SAMIKSHA BHATTACHARYA, MEMBER
The instant Appeal has been directed by the appellants against Order No.10 dated 29.04.2022 passed by the Ld. DCDRC, South 24 Parganas in Miscellaneous Case being No. MA/1/2022 in CC/78/2021.
Facts of the case, in brief, are that the appellants/complainants (hereinafter referred to as complainants) entered into a sale agreement dated 10.09.2017 with the respondents/OPs (hereinafter referred to as ‘OPs’) wherein it was agreed that the OPs will develop and complete and sell a 1000 sq. ft. of a flat on the 2nd floor situated at Mouza-Noapara Sonarpur, Ward No.10 of Rajpur-Sonarpur Municipality Premises No.570, Kolkata – 700150 for total consideration of Rs.30,00,000/-. Out of total consideration, complainants paid Rs.6,00,000/- as initial payment. According to the agreement, the flat was supposed to be developed and handed over to the complainants within 18 months from the date of signing of the agreement i.e. by March 2019. The OPs failed to deliver the flat within time and therefore, complainants sent a letter dated 29.06.2019 which was duly accepted by the OPs acknowledging that they would refund the deposited amount within three months. Such commitment was not honoured. The OPs refunded only Rs.3,00,000/- out of Rs.6,00,000/- . Hence, the petition of complaint praying for direction upon OPs to pay Rs.3,00,000/- along with statutory interest @ 18% p.a. calculated from the date of payment. The complainants have also prayed for compensation of Rs.3,00,000/- for causing mental agony, harassment, pecuniary stress and litigation cost of Rs.1,00,000/-.
The OPs appeared before the Ld. DCDRC, South 24 Parganas and filed their written version. Thereafter, the OPs filed an application for maintainability of the complaint case by filing Miscellaneous Application being No. MA/01/2022.
The Ld. DCDRC, South 24 Parganas allowed the petition challenging the maintainability of the case on contest but without cost and accordingly the complaint petition was dismissed on contest.
Being aggrieved by and dissatisfied with the aforesaid order, the complainants filed the instant appeal.
The Ld. Counsel for the complainants has stated that the Ld. District Commission has not applied its judicial mind at the time of passing the said impugned order. The Ld. DCDRC has erred both in law and facts as well while passing the impugned order which is not only highly illegal but based on surmise and conjecture too. The Ld. District Commission has also erred to ignore the recital of the clauses of the agreement dated 10.09.2017. Ld. Counsel for the complainants has further stated that in pursuance to the letter dated 29th June, 2019 issued by the complainant OPs have acknowledged the same and they have categorically undertaken to return the amount within 3 months. But the Ld. District Commission has passed the impugned order without applying its judicial mind where Section 100 of the CP Act, 2019 of Section 100 where it has been categorically stated that “Act not in derogation of any other law”. Ld. District Commission ought to consider the principle of natural justice as laid down in Section 38(5) of the CP Act, 2019. Section 37 and Section 38(1) of the CP Act, 2019 should be invoked by the District Commission. The appellants submitted that the Ld. District Commission has failed to appreciate the remedy of arbitration is optional. In support of his argument, the Ld. Counsel for the appellant cited the judgment passed by the Hon’ble Supreme Court in M/s. Emaar MGF land Limited vs. Aftab Singh where the Hon’ble Apex Court has categorically mentioned that “Section 2(3) of Arbitration Act recognizes schemes under other legislations that make disputes non-arbitrable and in light of the overall architecture of the Consumer Act and Court-evolved jurisprudence, amended Sub-Section (1) of Section 8 cannot be construed as a mandate to the Consumer Forums, constituted under the Act, to refer the parties to Arbitration in terms of the Arbitration Agreement”. The Hon’ble Apex Court has also held that “the Consumer Act being a beneficial legislation enacted to give an additional remedy for the settlement of disputes, the same cannot be taken away by Section 8 of the 1996 Act. This Court in jurisdiction cases have already held that “Arbitration Act does not exclude the jurisdiction of the Consumer Forum to decide disputes under the Consumer Act. The amendment of Section 8(1) of the Arbitration Act by Act 3 of 2016 was never intended to interfere with the jurisdiction of the Consumer Forum to decide the Consumer disputes”.
Ld. Advocate for the complainants has also cited the judgment passed by the Hon’ble Supreme Court of India in M/s. Fair Air Engineers Pvt. Ltd. Vs. N.K. Modi.
In course of argument, Ld. Advocate for the respondents has submitted that OP No. 1 namely, M/s. Modern Construction being the developer company is represented by its sole proprietor/OP No. 2. The land-owner and the OP No. 1 entered into a development agreement on 19.06.2013. The complainants and OPs entered into an agreement for sale on 10.09.2017 for purchasing a self-contained flat having an area of 1000 sq. ft. super built up area in the suit premises. The total construction cost of the flat was fixed at Rs.30,00,000/- and the complainants paid Rs.50,000/- on the date of agreement in cash. As per agreement, the complainants agreed to pay balance amount of consideration out of which 30 per cent amount would be paid on the date of execution of the agreement, i.e., Rs.9,00,000/-. It was agreed that the complainants ought to pay the total consideration stage by stage. There is an arbitration clause in the sale agreement. The OPs demanded the money as per terms of agreement but the complainants disclosed that they would not continue with the agreement due to insufficient fund and by their letter dated 29.06.2019 the complainants requested the OPs to refund the earnest money of Rs.6,00,000/- which was paid by them, within 3 months from the date of cancellation of the agreement. OPs have already refunded Rs.3,00,000/-. Since the complainants have cancelled the agreement for sale dated 10.09.2017, the complainants are not at all consumers under Section 35 read with Section 2(7), 2(11), 2(22) and 2(47) of the CP Act, 2019. Therefore, the OPs prayed for dismissal of the complaint case.
On the date of filing the written version i.e., 14.03.2021 the OPs also filed an application challenging the maintainability of the complaint case. The main contention of the non-maintainability application is that “the complainants willfully cancelled the agreement for sale dated 10.09.2017 and therefore, they are not at all consumers.”
Other point raised in the application is, since there is an arbitration clause mentioned in the sale agreement. The complaint case is not maintainable before the Consumer Commission.
Upon hearing the parties and on perusal of the entire materials on record, particularly the final order passed by the Ld. District Commission it appears to us that the Ld. District Commission dismissed the complaint case since there is an arbitration clause and secondly, the complainants have cancelled the agreement.
Now the question is whether the complainants can file the complaint case before the Consumer Commission if there is an arbitration clause in the agreement for sale. (regarding the contention raised by the OPs that) whether the complainants come under the meaning of Section 2(5) of the CP Act and whether the complainants can continue a consumer dispute, it is crystal clear in the judgment of the Hon’ble Supreme Court of India where it has given ample right to the consumer. In Sky pac Curiers Limited vs. Tata chemicals reported in 2000 5 SCC 295, the Hon’ble Supreme Court of India held that even if their exists an arbitration clause in an agreement and a complaint is made by the consumer in addition to a certain deficiency in service then the existence of an arbitration clause will not be a bar. The agency constituted under the Consumer Protection Act has power to give remedy provided in the Act which is in addition to the provisions of any other law for the time being in force. For the welfare of such consumers and to protect the consumers from the exploitations to provide protection of the interests of the consumers, the Parliament enacted the Consumer Protection Act and the Act itself makes provision for the establishment of Commission for settlement of consumer disputes and matter connected therewith. In this aspect, we can also cite the judgments passed by the Hon’ble Supreme Court in National Seeds Corporation vs. M. Madhusudhan Reddy [(2012) 2 SCC 506] and Booz Allen & Hamiaton Inc. vs. SBI Home Finance Ltd. Reported in (2011) 5 SCC 532.
In M/S. Fair Air Engineers Pvt. Ltd. vs. N.K. Modi the Hon’ble Supreme Court held “It would, therefore, be clear that the Legislature intended to provide a remedy in addition to the consentient arbitration which could be enforced under the Arbitration Act or the civil action in a suit under the provisions of the CPC. Thereby, as seen, Section 34 of the Act does not confer and automatic right nor create an automatic embargo on the exercise of the power by the judicial authority under the Act. It is a matter of discretion. Considered from this perspective, we hold that though the District Forum, State Commission and National Commission are judicial authorities, for the purpose of Section 34 of the Arbitration Act, in view of the object of the Act and by operation of Section 3 thereof, we are of the considered view that it would be appropriate that these forums created under the Act are at liberty to proceed with the matters in accordance with the provisions of the Act rather than relegating the parties to an arbitration proceedings pursuant to a contract entered into between the parties. The reason is that Act intends to relieve the consumers of the cumbersome arbitration proceedings or civil action unless the forums on their own and on their own and on the peculiar facts and circumstances of the particular case, come to the conclusion that the appropriate forum for adjudication of the disputes would be otherwise those given in the Act.”
Therefore, it can be safely said that the complainant can file the complaint case before the Consumer Commission, though there is an arbitration clause it is the option of the complainants where they would approach here, in the instant case, complainants have approached the consumer commission and accordingly, the consumer complaint is maintainable either there is an arbitration clause in the consumer commission. Secondly, the District Commission rejected the complaint petition since the complainants have cancelled the agreement for sale. From the documents, it is clear that complainants have opted for cancellation of the agreement for sale. (Running Page 29 with the Memo of Appeal). In the agreement for sale dated 10.09.2017 it was agreed by and between the parties that the construction of the flat would be completed within 18 months (internal Page 5 of the Agreement for Sale). Since OPs failed to handover the flat within the stipulated period finding no other alternative, complainants have requested the OPs for cancellation of the agreement and thereby requested to refund the deposited amount of Rs.6,00,000/-. Therefore, it is crystal clear that the complainants have not wanted to cancel the Agreement for Sale on their own will but they had to opt for cancellation of agreement since the OPs failed to provide the flat within the stipulated period which is reflected in the letter issued by the complainants dated 29.06.2019. The Ld. Advocate for the OPs has submitted that the complainants have cancelled the agreement for sale and therefore, they cannot be termed as ‘consumers’. But the Ld. Advocate for the OPs has not mentioned any reason why they were not completed the project within the stipulated period as per Agreement for Sale. Moreover, it is pertinent to mention in the internal Page 6 of the agreement for sale that if the developer cannot give the flat within the stipulated period as per agreement then the developer shall be liable to render the advance amount along with the bank interest within one month. Therefore, as per Agreement for Sale, since the OPs No. 1 & 2 had not refunded the deposited amount within one month after the stipulated period, the complainants had no option left but to cancel the Agreement for Sale. The Agreement for Sale was executed on 10.09.2017, therefore, the stipulated period of 18 months, to deliver the flat, would be completed on 10.03.2019. The complainants have opted for cancellation of Agreement for Sale on 29.06.2019 which is after 20 months from the date of entering into the Agreement for Sale. Moreover, the OPs endorsed on the letter dated 29.06.2019 with remarks “Return amount within 3 months”. But the OPs have returned only Rs.3,00,000/- till date out of deposited amount of Rs.6,00,000/-. The Ld. Advocate for the OP has drawn our attention by showing the date of the letter issued by the complainants as 29.06.2017. The Agreement for Sale was entered by and between the parties on 10.09.2017. Therefore, the letter cannot be issued on an earlier date than the date of Agreement for Sale. We have observed that the endorsement made by the OPs with signature and seal and the date was mentioned as 30.06.2019. Therefore, the date mentioned in the letter as 29.06.2017 is nothing but a typographical mistake in place of 29.06.2019.
Therefore, the Ld. District Commission has erred in observing the views that the complainants are not ‘consumers’ and for the existence of arbitration clause, the complainants cannot approach the Consumer Commission.
In view of above discussion, we set aside the impugned order passed by the Ld. District Commission and we remand back the case to the concerned District Commission to restore the case with its original file and number.
The Ld. District Commission is requested to give the liberty to both parties to file evidence, questionnaire and replies and to dispose of the matter preferably within two months from the date of receiving of this order.
In view of above, the Appeal is allowed on contest and disposed of accordingly.
Fix 07.07.2023 for appearance of the parties before the Ld. DCDRC, South 24 Parganas for receiving further direction.
The office is directed to serve a copy of this order to the Ld. District Commission, South 24 Parganas.
