Chandigarh

StateCommission

CC/134/2016

Punita Sehgal - Complainant(s)

Versus

M/s DLF Universal Ltd. - Opp.Party(s)

Satyawan Ahlawat, Adv.

19 Jul 2016

ORDER

STATE CONSUMER DISPUTES REDRESSAL COMMISSION,

U.T., CHANDIGARH

 

Complaint case No.	:	134 of 2016
Date of Institution	:	07.04.2016
Date of Decision	:	19.07.2016

1. Punita Sehgal w/o Ashwani Kumar Sehgal R/o 24/7, Ground Floor, Main Road, Shakti Nagar, Delhi – 110007.

2. Ashwani Kumar Sehgal s/o Shri Ram Nath Sehgal, R/o 24/7, Ground Floor, Main Road, Shakti Nagar, Delhi – 110007.

…… Complainants

Versus

 M/s DLF Universal Ltd., SCO No.191-192, Sector 8-C, Chandigarh.

....Opposite Party.

Complaint under Section 17 of the Consumer Protection Act, 1986.

BEFORE:     JUSTICE JASBIR SINGH (RETD.), PRESIDENT.

                   MR. DEV RAJ, MEMBER.

                   MRS. PADMA PANDEY, MEMBER.

 

Argued by:- Sh. Satyawan Ahlawat, Advocate for the Complainants.

                   Ms. Ekta Jhanji, Advocate for the Opposite Party.

 

PER DEV RAJ, MEMBER            

                   The facts in brief are that the complainants booked an independent floor R2-E802FF, Block E, measuring 1881 sq. ft., @Rs.3,800/- per sq. ft., at the total basic sale price of Rs.71,47,800/- and payment was to be regulated by construction linked payment plan. An Independent Floor Buyer’s Agreement was executed between the complainants and the Opposite Party on 4.4.2014. The complainants in all paid an amount of Rs.48,08,217.28 as per details given in Para 3 of the complaint. The complainants visited the site many a time and observed that the brick work and other construction material like sand, cement, bajari etc. were not being used as per BIS for construction material code parameters and the quality of material was not according to the Agreement, which was substandard. It was stated that despite receipt of huge amount, the Opposite Party did not adhere to the quality norms and continued to use substandard quality of material. It was further stated that the complainants requested the company vide letter dated 18.09.2015, to refund the amount deposited with the company but the Opposite Party did not bother to respond to the request of the complainants and kept mum without any intimation. It was further stated that instead of making refund, the Opposite Party made offer for alternative option in shape of allotting a micro shop (booth) at the total price of Rs.34 Lacs vide email dated 29.2.2015. It was further stated that vide letter dated 15.2.2016, the Opposite Party enhanced the cost of the flat from Rs.71,47,800/- to Rs.84,54,180/- and further to Rs.1,00,16,805/-, without the consent/prior approval of the complainants and demanded the balance amount in lump-sum. It was further stated that the complainants are not in a position to make the payment of the enhanced amount. It was further stated that the saleable area of the floor was also increased by the Opposite Party without seeking the consent of the complainants. It was further stated that the arbitrary increase of size and cost went beyond the paying capacity of the complainants.  It was further stated that the complainants are left with no option but to demand the refund of the deposited amount alongwith interest. 

2.         It was further stated that the aforesaid acts of the Opposite Party amounted to deficiency in providing service and adoption of unfair trade practice. Hence, this consumer complaint was filed by the complainants, seeking refund of the amount paid to the Opposite Party alongwith interest @24% per annum; Rs.10 Lacs as compensation for harassment and mental agony and Rs.1 Lac as litigation expenses.

3.         The Opposite Party in its written statement took up certain preliminary objections to the effect that in the face of arbitration clause contained in the Agreement, dispute if any, was required to be referred to an Arbitrator, as such, the consumer complaint was not maintainable; that the parties are bound by the terms and conditions mentioned in the Agreement and that since the proceedings before the Consumer Foras are summary, in nature, this Commission is not competent to adjudicate this complaint.

4.         On merits, it was admitted that the complainant had purchased the unit, in question, from the Opposite Party. It was further stated that payment of Rs.48,08,217.28Ps made by the complainants up-to the date of possession was a matter of record. Execution of Agreement was admitted by the Opposite Party. It was further stated that the complainants have not come forward for taking possession for clearing the FSA and, thus, defaulted the payment clause as well as breached the terms of the Agreement. It was further stated that amount on account of holding charges, maintenance, interest on default, increased manifold and the same was payable by the complainants.  It was further stated that seeking refund by the complainants, clearly meant backing out from the Agreement and amounted to surrendering of the floor at this stage. It was further stated that possession has already been offered by the Opposite Party on 15.02.2016. It was further stated that after discussion, the complainants were offered micro booth in view of the refund request, so that the earnest money of the complainants might not be forfeited. It was further stated that letter dated 15.02.2016 was sent to the complainants alongwith the offer of possession as final statement of account and all the charges were charged as per the terms and conditions of the Agreement. It was further stated that the possession was offered within 30 months from the date of signing of the application form. It was further stated that no prior written communication was required to be sent to the complainants as the increased area was less than 15% of the saleable area. It was further stated that the complainants themselves failed to comply with the terms and conditions of the Agreement and failed to clear the payment on time, for which several reminders were sent to them. It was further stated that the Opposite Party was neither deficient, in rendering service nor it indulged into unfair trade practice. The remaining averments, made in the complaint, were denied.

5.         The complainants, in support of their case, submitted the affidavit of Sh. Ashwani Kumar Sehgal, complainant No.2, by way of evidence alongwith which, a number of documents were annexed.

6.         The Opposite Party, in support of its case, submitted joint affidavit of Sh. Mahinder Singh & Sh. Shiv Kumar, their authorized signatories, by way of evidence, alongwith which, a number of documents were annexed. 

7.         We have heard the Counsel for the parties, and, have gone through the evidence and record of the case, carefully. 

8.         Admittedly, the complainants were allotted Independent Floor No.R2-E-802 (Ground Floor) with parking space No.P-1F, measuring 1881 Sq. ft., in the project of the Opposite Party, total price whereof, including Preferential Location Charges and External Development Charges, was Rs.77,36,860/-. Admittedly, the cost of the floor in question, was subsequently enhanced to Rs.1,00,16,805/- (inclusive of Rs.7,72,355/- on account of stamp duty, registration charges and on account of increase in area of the floor, PLC and EDC etc). The Opposite Party vide letter dated 15.2.2016 (Annexure R-4) offered possession, wherein it was informed that final area of the independent floor was 1900 sq. ft. (increase of 19 sq. ft.) and as per Final Statement of Account as on 15.02.2016 annexed with possession letter, against the payable amount of Rs.84,54,179.65Ps, it (Opposite Party) had received an amount of Rs.48,08,217.28Ps from the complainants and still an amount of Rs.36,45,962.37Ps remained to be paid by the complainants. The payment was to be regulated by construction linked payment plan. As per Clause 11(a) of the Agreement, the Opposite Party was to complete construction of the floor, in question, by 18.04.2016 i.e. within 30 months from the date of the application, which was 17.10.2013. Thus, possession was offered within the stipulated period. It is also evident from record that despite notices/reminders, the complainants did not make payment of installments and they showed their inability to pay the aforesaid amount. They  also refused to accept the offer of 3 booths of Rs.34 Lacs each, made by the Opposite Party as the same would have put a burden of payment of Rs.52 Lacs upon them. 

9.         The first question that falls for consideration is, as to whether, in the face of existence of arbitration clause in the Agreement, to settle disputes between the parties through Arbitration, in terms of provisions of Section 8 (amended) of Arbitration Act 1996, this Commission has no jurisdiction to entertain the present complaint. It may be stated here that the objection raised by the Opposite Party, in this regard, deserves rejection, in view of the judgment passed by this Commission in Abha Arora Vs. Puma Realtors Pvt. Ltd. and another, consumer complaint No.170 of 2015, decided on 01.04.2016, wherein this issue was dealt, in detail, in light of various judgments of the Hon'ble Supreme Court of India; the National Commission, New Delhi, and also Section 3 of the Consumer Protection Act, 1986. Ultimately it was held by this Commission that even in the face of existence of arbitration clause in the Agreement, to settle disputes between the parties through Arbitration, in terms of provisions of Section 8 (amended) of 1996 Act, this Commission has jurisdiction to entertain the consumer complaint. It was also so said by the National Commission, recently, in a case titled as Lt. Col. Anil Raj & anr. Vs. M/s. Unitech Limited, and another, Consumer Case No. 346 of 2013, decided on 02.05.2016. Relevant portion of the said case, reads thus:-

“In so far as the question of a remedy under the Act being barred because of the existence of Arbitration Agreement between the parties, the issue is no longer res-integra.  In a catena of decisions of the Hon’ble Supreme Court, it has been held that even if there exists an arbitration clause in the agreement and a Complaint is filed by the consumer, in relation to certain deficiency of service, then the existence of an arbitration clause will not be a bar for the entertainment of the Complaint by a Consumer Fora, constituted under the Act, since the remedy provided under the Act is in addition to the provisions of any other law for the time being in force. The reasoning and ratio of these decisions, particularly in Secretary, Thirumurugan Cooperative Agricultural Credit Society Vs. M. Lalitha (Dead) Through LRs. & Others  - (2004) 1 SCC 305; still holds the field, notwithstanding the recent amendments in the Arbitration and Conciliation Act, 1986.  [Also see: Skypak Couriers Ltd. Vs. Tata Chemicals Ltd. - (2000) 5 SCC 294 andNational Seeds Corporation Limited Vs. M. Madhusudhan Reddy & Anr. - (2012) 2 SCC 506.] It has thus, been authoritatively held that the protection provided to the Consumers under the Act is in addition to the remedies available under any other Statute, including the consentient arbitration under the Arbitration and Conciliation Act, 1986.” 

          In view of the above, and also in the face of ratio of judgments, referred to above, passed by the National Commission and this Commission, the arguments raised by Counsel for the Opposite Party, stands rejected.

10.        Another objection raised by Counsel for the Opposite Party was that since the complainants sought enforcement of the Agreement, only a Civil Court can decide the complaint, and as such, consumer complaint was not maintainable. It may be stated here, that the complainants hired the services of the Opposite Party, for purchasing the floor, in question, in the manner, referred to above. According to Clause 11(a) of the Agreement, subject to force majeure conditions and reasons, beyond the control of the Opposite Party, it was to  handover possession of the plot, in question, within a period of thirty months, from the date of Application. Section 2 (1) (o) of the Act, defines ‘service’ as under:-

“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”

11.        From the afore-extracted Section 2(1)(o) of the Act, it is evident that housing/construction, also comes within the definition of a service. In Narne Construction P. Ltd., etc. etc. Vs.  Union Of India and  Ors. Etc., II (2012) CPJ 4 (SC),  it was held that when a person applies for the allotment of a building or site or for a flat constructed by the Development Authority and enters into an agreement with the Developer, or the Contractor, the nature of transaction is covered by the expression ‘service’ of any description. Housing construction or building activity carried on by a private or statutory body constitutes ‘service’ within the ambit of Section 2(1)(o) of the Act. Similar principle of law, was laid down, in Haryana Agricultural Marketing Board Vs. Bishambar Dayal Goyal & Ors. (AIR 2014 S.C. 1766). Under these circumstances, the complaint involves the consumer dispute, and the same is maintainable. Not only this, as stated above, Section 3 of the Act, provides an alternative remedy. Even if, it is assumed that the complainants have a remedy to file a suit in the Civil Court, the alternative remedy provided under Section 3 of the Act, can be availed of by them, as they fall within the definition of consumer, as stated above. In this view of the matter, the objection of the Opposite Party, in this regard, being devoid of merit, must fail, and the same stands rejected.

12.        The principal question, which falls for consideration, is, as to whether the complainants are entitled to refund of the deposited amount and if so, to what extent. Clearly, the allotment of Floor No.R2-E-803 (Ground Floor) with parking space No.P-1F, measuring 1881 Sq. ft. to the complainants was to be regulated in accordance with the terms and conditions of the Independent Floor Buyer’s Agreement. As per definition of “Earnest Money” in the  Agreement, at Page 34 of the file, earnest money means booking amount paid by the applicants (complainants), which in the instant case, was Rs.6,00,000/-.

13.        The complainants were required to deposit the installments in accordance with the Schedule of Payment (at Pages 165, 166 and 167 of the reply file) opted by them. Admittedly, the total price of the floor, in question, was increased from Rs.77,36,860/-  to Rs.84,54,179.65Ps on account of increase in area of the floor, PLC and EDC etc. As already stated earlier, as is clear from the Final Statement of Account as on 15.02.2016, as against the total payable amount of Rs.84,54,179.65Ps, the Opposite Party had received an amount of Rs.48,08,217.28Ps from the complainants and still an amount of Rs.36,45,962.37Ps remained to be paid by the complainants, which they failed to remit. Additionally, an amount of Rs.16 Lacs, which included a sum of Rs.7,72,355/- on account of stamp duty and registration charges and other charges, was payable by the complainants. It is also evident from record that complainants were not able to pay the aforesaid amount and they refused to accept the offer of 3 booths of Rs.34 Lacs each, saying that the same would put a burden of payment of Rs.52 Lacs upon them.

14.        Clearly the complainants did not make payment to the Opposite Party, as per payment schedule and they committed breach of terms and conditions of the application form (Annexure R-1). The complainants had paid a total sum of Rs.48,08,217.28Ps, during the period 17.10.2013 till 05.03.2015. The earnest money, as mentioned in the Application Form and Agreement was to the tune of Rs.6,00,000/-. The complainants have in Para 7 of their complaint stated that vide letter dated 18.09.2015, they requested the Opposite Party to refund the deposited amount. The complainants vide their email dated 04.03.2016 (at Page 117 of the complaint file), again requested the Opposite Party to cancel the allotment and refund the amount. The said email reads thus:-

“This has reference to our detailed discussion on 1^st March, 2016 regarding my inability to pay for the above flat since Dec, 2014 and have already penalized by your good office as Delayed Interest DLI amounting to Rs.3.75 lacs approx. (three lacs seventy five thousand approx.)

 

Even your offer of 3 booths of 34 lacs each (amounting to one crore total) in lieu of adjusting 48 lacs (forty eight lacs) paid for the above mentioned flat, will put a burden of payment of 52 lacs (fifty two lacs), is not workable.

 

Hence I wish to request to kindly cancel my allotment and refund the money. I have been requesting you since December 2014 about my inability of paying for the reasons clearly indicated in my letter dated 18.9.2015.

 

Looking at the further escalation in your letter posted to me for the final demand of 1 crore 2 lac approx, makes it impossible for me to even dream of owning DLF flat.

 

While I was at your office on 1^st March 2016 at 1500 hrs, there was meeting held between Mr. Karewal and the dealers to represent the grievances of buyers regarding the final escalation of flats in Hyde Estate Park from 78 lacs to 95 lacs. I will appreciate to know about company’s decision about this meeting. If the requests by buyers and dealers have been given a serious thought and any relief has been considered?”

 

            From the contents of the email, it transpires that the complainants were not in a position to make the balance payments as already indicated in their letter dated 18.09.2015. It, therefore, means that when the complainants expressed their inability on 18.09.2015 that they were not in a position to make further payments, the agreement stood rescinded. The Opposite Party, in its written statement, stated that the complainants paid only an amount of R.48,08,217.28Ps and despite repeated reminders sent, they (complainants) did not respond to the same, which amounted to backing out from the Buyer’s Agreement and breach of the contract, which further amounted to surrender of the floor and cancellation of the said agreement in terms of Clause 13 of the Agreement. No doubt, non-payment of the subsequent installments by the complainants, as stated by the Opposite Party, amounted to rescinding the Agreement but the fact remains that the Opposite Party neither cancelled the allotment nor refunded the refundable amount. When request to this effect was made by the complainants on 18.09.2015, the Opposite Party, who was fully aware of default of the complainants, ought to have cancelled the agreement, by forfeiting the earnest money to the tune of Rs.6,00,000/-  in terms of Clause 4 relating to ‘Earnest Money’ of the Agreement and ought to have refunded the balance amount to the complainants. By not doing so, the Opposite Party was deficient in rendering service.

15.        A similar question arose before the Hon’ble National Commission in DLF Commercial Developers Limited Vs. Ravinder Zutshi, 2009 (4) C.P.J. 163. A complaint was filed before the District Forum alleging that the complainant had booked office space at DLF Galleria in 1998 and paid a sum of Rs.4,41,838/- against the total consideration of Rs.16,35,000/-. After paying the aforesaid two instalments, the complainant vide letter dated 18.5.99 requested the Opposite Party to cancel the allotment and refund the amount on account of some unavoidable circumstances. As a result of this, the Opposite Party refunded the amount of Rs.1,98,640/- on 23.2.2002. It was the case of the complainant that the balance amount of Rs.2,43,198/- was still to be refunded by the Opposite Party, to the complainant. The District Forum partly allowed the complaint and directed the Opposite Party to refund the amount after deducting 10% of the basic sale price, i.e. Rs.80,127/-, alongwith interest @12% from 1.8.99 till the date of realisation together with cost of Rs.5,000/-. Aggrieved by this order, an appeal was filed by the Opposite Party before the State Commission, which was dismissed. In Revision Petition, the Hon’ble National Commission, held in Paras 5 and 6, held as under:-

“5.  We have very carefully gone through the provisions and find that as per terms of agreement the petitioner is correct in arguing that in the case of cancellation of space, he is entitled to forfeiture of earnest money, which is 10%. But our careful scrutiny of the terms reproduced above, does not help the case of the petitioner, to recover the interest on account of delayed/non-payment(s) of the instalments due at the time of refund. The learned Counsel  for the petitioner wishes to rely upon this part of Clause 11, which is as under:-

“…..the firm may at its sole discretion waive the breach of agreement committed by the allottee in not making the payments at specified time but on the condition that the allottee shall pay interest @24% p.a. for the period of delay and such other penalties, the firm may impose.”

6.   After careful consideration of the condition 11, part of which is extracted above, we are left in no doubt that the condition 11 would help the case of the petitioner only if the breach is waived. This is not the case here. It is very difficult for us to read the point relating to “payment of interest @24% p.a.” in isolation. It has to be read in continuation of the words appearing earlier to this point on payment of interest, which relates to breach of agreement. In this case, there is no request from the complainant to waive the breach of agreement. Our understanding of the clause is, that this would be applicable only in case, the complainant or the allottee make request for restoration of the property in question. This is not the case here.”

Further in DLF Universal Limited Vs. Nirmala Devi Gupta, Revision Petition No.3861 of 2014 decided on 26.08.2015, the Hon’ble National Consumer Disputes Redressal Commission, New Delhi, in Paras 10 and 11 of its order, held that the Revision Petitioner was not entitled to charge interest as non-refundable amount on the subsequent installments in the wake of cancellation of plot. Paras 10 and 11 of the order read as under:-

“10.      We have now to consider whether the forfeiture amount mentioned in the letter of cancellation under the head “earnest money” and “non-refundable advance” was justified or not.  It has been stated in the said letter that a sum of Rs.15,57,781.25ps. was being forfeited as earnest money.  In the plot-buyers’ agreement, however, this amount has been shown as Rs.14,85,747/-.  It is to be seen, however, whether the OP DLF was within its rights to treat 15% of the total price as earnest money of the plot.  In a case recently decided by this Bench in “DLF Limited vs. Bhagwanti Narula,” RP No. 3860 of 2014, decided on 06.01.2015, we have taken the view that an amount exceeding 10% of the total price of the property cannot be forfeited by the seller as earnest money being unreasonable, unless the OP can show that it had suffered loss to the extent the amount was forfeited by it.  Applying the same principle in the present case as well, it is held that the OP DLF was competent to forfeit only 10% of the total amount of the plot in question as earnest money.  Since the total value of the plot including Preferential Location Charges (PLC), is Rs.99,04,986.10ps. as already indicated, 10% of the earnest money comes out to be Rs.9,90,500/-

11.        In so far as interest on delayed payments, stated to be non-refundable amount in the agreement is concerned, the OP deducted a sum of Rs.3,65,479.25ps in the cancellation letter. It is observed in this regard that the complainant made payments of a sum of Rs.12 lakh at the time of initial booking and then made two further payments in the last week of June 2011. Since no further payments were made, as per the terms and conditions of the allotment as contained in Para 65 of the plot-buyers’ agreement, the OP was well within its rights to initiate the process of cancellation of the plot after the first default in making payment of an instalment. In its own wisdom, if it decided not to do so immediately, it is not entitled to charge interest as non-refundable amount on the subsequent instalments in the wake of cancellation of plot. The letter of cancellation dated 23.05.2012 makes it clear that the plot-buyers’ agreement if executed, stood cancelled and the allottee shall not have any lien or right on the said property. It is held, therefore, that the OP cannot deduct a sum of Rs.3,65,479.25ps as non-refundable amount from the money deposited by the complainant.”

The aforesaid judgments clearly lay down that not more than 10% of the total price of the property, in question, as earnest money can be forfeited. Since, in the instant case, the earnest money is less than 10%, the Opposite Parties could forfeit earnest money in terms of Clause 53 (xi) of the Agreement, to the tune of Rs.6,00,000/-.

16.        Thus, in view of above, out of the total amount of Rs.48,08,217.28Ps, the Opposite Party can forfeit a sum of Rs.6,00,000/- only and the balance amount is refundable to the complainants. Thus, the complainants are held entitled to the refund of an amount of Rs.42,08,217.28Ps  i.e. [Rs.48,08,217.28 (-) minus Rs.6,00,000.00]. By not refunding the aforesaid amount of Rs.42,08,217.28Ps, the Opposite Party indulged into unfair trade practice and the same also definitely amounted to deficiency, in rendering service, on its part. The complainants are, thus, entitled to refund of a sum of Rs.42,08,217.28Ps  alongwith interest @12% per annum w.e.f. 18.09.2015 i.e. the date when they expressed their inability to pay the amount and requested for cancellation of their allotment and sought refund.

17.        For the reasons recorded above, the complaint, is partly accepted with costs. The Opposite Party is held liable and directed as under :-

 

(i)	to refund the amount of Rs.42,08,217.28Ps, to the complainants, alongwith interest @12% per annum (simple), from 18.09.2015.
(ii)	to pay Rs.50,000/- to the complainants as cost of litigation.
(iii)	The amounts mentioned, in Clauses (i) and (ii) above, shall be paid, by the Opposite Party, within a period of 45 days, from the date of receipt of a certified copy of this order, failing which, it shall pay penal interest @18% per annum, on the amount mentioned in Clause (i) above from the date of default till realization and rate of interest i.e. @12% per annum on the amount mentioned in Clause (ii) above from  the  date  of default till realization.

18.        Certified Copies of this order be sent to the parties, free of charge.

19.        The file be consigned to Record Room, after completion.

Pronounced.

July  19, 2016.

[JUSTICE JASBIR SINGH (RETD.)]

PRESIDENT

 

 

(DEV RAJ)

MEMBER

 

 

(PADMA PANDEY)

MEMBER

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