1.      Heard Dr. Aman Hingorani, Sr. Advocate assisted by Ms. Vidisha Jain, Advocate, Mr. A.K. Tewari, Advocate, for the appellants and Lt. Col. Vijay Kumar Padwal, the respondent (In Person).

2.      Army Welfare Housing Organisation and its Managing Director have filed above appeal against the order of State Consumer Disputes Redressal Commission, Punjab, dated 04.10.2019, allowing CC/148/2019 and directing the appellants to pay interest @9% per annum on the deposit of the respondent from 30.04.2014 till 15.10.2018, as delay compensation, refund Rs.286000/- with interest @9% per annum from the date of deposit till the date of refund, charged under the head of late allotment charges and pay Rs.50000/- as compensation for harassment, mental agony and litigation costs.

3.      Lt. Col. Vijay Kumar Padwal (the respondent) filed CC/148/2019, for directing the appellants to (i) pay delay compensation in the form of interest @12% per annum on his deposit from 30.04.2014 till 15.10.2018; (ii) refund Rs.286000/- charged under the head of late allotment charges; (iii) pay Rs.200000/- as compensation for mental agony and harassment; (iv) pay litigation costs; and (v) any other relief, which is deemed fit and proper in the facts of the case.   

4.      The complainant stated that Army Welfare Housing Organisation was a society, registered under the Societies Registration Act, 1860, with an object to provide dwelling units to serving and retired army personnel and their widow. The complainant booked a dwelling unit of the category of ‘super deluxe apartment’, in the housing project at Sector 27, Panchkula, Haryana, being developed by the opposite party vide Registration No.OFF/SDA/149259/AR/M90/2010, as a working army personnel. Owing to long waiting list, the booking of the complainant was transferred in the housing project at Sector 114, SAS Nagar, Mohali, Punjab, in August, 2010. The complainant deposited registration charges on 27.08.2010. The opposite party launched the housing project at Sector 114, SAS Nagar, Mohali, Punjab, in November, 2008. The opposite party, vide letter dated 29.11.2011 informed that a ‘super deluxe apartment’, tentative cost of Rs.5514702/- (excluding cost of parking and escalation) had been booked in the project ‘Harbhajan Vihar’, Sector 114, Mohali, for the complainant. This letter also contained payment schedule, under which, 95% of the consideration was payable in instalments up to 15.08.2013 and balance 5% + other charges were payable on offer of possession, which was expected till April, 2014. The complainant paid Rs.90000/- on 27.08.2010, Rs.1084000/- on 15.02.2012, Rs.684000/- on 10.05.2012, Rs.400000/- on 11.05.2012, Rs.1084000/- on 15.11.2012, Rs.1084000/- on 03.06.2013, Rs.813000/- on 09.06.2014. The complainant took loan of Rs.3500000/- from State Bank of India, which was sanctioned on 09.01.2012, from which, the instalments were paid. The opposite party issued a letter dated 07.06.2018, containing “Handing over Taking over Instructions” and Final Statement of Account. As per demand, the complainant deposited Rs.709135/- and Rs.90480/- on 28.06.2018. The opposite party handed over possession on 15.10.2018. Although the opposite party was charging 12% interest on delay in payment of instalment but they did not give any delay compensation although possession was handed over with delay of more than 4 years. In final statement of the account, the opposite party charged Rs.286000/- as late booking charge. The complainant retired from service on 30.06.2015 and thereafter was living in a rented accommodation on a monthly rent of Rs.25000/-. The complainant was also paying instalment of his bank loan, which included Rs.350000/- to Rs.300000/- per annum towards interest on the loan. Due to delay in handing over possession, the complainant had to bear double burden of paying rent and interest on the loan and suffered from mental agony and harassment. The complainant vide emails dated 22.11.2018 and 04.01.2019, demanded compensation for delay in handing over possession and to refund late allotment charge. The opposite party, vide letter dated 30.01.2019, denied their liability to pay delay compensation or refund any amount. Then, the complaint was filed on 21.02.2019.         

5.      The appellants filed its written reply in the complaint and stated that Army Welfare Housing Organisation (the society) was a society, registered under the Societies Registration Act, 1860, on 20.03.1978 with an object to provide dwelling units to serving and retired army personnel and their widow on “No Profit and No Loss” and “First come First served” basis, all over India. The society does not get any grant from the government. The society used to develop the housing project from the fund arranged by way of short-term loan from Financial Institutions, like Banks, HUDCO and National Housing Bank and the contribution made by the allottees. After completion of a particular project, final accounting of the expenditure used to be done and the surplus money, if any, used to be refunded to the allottees in equal ratio. The society avails the services of the planners, architects, engineers, surveyors, project managers, staff and employees as required from time to time on contractual basis and pay them as determined by Executive Body from the fund raised/ generated during course of the development of the project. Board of Management of the society comprises of Adjutant General, Army Head Quarters as an Ex-Officio Chairman/Managing Director, who is assisted by the members of Executive Committee, the specialist in their faculty i.e. planner, architects, engineers, surveyors, project manager etc. The society framed a Master Brochure, in the name of the Army Welfare Housing Organisation Rules, 1987 governing the rules for development of the housing project as well as allotment of the unit. The society acquired 12.51 acres land at Vikram Vihar in Sector 27, Panchkula, Haryana, for the housing project. The complainant applied for a dwelling unit of the category of ‘super deluxe apartment’ on 02.08.2010 in the project at Vikram Vihar, vide Registration No.OFF/SDA/149259/AR/M90/2010. By that time all the units in this project were booked and the complainant was given an option to withdraw from the project. The complainant, vide application dated 12.07.2011, requested the society to transfer his booking to the project at Sector 114, SAS Nagar, Mohali, Punjab, which was launched in November, 2008 and in the Brochure of the project, expected date for completion was mentioned as April, 2014. The society, vide letter dated 29.11.2011, informed the complainant that a ‘super deluxe apartment’, tentative cost of Rs.5514702/- (excluding cost of parking and escalation) had been booked for the complainant in the project ‘Harbhajan Vihar’, Sector 114, Mohali. This letter contained payment schedule, under which, 95% of above consideration was payable in instalments up to 15.08.2013 was extended till 30.06.2014 and balance 5% + other charges were payable on offer of possession. The housing project at Sector 114, Mohali comprises 1048 dwelling units and community centres etc. Although the project was undertaken in the year 2008, but the formalities of ground works of obtaining various sanction and NOC for development took time and the project commenced from 26.04.2011. Punjab and Haryana High Court imposed ban in mining of sand and stone in the states on 01.03.2010 which continued till May, 2012. Due to which, the sand and stone were unavailable and its prices were hiked and the contractors made unreasonable demand for it. Due to which, construction could not be started. On account of heavy rain fall in the locality of the project and consequent inundation at the site during June, 2011 to January, 2012, the works of piling and laying foundation was severely hampered. As there was 3 feet water logging on the site as such movement of heavy building machinery and labour was not possible. These issues were conveyed to the allottees time to time. The society postponed payment of third, fourth and fifth instalments from 18.05.2012 to 18.11.2012, 16.01.2013 to 17.06.2013 and 16.08.2013 to 30.06.2014 respectively as the work was stopped. The construction was near completion and the allottees were given notice for draw, scheduled to be held on 23.07.2015 for allotment of specific unit and parking but due to some technical reason the draw was postposed for 28.10.2015 and again for 23.06.2016 and the allottees were informed time to time. In the draw held on 23.06.2016, the complainant was allotted Unit No. 4FL/0404, Block P and twin car parking no. P-TVPB-B576T under basement. The complainant was informed vide letter dated 27.06.2016. The society, vide letter dated 24.10.2016, again re-scheduled the instalments. Due to delay, the costs of the project was increased. The construction was completed and the society started the process for handing over possession block-wise from 15.06.2017. Statutory authority tagged the application of the society with M/s. Ansal (another developer), for whom the society had nothing to do. Due to which, issue of ‘occupation certificate’ was delayed. The complainant was offered possession, vide letter dated 07.06.2018 and he took possession on 15.10.2018 after completing formalities. The project of Sector 114, Mohali was started in the year 2008 while the complainant vide application dated 12.07.2011, requested the society to transfer his booking to this project, as such, he is liable to pay ‘late booking charge’ as per Master Brochure. The project was delayed for force majeure reason and the society is entitled for extension of time. The society constructs dwelling unit under welfare scheme on “no profit no loss” and cannot be burdened with delay compensation. The complainant is not a ‘consumer’ and the complaint is not maintainable.           

6.      The complainant filed Affidavit of Evidence of Lt. Col. Vijay Kumar Padwal and documentary evidence. The society filed Affidavit of Evidence of Col. Atul Menon and documentary evidence. Both the parties filed their written arguments. State Commission, by impugned order dated 04.10.2019, held that the complainant is a ‘consumer’ and the complaint is maintainable. The society failed to prove rain and inundation during June, 2011 to January, 2012 by producing report of Meteorological Department as such plea of force majeure for delay in construction has not been proved. Due date of possession was 30.04.2014 and possession was handed over on 15.10.2018 as such the society is liable to pay delay compensation. The opposite party has not produced Master Brochure to justify the charge for late booking. On these findings the complaint was allowed and the order as stated above has been passed. Hence, the society has filed this appeal.

7.      We have considered the arguments of the counsel for appellant and examined the record. The word “consumer” has been defined under Section 2(1)(d) and the word “service” has been defined under Section 2(1)(o) of the Consumer Protection Act, 1986, (hereinafter referred to as the Act) which are quoted below:-

Section-2 (1) (d).- “consumer” mean any person who,-

(i) buys any goods for a consideration which has been paid or promised or partly paid and partly promised, or under any system of deferred payment and includes any user of such goods other than the person who buys such goods for consideration paid or promised or partly paid and partly promised, or under any system of deferred payment, when such use is made with approval of such person, but does not include a person who obtains such goods for resale or for any commercial purpose; or

(ii) hires or avails of any services for consideration which has been paid or promised or partly paid and partly promised, or under any system of deferred payment and includes any beneficiary of such services other than the person who hires or avails of the services for consideration paid or promised or partly paid and partly promised, or under any system of deferred payment, when such services are availed of with the approval of the first mentioned person, but does not include a person who avails such services for any commercial purpose;

Explanation.- For the purpose of this clause, “commercial purpose” does not include use by a person of goods bought and used by him and services availed by him exclusively for the purposes of earning livelihood by means of self-employment.

Section 2(1) (o):- “service” means service of any description which is made available to potential users and includes, but not limited to, the provision of facilities in connection with banking, financing, insurance, transport, processing, supply of electrical or other energy, board or lodging or both, housing construction, entertainment, amusement or the purveying of news or other information, but does not include the rendering of any service free of charge or under a contract of personal service;”

8.      The Explanation was added to Sction-2(1)(d)(i) of the Act by Act No. 50 of 1993 w.e.f. 18.06.1993. Section-2(1)(d)(ii) was amended and the term “but does not include a person who avails such services for any commercial purpose” has been added in it and the Explanation was placed in last by Act No. 62 of 2002, w.e.f. 15.03.2003,. The term “housing construction” has been added in the term ‘service’ in Section-2(1)(o) of the Act by Act No.50 of 1993.

As per Master Brochure, the society is providing the service of “housing construction” to the serving and retired army personnel and their widow for the consideration paid by them, as such, it cannot be ruled that the complainant will not come within the definition of “consumer” as defined under the provisions of the Act. Supreme Court in LDA v. M.K. Gupta, (1994) 1 SCC 24,  held that if development authority undertakes to construct building or allot houses or building sites to citizens of the State either as amenity or as benefit then it amounts to rendering of service and will be covered in the expression ‘service made available to potential users’.

9.      Rule-20 of the Army Welfare Housing Organisation Rules, 1987 (the Rules) provides that as and when a project at particular station is finalised, a Spot Scheme will be announced. Registration for the Scheme will be open for a period of three months. Where demand is more than availability, the allotment will be made by a computerised draw. Rule-21 provides that to fill up residual vacancies of any Spot Scheme or to create waiting list as reserve for any project, Annual Registration Scheme may be announced. Registration will be open throughout the year. Booking as per availability will be first come first serve basis. Rule-5 (l) provides “Financial Cost”- This is additional cost charged to an allottee, who joins a project late to bring parity with the existing allottees to offset interest burden carried by the organisation.

The society stated that the project at Sector 114, SAS Nagar, Mohali, Punjab, was launched in November, 2008. The complainant applied for a dwelling unit of the category of ‘super deluxe apartment’ on 02.08.2010 in the project at Vikram Vihar, Sector-27, Panchkula vide Registration No.OFF/SDA/149259/AR/M90/2010. By that time all the units in that project were booked and the complainant was given an option to withdraw from the project. The complainant, vide application dated 12.07.2011, requested the society to transfer his booking to the project at Sector 114, SAS Nagar, Mohali, which was accepted by the society and the complainant was informed, vide letter dated 29.11.2011. Therefore, it is proved that the complainant has neither applied within three months or within one year of the scheme being opened for registration, as such, he is liable to pay ‘late registration charge’ as per Rule-5 (l). Charging Rs.286000/- as ‘late registration charge’ was in accordance with Rule-5 (l).

Supreme Court in Awasan Mandal Parijat Uch Ayawarg Sangharsh Samiti v. Rajasthan Housing Board, (1997) 9 SCC 641, held that after going through the pleadings of the parties in his behalf, we are of the opinion that the land cost which was determined by the Housing Board is in consonance with the brochure and the costing principles reflected in paras 4.1 to 4.1.5, 4.2.1, 4.2.3, 4.2.5 and 4.2.6. Since the allotment letters of the houses of the second quarter fell during the Financial Year 1990-91, the land cost stood enhanced in view of the costing principles. The same was true in respect of the third and fourth quarter houses as the letters of allotment were issued in the Financial Year 1991-92 on different dates i.e. 9-12-1991 and 5-2-1992 respectively. All these factors were very much known to the appellants when they entered into agreements with the Rajasthan Housing Board and they were fully aware of the terms and conditions set out in the brochure and other relevant Rules and Regulations. Rajasthan Housing Board had committed no error while determining the land cost differently in respect of the second, third and fourth quarters based on the costing principles. Rajasthan Housing Board had borrowed huge sums from various financial institutions for which it was required to pay the interest thereon. The appellants are unable to demonstrate that the land cost determined by the Rajasthan Housing Board was in violation of any of the terms and conditions mentioned in the brochure and/or Rules or Regulations or it had deviated from the Board's policy of providing houses on no-profit-no-loss basis.

10.    Next argument of the counsel for the appellants is that the society constructs dwelling unit under welfare scheme on “no profit no loss” basis. After completion of a particular project, final accounting of the expenditure used to be done and the surplus money, if any, used to be refunded to the allottees in equal ratio. The society cannot be burdened with delay compensation as it has no fund for it. Rule-74 provides that no compensation will be paid by the society to the allottee, in case handing over of a dwelling unit is delayed for the reasons beyond the control of society.

The society has been formed with an object to ensure welfare of the Army personnel and their widow by providing them dwelling unit on “no profit no loss” basis. Most of the Army personnel and their widow used to take loan for payment of the instalment and has to pay interest on the loan. Due to delay in handing over possession, the allottee is burdened of paying interest on loan and also rent of the rented accommodation. If the society is given free hand to delay the project, it will not serve the welfare of the Army personnel and their widow. Rule-74, absolves the society from liability of delay compensation, in the case, where handing over of a dwelling unit is delayed for the reasons beyond the control of the society and not in general.

11.    Relying upon the judgment of Supreme Court in Bangalore Development Authority Vs. Syndicate Bank, (2007) 6 SCC 711, the counsel for the appellants submitted that in civil construction work, time is not ‘an essence of contract’ Bangalore Development Authority was absolved from the liability of paying delay compensation, holding that where the grievance is one of delay in delivery of possession, and the development authority delivers the house during the pendency of the complaint at the agreed price, and such delivery is accepted by the allottee complainant, the question of awarding any interest on the price paid by him from the date of deposit to date of delivery of possession, does not arise. The allottee who had the benefit of appreciation of price of the house, is not entitled to interest on the price paid. In this case, the 11 houses were delivered in 1997 at the agreed prices (Rs 5.5 lakhs per corner HIG house and Rs 4.75 lakhs per other HIG houses). In view of it, the order of the Commission awarding interest at 18% per annum on the price of the houses is unsustainable and liable to be set aside.  

12.    Section 55 of the Contract Act, 1872 is quoted below:-

“Section-55.- When a party to a contract promises to do a certain thing at or before a specified time, or certain things at or before specified times, and fails to do any such thing at or before the specified time, the contract, or so much of it as has not been performed, becomes voidable at the option of the promisee, if the intention of the parties was that time should be of the essence of the contract.

If it was not the intention of the parties that time should be of the essence of the contract, the contract does not become voidable by the failure to do such thing at or before the specified time; but the promisee is entitled to compensation from the promisor for any loss occasioned to him by such failure.

If, in case of a contract voidable on account of the promisor's failure to perform his promise at the time agreed, the promisee accepts performance of such promise at any time other than that agreed, the promisee cannot claim compensation for any loss occasioned by the non-performance of the promise at the time agreed, unless, at the time of such acceptance, he gives notice to the promisor of his intention to do so.”

13.    In the present case, the project at Sector 114, SAS Nagar, Mohali, Punjab, was launched in November, 2008 and in the Brochure of the project, expected date for completion was mentioned as April, 2014. The society in its letter dated 29.11.2011 mentioned that expected date for handing over by March, 2014 (may be inadvertently). The society however failed to handover possession on due date. The possession was offered vide letter dated 07.06.2018 and the complainant took possession on 15.10.2018. As such there was delay in handing over possession and under second part of Section 55 of the Contract Act, 1872, the allottee is entitled to compensation from the society for the loss caused to him due to delay in delivery of possession. In similar set of terms of agreement, Supreme Court in LDA v. M.K. Gupta, (1994) 1 SCC 24, held that the allottee is entitled to be compensated with actual loss or expected loss and may extend to physical, mental or even emotional suffering, insult or injury or loss. In R.V. Prasanna Kumar Vs. Maruti Castles Pvt. Ltd., (2020) 14 SCC 769, Wg. Cdr. Arifur Rahman Khan Vs. DLF Southern Homes Pvt. Ltd., (2020) 16 SCC 512 and DLF Home Developers Pvt. Ltd. Vs. Capital Green Flat Buyer’s Association, (2021) 5 SCC 537, Supreme Court awarded delay compensation in form of interest @6% per annum on the deposit of the allottee from due date of possession, till the date of offer of possession. In Bangalore Development Authority’s case (supra), the compensation has been denied on the ground that due to delay, the property has appreciated the value several times. The allottee paid consideration on time for the property. The appreciation of value of the property due to delay in handing over possession will not go to the credit of the developer. Supreme Court did not follow this principle subsequently.

          It may be mentioned that this Commission in CC/836/2017 Brig. J.S. Dharmadheeran Vs. Army Welfare Housing Organization (decided on 06.04.2023), awarded delay compensation, which has been upheld by Supreme Court in Civil Appeal Diary No.24631 of 2023 Army Welfare Housing Organization Vs. J.S. Dharmadheeran (decided on 25.07.2023. In Civil Appeal No.8251 of 2022 Major Sandeep Vinayak Vs. Army Welfare Housing Organization (decided on 12.12.2022) directed the appellant to pay delay compensation. 

14.    The society has taken plea that the project was delayed for force majeure reason and the society is entitled for extension of the period. The society took plea that although the project was undertaken in November, 2008, but the formalities of ground works of obtaining various sanction and NOC for development took time and the project commenced from 26.04.2011. Punjab and Haryana High Court imposed ban in mining of sand and stone in the states on 01.03.2010 which continued till May, 2012. Due to which, the sand and stone were unavailable and its prices were hiked and the contractors made unreasonable demand for it. On account of heavy rain fall in the locality of the project and consequent inundation at the site during June, 2011 to January, 2012, the works of piling and laying foundation was severely hampered. As there was 3 feet water logging on the site as such movement of heavy building machinery and labour was not possible and the construction could not be started. State Commission, ignored this plea on the ground that the society has not produced the report of Meteorological Department to prove heavy rain in the locality.

          The society postponed payment of third, fourth and fifth instalments from 26.07.2012 to 18.11.2012, 16.01.2013 to 17.06.2013 and 16.08.2013 to 30.06.2014. The respondent deposited these instalments on 15.11.2012, 03.06.2012 and 09.06.2014. Although the society has not produced report of Meteorological Department to prove heavy rain in the locality but extension of period of deposit of instalment was proved/admitted. A perusal of the application dated 17.11.2018 (Pg.115 of the appeal) shows layout plans were sanctioned on 12.08.2010 and 16.11.2010 (the project has two sites) and the society applied for issue of “occupation certificate” on 10.07.2017. The society was entitled for extension of 11 months period for initial delay in start of construction and six months period for delay in issue of ‘occupation certificate. For the purposes of delay compensation, the date of offer of possession is material and not the date of taking possession. Supreme Court in Dhanrajmal Govindram Vs. Shyamji Kalidas, AIR 1961 SC 1285, held that an analysis of the rulings on the subject shows that where reference is made to “force majeure” the intension is to save the performing party from the consequences of anything over which he had no control. Again in Ireo Grace Realtech Pvt. Ltd. Vs. Abhishek Khanna, (2021) 3 SCC 241, extended period, for which, sanction of fire NOC was delayed.

15.    By the impugned order State Commission has granted interest @9% per annum on the deposit of the complainant as delay compensation. Three members Bench of Supreme Court in DLF Home Developers Pvt. Ltd. Vs. Capital Green Flat Buyer’s Association, (2021) 5 SCC 537, awarded delay compensation in form of interest @6% per annum on the deposit of the allottee from due date of possession, till the date of offer of possession. 

O R D E R

    In view of the aforesaid discussions, the appeal is partly allowed. The order of State dated 04.10.2019, passed in CC/148/2019 is modified and the appellants are directed to pay delay compensation in the form of interest @6% per annum on the deposit of the respondent from 01.05.2014 till 06.06.2018, (excluding 17 months for force majeure) and direction to refund Rs.286000/- with interest @9% per annum is set aside.