Delhi

StateCommission

CC/418/2015

MR. ARPIT GUPTA - Complainant(s)

Versus

M/S PARSVNATH DEVELOPERS LTD. & ANR. - Opp.Party(s)

12 Nov 2018

ORDER

IN THE STATE COMMISSION: DELHI

(Constituted under Section 9 of the Consumer Protection Act, 1986)

Date of Decision: 12.11.2018

Complaint Case No. 418/2015

In the matter of:

Arpit Gupta s/o. Sh. Ashim Kumar Gupta R/o. B-1/90, Janakpuri, New Delhi-110058

:

Complainant

                       

Versus

 

 

	M/s. Parsavnath Developers Ltd. 5th Floor, Arunachal Building 19 Barakhamba Road, New Delhi-110001	:
	Mr. Sanjeev Jain Managing Director M/s. Parsavnath Developers Ltd. 6th Floor, Arunachal Building, 19 Barakhamba Road, New Delhi-110001
	Mr. Rajeev Jain Director (Marketing), M/s. Parsavnath Developers Ltd. 6th Floor, Arunachal Building, 19 Barakhamba Road, New Delhi-110001		Opposite Party(s)

 

                            

CORAM     :       N P KAUSHIK, Member (Judicial)

 

1.         Whether reporters of local newspaper be allowed to see the judgment?                   Yes

2.         To be referred to the reporter or not?                                                                  Yes

 

 

Cases relied upon

 

1.         Satish Kumar Pandey & Anr. vs M/s. Unitech Ltd. and Others decided by Hon’ble National Commission in CC No. 427/2014 decided on 08.06.2015.

 

2.         Swarn Talwar and Others vs. Unitech Limited decided by National Commission in CC No. 347/2014 on 14.08.2015

 

 

N P KAUSHIK – MEMBER (JUDICIAL)

 

JUDGEMENT

1. Complainant Sh. Arpit Gupta filed the present complaint against M/s. Parsavnath Developers Ltd. (in short OP1) and its Directors (OP2 and OP3) submitting that he had made an application for allotment of a residential unit No. T-6/502 measuring 1570 sq. ft.  The project of the OPs was known as ‘Parsavnath Regalia’ and located in village Pasonda, Pargana Loni, District Ghaziabad (UP).  Application was made on 28.10.2006.  A ‘flat buyer’s agreement’ dated 22.03.2007 was entered into between the complainant and the OPs.  Basic price of the flat was Rs.34,02,190/- calculated @Rs.2167 per sq. ft.  In addition to the basic price, parking space charges of Rs.50,000/- were also agreed to.  Complainant opted for ‘construction linked payment plan’.  An amount of Rs.8,50,547/- was paid at the time of booking of the aforesaid flat.  Complainant thereafter paid an amount of Rs.24,31,533/-. 

 

2. Grievance of the complainant is that instead of repeated reminders and follow up, he was neither given possession of the flat nor compensated for delay in delivery.  Complainant sent legal notice dated 08.08.2014.  It was replied to vide reply dated 29.08.2014.  Complainant inspected the flat on 07.06.2015 and took photographs.  Contention of the complainant is that the flat was not ready for being handed over.  Referring to the letter dated 01.08.2016 received from the OPs, complainant submitted that the OPs stated having credited penalty for 56 months delay in handing over the possession.  On receipt of the said letter, complainant again went to the flat and took photographs which showed that the construction was nowhere near completion. 

 

3. On the basis of the aforesaid factual matrix the complainant prayed for  directions to the OPs to handover the possession of the flat in question and also pay penalty charges @Rs.5 per sq. ft. alongwith interest @24% per annum for the delay in delivery of possession.  Compensation to the tune of Rs.15 lakhs has also been prayed for. 

 

4. Defence raised by the OPs is that due to ‘global recession’ it could not complete the construction.  OPs also raised an objection that the matter cannot be heard by a consumer court as it requires examination by a civil court.   Referring to clause 10C of the ‘flat buyer’s agreement’, OPs submitted that the rights of the complainant were well protected.  Clause 10C of the flat buyer’s agreement provided for compensation for the delay @Rs.5/- per sq. ft. per month of the super area of the flat for the period of delay in handing over the possession.  OPs submitted that they credited the said amount to the account of the complainant maintained by them.

 

5. Parties filed evidence by way of affidavits.  Written arguments too were filed.  I have heard the arguments addressed by the Counsel for the complainant Sh. Shantala Sankrit and Counsel for the OPs Sh. Rakesh Bhardwaj, at length. 

 

6. Sole defence raised by the OPs is that due to ‘global recession’ it could not complete the construction.  Plea has been examined by the  Hon’ble National Commission in the case of “Satish Kumar Pandey & Anr. vs M/s. Unitech Ltd. and Others (in CC No. 427/2014 decided on 08.06.2015), wherein the Hon’ble National Commission held as under:

“Neither any new legislation was enacted nor an existing rule, regulation or order was amended stopping suspending or delaying the construction of the complex in which apartments were agreed to be sold to the complainants.  There is no allegation of any lock-out or strike by the labour at the site of the project.  There is no allegation of any slow-down having been resorted to by the labourers of the opposite party or the contractors engaged by it at the site of the project.  There was no civil commotion, war, enemy action, terrorist action, earthquake or any act of God which could have delayed the completion of the project within the time stipulated in the Buyers Agreement.  It was contended by the counsel for the OP that the expression ‘slow down’ would include economic slow-down or recession in the Real Estate sector.  I, however, find no merit in this contention.  The word ‘slow down’ having been used alongwith the words lock-out and strike, it has to be read ejusdem generis with the words lock-out and strike and therefore, can mean only a slow down if resorted by the labourers engaged in construction of the project.

As regards, alleged shortage of labour, I find that no material has been placed on record by the OP that despite trying, it could not be get labourers to complete the construction of the project within the time stipulated in the Buyers Agreement.  It was submitted by the learned counsel for the complainants that ordinarily big builders such as the OP in these cases, are contracting/sub-contracting the construction work to the contractors engaged by them, instead of employing their own labourers on a regular basis, the purpose being to ensure that they are not saddled with the wage bill of those regular labourers, in case the opposite party does not have adequate work for them.  There is no evidence of the OP having been invited tenders for appointment of contractors / sub-contractors for executing the work at the site of those projects and no contractor/ sub-contractor having come forward to execute the project on the ground that adequate labour was not available in the market.  Therefore, it cannot be accepted that the opposite party could not have arranged adequate labour, either directly or through contractors/sub-contractors, for timely completion of the project.  As regards the alleged shortage of water, bricks and sand in the market, I find that there is no evidence filed by the OP, to prove that it was unable to procure water, sand and brick in adequate quantity.  This is also their case that the notification of the Government, being relied upon by the opposite party, is an old notification, which was in force even at the time the opposite party promised possession in 36 months. There is no evidence of the opposite party having invited tenders for supply of bricks and water and there being no response to such tenders.  In fact, if the work is to be executed through contractors/sub-contractors, the material such as bricks, sand and even water will be arranged by the contractor/sub-contractor and not by the opposite party.  As noted earlier, there is no evidence of the opposite party having invited tenders after awarding the work of project in question to the contractors/sub-contractors and there being no response to such tenders.”

 

7. In view of the legal position settled above, plea in relation to the ‘global recession’ does not help the OPs.

 

8. Now coming to the plea of protecting the interest of the complainant by way of compensation @Rs.5/- per sq. ft. per month of the super area, Hon’ble National Commission in the case of Swarn Talwar and Others vs. Unitech Limited decided by National Commission (in CC No. 347/2014 on 14.08.2015) held that the flat buyers are left with no option but to sign the buyer’s agreement in the format provided by the builder.  The relevant paragraphs of the judgement run as under:

 

“However, a term of a contract, in my view will not be final and binding if it is shown that the consent to the said term was not really voluntary but was given under a sort of compulsion on account of the person giving consent being left with no other choice or if the said term amounts to an unfair trade practice.  It was submitted by the learned counsel for the complainants that the term providing for payment of a nominal compensation such as Rs.5/- per square foot of the super area having become the order of the day in the contracts designed by big builders, a person seeking to buy an apartment is left with no option but to sign on the dotted lines since the rejection of such term by him would mean cancellation of the allotment.  He further submitted that a person seeking to acquire a built up flat instead of purchasing a plot and then raising construction on it, therefore, is not in a position to protest resist the inclusion of such a term in the Buyer’s Agreement, and has to rely upon the reputation of the builder, particularly if he is a big builder such as Unitech Ltd.  He also submitted that the format of the Buyer’s Agreement is never shown to the purchasers at the time of booking the apartment and if he refuses to sign the Buyer’s Agreement on the format provided by the builder, not only will he lose the booking, even the booking amount/earnest money paid by him will be forfeited by the builder.  I find merit in the above referred submissions of the learned counsel.  A person who, for one reason or the other, either cannot or does not want to buy a plot and raise construction of his own, has to necessarily go in for purchase of the built up flat.  It is only natural and logical for him to look for an apartment in a project being developed by a big builder such as the opposite party in these complaints.  Since the contracts of all the big builders contain a term for payment of a specified sum as compensation in the event of default on the part of the builder in handing over possession of the flat to the buyer and the flat compensation offered by all big builders is almost a nominal compensation being less than 25% of the estimated cost of construction per month, the flat buyer is left with no option but to sign the Buyer’s Agreement in the format provided by the builder. No sensible person will volunteer to accept compensation constituting about 2-3% of his investment in case of delay on the part of the contractor, when he is made to pay 18% compound interest if there is delay on his part in making payment.

It can hardly be disputed that a term of this nature is wholly one sided, unfair and unreasonable.  The builder charges compound interest @ 18% per annum in the event of the delay on the part of the buyer in making payment to him but seeks to pay less than 3% per annum of the capital investment, in case he does not honour his part of the contract by defaulting in giving timely possession of the flat to the buyer.  Such a term in the Buyer’s Agreement also encourages the builder to divert the funds collected by him for one project, to another project being undertaken by him.  He thus, is able to finance a new project at the cost of the buyers of the existing project and that too at a very low cost of finance.  If the builder is to take loan from Banks or Financial Institutions, it will have to pay the interest which the Banks and Financial Institutions charge on term loan or cash credit facilities etc.  The interest being charged by the Banks and Financial Institutions for financing projects of the builders is many times more than the nominal compensation which the builder would pay to the flat buyers in the form of flat compensation.  In fact, the opposite party has not even claimed that the entire amount recovered by it from the flat buyers was spent on this very project.  This gives credence to the allegation of the complainants that their money has been used elsewhere.   Such a practice, in my view, constitutes unfair trade practice within the meaning of Section 2(r) of the Consumer Protection Act, 1986 since it adopts unfair methods or practice for the purpose of selling the product of the builder.  Though, such a practice does not specifically fall under any of the Clauses of Section 2(r) (1) of the Act that would be immaterial considering that the unfair trades, methods and practices enumerated in Section 2(r) (1) of the Act are inclusive and not exhaustive, as would be evident from the use of word “including” before the words “any of the following practices”.

 

9. OPs have failed to place on record any case law in support of their contention that the cases relating to ‘flat buyer’s agreement’ cannot by heard by consumer courts.

 

10. Complainant has placed on record photographs showing that the flat in question was nowhere near completion.  Be that as it may, it is not the case of the OPs that he has received occupancy certificate/ Completion Certificate from the Government authorities.  In a catena of authorities it is held by the superior courts that in the absence of a ‘completion certificate’ a builder cannot claim of having completed the construction. 

 

11. In view of the discussion above, I am of the considered opinion that the OPs in the present case are guilty of ‘deficiency in service’ and ‘unfair trade practice’.  OPs are, therefore, directed to pay to the complainant as under:

 

1. OPs shall refund the amount of Rs.32,82,080/- alongwith interest @18% per annum from the date of its deposit till the date of its realization. 

 

2. OPs shall pay to the complainants compensation to the tune of Rs.5,00,000/- for causing inconvenience, harassment, sadness, frustration and mental agony. 

 

3. OPs shall pay to the complainants litigation charges to the tune of Rs.1,00,000/-.

 

The aforesaid amounts shall be paid by the OPs to the complainants within a period of 30 days from today failing which these amounts shall carry interest @24% per annum. 
Complaint is accordingly disposed of. File be consigned to Records.

 

 

(N P KAUSHIK)

MEMBER (JUDICIAL)