CONSUMER DISPUTES REDRESSAL FORUM – X
GOVERNMENT OF N.C.T. OF DELHI
Udyog Sadan, C – 22 & 23, Institutional Area
(Behind Qutub Hotel)
New Delhi – 110 016
Case No.573/2008
SH. SATYA PRAKASH SHUKLA,
RZ-231/2968 LANE NO.4,
GEETANJALI PARK,
SAGARPUR(WEST),
NEW DELHI
…………. COMPLAINANT
Vs.
M/S VARDHMAN PROPERTIES LTD.,
G-9 VARDHMAN TRADE CENTRE,
NEHRU PLACE,
NEW DELHI-110019
…………..RESPONDENT
Date of Order: 27.11.2015
O R D E R
A.S. Yadav, President
The case of the complainant is that he intended to purchase one shop in commercial complex in view of the recent sealing operation of commercial places in residential areas. Complainant came to know about the commercial complex proposed to be built up by OP in Vigyan Vihar, New Delhi. Complainant then approached OP and the officials of OP suggested purchasing one shop having a total area of 220 sq. yards and value of same was told to be 26,40,000/-.
Complainant was given the application form for allotment of shop and complainant duly filled up the application form and made payment of Rs.2,64,000/- to OP. Complainant was allotted one shop No.G-34 in the said complex. The complainant was given the payment schedule and the photocopy of application. No other document was provided to the complainant. It is further stated that after few days of booking complainant went through copy of the application form which was given by the OP at the time of booking of said shop, the complainant found that the following mentioned on the application form which was filled up and signed by the complainant:-
“I/We agree to abide by the terms and conditions as laid down by the builder towards allotment of the aforesaid unit and agree to sign the purchase agreement the builder’s standard form as and when required by the builder.
I/We agree on terms and conditions mentioned overleaf.
Signature of the applicant(s)”
It is further stated that from the above, the complainant as layman could understand that the terms and condition regarding the sale of said shop would be governed by the standard form of builder’s agreement of purchase. However no such agreement was provided to the complainant. Complainant approached OP and asked for builder’s standard form of agreement for purchase. OP assured that the same would be signed and provided after payment of 50% of the total price. Complainant also inquired about the meaning of “terms and conditions mentioned overleaf” as no other document was provided to the complainant and the copy of application form provided to the complainant did not mentioned about any terms and conditions. However the said official summarily stated that the said sentence has been written as a formality on the application form and there is no other terms and condition and payment as per schedule is only terms and condition.
Complainant further paid a sum of Rs.2,64,000/- on 14.12.2006. Complainant suffered financial crisis and accordingly complainant requested for cancellation of allotment and refund of sum of Rs.5,28,000/- the officials of OP assured that refund would be made after taking due permission from the concerned higher officials.
It is further stated that complainant was surprised to find one letter dated 06.04.2007 received on 10.04.2007 whereby the OP informed the complainant about the cancellation of the allotment of the said shop but reused to refund the deposited amount on the ground that the amount below 25% of the total amount was not liable to be refunded as per the terms and condition of the booking.
It is further stated that complainant was surprised to see that no terms and conditions were mentioned in the copy of the application form supplied to him. Complainant approached OP and apprised them of this fact. At this stage, the complainant was shown original application form filled up by the complainant. The complainant was surprised to see that the backside of the said application form contained the condition regarding forfeiture of earnest money. It is further stated that OP did not get the agreement signed from the complainant and that they were duty bound to get the same executed. OP has not disclosed about the terms and conditions which was contained on the overleaf of the original application. It is stated that OP is bound to refund the amount however the same was not returned and OP is guilty for deficiency of service.
It is prayed that OP be directed to refund Rs.5,28,000/- deposited by complainant towards purchase of the said shop and also to pay Rs.3 lakh for compensation and Rs.50,000/- for litigation expenses.
OP in reply took the plea that there was no deficiency in service on their part. The complainant having defaulted in making the payment as were agreed by the complainant under the payment schedule cannot be permitted to take benefit of his own wrongs. The complainant has not disclosed that at the time of allotment in question he had agreed to certain terms and conditions of allotment. OP vide letters dated 25.11.2006, 28.12.2006, 24.01.2007, 21.02.2007 demanded from the complainant the subsequent instalments which were due as per the schedule. The complainant however despite repeated reminder failed to make the payment. It shows that complainant was only a speculator and was not ready and willing and was also not possessed of sufficient funds to honour his commitments. Since the payment was not made by the complainant, OP having been left with no alternative cancelled the allotment vide letter dated 07.04.2007 and called upon the complainant to surrender the original documents and to take back refund if any of the earnest money if paid beyond 25% of the total cost of the unit, which stood forfeited on account of non payment of schedule instalments. It is denied that copy of complete set of papers was not provided to the complainant at the time of booking. The complainant very well knew the terms and conditions of booking as the complainant had also signed the payment schedule as per which the payment was to be made The complainant was also aware of all the terms and conditions of allotment as they were printed on the reverse of the application form.
It is further stated that complainant has been provided the copy of proposed detailed agreement and was informed that allotment agreement would be executed at the stage when the complainant would make next payment of 10% instalment as per the payment schedule. In fact OP right from its letter dated 21.2.07 kept on requesting the complainant to visit the office of OP with necessary documents like ID proof and photograph for execution of the detailed allotment agreement. It is the complainant who did not comply with the said terms and did not visit OP for execution of the detailed agreement of allotment. It is prayed that complaint be dismissed.
We have gone through the written arguments of the parties and heard the complainant and counsel for OP.
The first submission of Ld. Counsel for OP is that complainant is not a consumer as space in question has been booked for commercial purpose It is further stated that it is nowhere averred in the entire complaint that the space has been booked by complainant for earning of his livelihood Admittedly complainant has booked a commercial space. Complainant has nowhere stated as to what was he doing at the time of booking of the shop Complainant only stated in para 4 of his complaint that he intended to purchase one shop in commercial complex in view of the recent sealing operation of commercial place in residential area. He has nowhere stated that he intended to purchase the shop for earning his livelihood. So on the face of it, complainant is not a ‘consumer’ under Section 2(1)(d) of Consumer Protection Act, 1986 which defines ‘consumer’ as under:-
“(d) ‘consumer’, means any person who –
- 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 or party promised or under any system of deferred payment when such use is made with the approval of such person but does not include a person who obtains such goods for resale or for any commercial purpose; or resale or for approval of such person but does not include a person who obtains such goods for resale or for any commercial purpose; or
- hires or avails of any services 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 beneficiary of such services other than the person who hires or avails of the service for consideration paid or promised, or partly paid or party promised, or under any system of deferred payment, when such services are availed of with the approval of first mentioned person, but does not include a person who avails of such services for any commercial purpose.
[Explanation – For the purposes 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 his livelihood by means of self-employment.]”
Hon’ble National Commissioner in Monswtera Estate Pvt. Ltd. Vs Ardee Infrastructure PVt. Ltd. – IV (2010) CPJ 299 (NC) has held that:-
“Housing – purchase of space for commercial purpose – There was delay in possession. Complainant was a private limited company. Complainant was nominated for allotment of showroom. Possession not given. Sale deed was not executed. Deficiency in service was alleged. Even if private limited company was treated as ‘person’ purchase of space could not be earning its livelihood. Purchase of space was for commercial purpose”.
Even otherwise the complainant has failed to prove any deficiency in service on the part of OP.
We are not convinced with the submission of the complainant that he was only given the photocopy of application form and he was not given the original application form containing the terms and conditions on its backside. It is further submitted by him that the terms and conditions contained on the backside of the application form were shown to him for the first time when he asked OP for the refund of the amount.
It is significant to note that complainant is an educated person. He booked a commercial space and signed the original application form. It is specifically mentioned in that application form that he has agreed on the terms an conditions mentioned overleaf. He has signed the original form that contained terms and conditions. Condition No.4 specifically provided as under:-
“In case of cancellation or if payments is not made in time, the allotment will be cancelled and 25% of total cost of the unit will stand forfeited. Buyer will not be entitled to any interest on instalment/payment made by him to the builder at any stage under any circumstances.”
The forfeiture has been made by the OP strictly in accordance with the terms and conditions of the allotment. It is not the case where there was any default on the part of OP.
Ld. Counsel for OP has referred to the case of Satish Batra Vs Sudhir Rawal Civil Appeal No.7588 of 2012p [arising out of SLP (Civil) No.4605 of 2012] decided by Hon’ble Supreme Court on 08.10.2012 where the Hon’ble Supreme Court, relying upon the judgment of Privy Council in case of (Kunwar) Chiranjit Singh v. Har Swarup AIR 1926 P.C. 1, held that “earnest money is a part of purchase price when the transaction goes forward and it is forfeited when the transaction falls through, by reason of the fault or failure of the purchase”.
Hon’ble Supreme Court also relied upon the case of Shree Hanuman Cotton Mills and Others v. Tata Air Craft Limited 1969 (3) SCC 522 in which it was held that:-
This Court elaborately discussed the principles which emerged from the expression “earnest money”. That was a case where the appellant therein entered into a contract with the respondent for purchase of aero scrap. According to the contract the buyer had to deposit with the company 25% of the total amount and that deposit was to remain with the company as the earnest money to be adjusted in the final bills. Buyer was bound to pay the full value less the deposit before taking delivery of the stores. In case of default by the buyer, the company was entitled to forfeit unconditionally the earnest money paid by the buyer and cancel the contract. The appellant advanced a sum of Rs.25,000/- (being 25% of the total amount) agreeing to pay the balance in two installments. On appellant’s failure to pay any further amount, respondent forfeited the sum of Rs.25,000/- which according to it, was earnest money and cancelled the contract. Appellant filed a suit for recovery of the said amount. The trial Court held that the sum was paid by way of deposit or earnest money which was primarily a security for the performance of the contract and that the respondent was entitled to forfeit the deposit amount when the appellant committed a breach of the contract and dismissed the suit. The High “Court confirmed the decision taken by the trial Court. This Court, considering the scope of the term “earnest”, laid down certain principles, which are as follows:
“21. From a review of the decisions cited above the following principles emerge regarding “earnest””’
- It must be given at the moment at which the contract is concluded.
- It represents a guarantee that the contract will be fulfilled or, in other words, “earnest” is given to bind the contract.
- It is part of the purchase price when the transaction is carried out.
- It is forfeited when the transaction falls through by reason of the default of failure of the purchaser.
- Unless there is anything to the contrary in the terms of the contract,, on default committed by the buyer, the seller is entitled to forfeit the earnest.”
In Delhi Development Authority v. Grihstrapana Cooperative Group Housing Society Ltd. 1995 Supp (1) SCC 751, this Court following the judgment of the Privy Council in Har Swaroop and Shree Hanuman Cotton Mills (supra), held that the forfeiture of the earnest money was legal.
In V. Lakshmanan v. B.R. Mangalgiri and others (1995) Suppl. (2) SCC 33, this Court held as follows:-
“The question then is whether the respondents are entitled to forfeit the entire amount. It is seen that a specific covenant under the contract was that respondents are entitled to forfeit the money paid under the contract. So when the contract fell through by the default committed by the appellant, as part of the contract, they are entitled to forfeit the entire amount.”
In view of the law laid down by the Hon’ble Supreme Court, forfeiture of earnest money was justified. Complaint is dismissed.
Copy of order be sent to the parties, free of cost, and thereafter file be consigned to record room.
(D.R. TAMTA) (A.S. YADAV)
MEMBER PRESIDENT
