages and interest when the parties have agreed for payment of damages and that there have to be exceptional and strong reasons to award compensation at more than the agreed rate.

7.     From the facts of this case it is manifest that the respondent had delayed the handing over of the possession of the row house booked by the appellants. Against the promised date of possession, including grace period of 6 months (31.12.2008), the offer was made on 11.04.2016. It is not the case of the respondent that the appellants defaulted in making payments towards the agreed sale consideration; neither it is contended that appellants having failed to take possession when offered, cannot be allowed to benefit from their own lapse. It is also manifest from the record and the admission of the respondent that there has been an delay in the offer of possession. The Hon’ble Supreme Court has in a catena of judgments, notably Pioneer Urban Land & Infrastructure Ltd. Vs. Govindan Raghavan, II (2019) CPJ 34 (SC) decided on 02.04.2019, Kolkata West International City Pvt. Ltd. Vs. Devasis Rudra, II (2019) CPJ 29 SC decided on 25.03.2021 and Fortune Infrastructure & Anr. Vs. Trevor D’Lima & Ors. (2018) 5 SCC 442 laid down that an allottee/consumer cannot be expected to wait indefinitely for possession and is entitled to seek either refund or possession with compensation. In the instant case, the appellants have chosen to accept possession with compensation for delay. Reckoned from the promised date of possession, including the grace period of 6 month, i.e., 31.12.2008 the offer of possession on 11.04.2016 amounts to a delay of over 7 years and 4 months years which is certainly inordinate and warrants compensation for the delay. The impugned order of the State Commission cannot be faulted on this account.

8.     In Supertech Ltd. Vs. Rajni Goyal, (2019) 17 SCC 681 it has been laid down by the Hon’ble Supreme Court that in cases of delay in handing over of possession of the flat booked to the allottee/consumer, the date of offer of possession would be reckoned for the date of calculation of compensation by way of interest to be awarded. In Samruddhi Co-operative Housing Society Ltd. vs. Mumbai Mahalaxmi Construction Pvt. Ltd., Appeal (Civil) no.4000 of 2019 decided on 11.01.2022 the Hon’ble Supreme Court has held that the offer of possession must necessarily be legally valid and that the offer must necessarily be based upon the issuance of an occupancy/completion certificate by the appropriate Competent Authority. In the instant case, it is evident that the Kolkata Metropolitan Development Authority (KMDA) as the competent authority issued the completion certificate on 23.05.2016 as per the letter brought on record by the respondent itself along with its written submissions. The stated offer of possession by the opposite party on 11.04.2016 cannot be considered to be a valid offer of possession since on that date the appellant admittedly did not have a completion certificate from the concerned competent authority, KMDA. The complainant cannot be faulted in refusing to accept possession offered since an offer of possession without a valid completion certificate cannot be considered a valid, legal offer of possession. However, the delay in  acceptance of possession till 18.06.2022, however, has not been explained by the appellants. When an offer of possession was available and a completion certificate received, the appellants were under obligation to accept possession. It has been held by the Hon’ble Supreme Court in Utpal Trehan Vs. DLF Ltd (supra) that an allottee cannot seek to profit from such delays.

9.     In the instant case the appellants have accepted possession of the row house on 18.06.2022. It is their claim that the appellant compensate them from the promised date of possession i.e. 31.12.2008 till this date @ 18%. The order of the State Commission awarding compensation @ 4% for the period from 01.01.2009 to 11.04.2016 is challenged on the ground that it has not factored in the delay correctly and awarded compensation at a rate of interest that is grossly at variance to appellants’ entitlement for the delay of 14 years in the handing over of possession. The complainant’s claim is also that interest be paid by the opposite party @ 18% since it was charging the same rate of interest for default in payments. The same has been considered. While this was a provision in the Allotment letter and the Buyer’s Agreement, it is evident that such a rate of interest was not actually charged by the respondent on any occasion in view of the timely payments by the appellant.

10.   So far as the contention of the appellants that possession which was offered on 11.04.2016 was actually accepted on 18.06.2022 and therefore compensation be paid till this date is concerned, the same cannot be accepted for the reasons stated above. However, in view of the completion certificate on record dated 23.05.2016 the appellants are entitled to compensation till this date when the offer of possession became a legal offer of possession.

13.   The contention of the respondent that the property was maintained by it, that the house was handed over with various amenities and that any enhancement of rate would be detrimental to the interest of other homebuyers is not material. The respondent was under a contractual obligation to hand over the unit by 30.06.2016. He had also factored in a period of grace of six months. Payments of instalments were received by it within time as per the schedule agreed upon. Respondent, however, failed to obtain a completion certificate from the competent authority and make an offer of possession in time. Deficiency in service on the part of the respondent is therefore, writ large. The appellants are therefore entitled to be compensated for the delay. The other arguments do not sustain.

14.   The Hon’ble Supreme Court has laid down in Experion Developers Pvt. Ltd. Vs. Sushma Ashok Shiroor, Civil Appeal No. 6044 of 2019 decided on 07.04.2022 that “the interest payable on the amount deposited (should be) restitutionary and also compensatory (and) interest has to be paid from the date of deposit of the amounts”. The Hon’ble Supreme Court in Wg Cdr Arifur Rehman Khan and Aleya Sultan and Ors. Vs DLF Southern Homes Pvt. Ltd. in Civil Appeal No. 6239 of 2019 held that in a case where possession is taken, compensation for the delay should be payable keeping in view the appreciation of the value of the property. As for the compensatory rate of interest awarded by the State Commission, interest @ 6% is considered to be a fair rate of compensation in the case on hand.

15.    In view of the discussion above and the facts and circumstances of this case, the order of the State Commission holding the respondent liable for deficiency in service is affirmed with the following modifications:

1. The opposite Party is directed to deliver Possession and to execute the Deed of Conveyance in respect of the unit as per provisional Allotment Letter dated 07.10.2016 and the Buyers’ Agreement dated 02.07.2007 in favour of complainants within 60 days from date;
2. The Opposite Party is directed to pay compensation in the form of simple interest @ 6% p.a. from the committed date of possession i.e. from 01.01.2009 (inclusive of six months grace period) till 23.05.2016;
3. The Opposite Party is directed to pay Rs.10,000/- as cost of litigation to the complainants;
4. The balance amount payable by the complainants, if any, shall be adjusted by OP out of the compensation payable to them in terms of this order.

        Pending IAs, if any, also stand disposed of with this order.