JUSTICE V.K.JAIN (ORAL)

The complainants booked a residential flat with the OP in  a project,  namely, ‘Uniworld City – Fresco’ which the OP was to develop in Kolkata. Vide allotment letter dated 10.12.2012, Flat No.1204 in the above-referred project was allotted to the complainants for a consideration of Rs.8268678/-. The parties then executed an agreement on 19.12.2012 incorporating their respective obligations in respect of the allotment made to the complainants. As per clause 5.a(i) of the agreement, the OP was to endeavor to deliver the possession to the complainants within 40 months of its execution. The agreement having been executed on 19.12.2012, the possession ought to have been offered by 19.4.2016 unless it is shown that the possession was delayed on account of the circumstances beyond the control of the OP. The case of the complainants is that the possession has not been offered to them and the construction is not complete even today, despite they having paid Rs.7370359/- to the OP. The complainants are therefore before this Commission seeking refund of the aforesaid amount already paid by them alongwith compensation etc.

2.      The OP has filed written version contesting the consumer complaint. In the written version, the OP has admitted the allotment made to the complainants as well as the agreement executed with them. The demand raised from them has also not been disputed. The complaint is resisted primarily on the following grounds:-

1. There was deficiency in cash flow on account of delayed payment/non-payment by various allottees.

2. In the event of delay, the complainants are entitled to compensation only at agreed Rs.5 per sq.ft. per month of the super area of the flat.

3.      I find no merit in either of the grounds on which the complaint has primarily been resisted. If there was delay or default on the part of other allottees in making payment to the developer, the complainants cannot be penalized for such a delay since it was for the OP to either cancel the allotment made to the allottees in default or to arrange finance from alternative sources and complete the project in time. An allottee who performs his contractual obligations cannot be made to suffer due to the default on the part of other allottees of the project.

4.      As far as the quantum of compensation is concerned, though the agreement executed between the parties does provide for payment of compensation @ Rs.5/- per sq.ft. of the super area per month, in the event of delay in completion of the construction, such clauses have consistently been held not only by this Commission but also by the Hon’ble Supreme Court  to be unfair and wholly one sided and therefore, cannot be enforced.  A reference in this regard can be made to the decision of the Hon’ble Supreme Court in Pioneer Urban Land & Infrastructure Ltd. Vs. Govindan Raghavan (2019) 5 SCC 725, which to the extent it is relevant, reads as under:

          “6.4. A perusal of the Apartment Buyer’s Agreement dated 08.05.2012 reveals stark incongruities between the remedies available to both the parties.

For instance, Clause 6.4 (ii) of the Agreement entitles the Appellant – Builder to charge Interest @18% p.a. on account of any delay in payment of installments from the Respondent – Flat Purchaser.

Clause 6.4 (iii) of the Agreement entitles the Appellant – Builder to cancel the allotment and terminate the Agreement, if any installment remains in arrears for more than 30 days.

 On the other hand, as per Clause 11.5 of the Agreement, if the Appellant – Builder fails to deliver possession of the apartment within the stipulated period, the Respondent – Flat Purchaser has to wait for a period of 12 months after the end of the grace period, before serving a Termination Notice of 90 days on the Appellant – Builder, and even thereafter, the Appellant – Builder gets 90 days to refund only the actual installment paid by the Respondent – Flat Purchaser, after adjusting the taxes paid, interest and penalty on delayed payments. In case of any delay thereafter, the Appellant – Builder is liable to pay Interest @ 9% p.a. only.

 6.5. Another instance is Clause 23.4 of the Agreement which entitles the Appellant – Builder to serve a Termination Notice upon the Respondent – Flat Purchaser for breach of any contractual obligation. If the Respondent – Flat Purchaser fails to rectify the default within 30 days of the Termination Notice, then the Agreement automatically stands cancelled, and the Appellant – Builder has the right to forfeit the entire amount of Earnest Money towards liquidated damages.

 On the other hand, as Clause 11.5 (v) of the Agreement, if the Respondent – Flat Purchaser fails to exercise his right of termination within the time limit provided in Clause 11.5, then he shall not be entitled to terminate the Agreement thereafter, and shall be bound by the provisions of the Agreement.

 6.6. Section 2 (r) of the Consumer Protection Act, 1986 defines ‘unfair trade practices’ in the following words :

 “‘unfair trade practice’ means a trade practice which, for the purpose of promoting the sale, use or supply of any goods or for the provision of any service, adopts any unfair method or unfair or deceptive practice …”, and includes any of the practices enumerated therein. The provision is illustrative, and not exhaustive.

 6.7. A term of a contract will not be final and binding if it is shown that the flat purchasers had no option but to sign on the dotted line, on a contract framed by the builder.

 The contractual terms of the Agreement dated 08.05.2012 are ex-facie one-sided, unfair, and unreasonable. The incorporation of such one-sided clauses in an agreement constitutes an unfair trade practice as per Section 2 (r) of the Consumer Protection Act, 1986 since it adopts unfair methods or practices for the purpose of selling the flats by the Builder.”

5.      The learned counsel for the complainant states on instructions that the complainants are seeking refund of the amount paid by them to the OP alongwith compensation in the form of simple interest @ 10% p.a. in terms of the following clause contained in application :-

“Alternative property/compensation:

That if for any reason whatsoever the Developer is not in a position to offer at all the Apartment herein applied for allotment, the Developer shall offer the Purchaser(s) an alternative property or refund the amount in full with simple interest @ 10% per annum without any further liability to pay any damages or compensation.”

He also submits that no alterative allotment has been made to them by the OP.

6.      For the reasons stated hereinabove, the complaint is disposed of with the following directions:-

(i)     The OP shall refund the entire principal amount of Rs.7370359/- received from the complainants, along with compensation in the form of simple interest @ 10% per annum from the date of each payment till the date of refund.

(ii)      The OP shall also pay a sum of Rs.25,000/- as the cost of litigation to the complainants.

(iii)     The payment in terms of this order shall be made within three months from today.