JUSTICE V.K.JAIN, PRESIDING MEMBER (ORAL)

The complainant initially booked a residential flat with the OP in a project namely ‘Parsvnath Preston’, which the OP was to develop in Sonepat.  He also executed an agreement with the OP on 30.01.2008 in respect of flat no. 1702 which was allotted to him in Tower 8 of the above referred project.  Since the construction of the allotted flat did not even begin, the OP allotted a flat to the complainant in another project namely ‘Parsvnath Privilege’ which it was to develop in Greater Noida.  The parties then executed a fresh agreement on 30.04.2013 incorporating their respective obligations in respect of the said transaction. 

2.      Clause 10(a) of the agreement executed in respect of 30.04.2013 reads as under:

10.(a) Construction of the Flat is likely to be completed within a period of 36 (Thirty Six) months from the date of commencement of construction/date of booking whichever is later of the particular Block in which the Flat is located on receipt of all requisite approvals including sanction of building plans, environmental clearances, etc. subject to force majeure and restraints/restrictions from any courts/authorities, non-availability of building materials and any circumstances beyond the control of the Developer and subject to timely payments by the Buyer.  No claim by way of damages/compensation shall lie against the Developer in case of delay in handing over possession of the flat on account of the said reasons.  The Flat shall be deemed to be completed for the purpose of this clause/agreement when the Developer submits application/completion plans to authorities for obtaining completion certificate, which may be for the Complex as a whole or in parts.  Possession of the Flat would be given only on clearance of the entire dues payable by the Buyer to the Developer in terms of this Agreement and after execution of the Tripartite Sub-Lease Deed.

3.      The grievance of the complainant is that even the construction of the allotted flat is not complete till date despite he having already paid Rs.52,14,170/- to the OP.  The complaint is therefore, before this Commission seeking refund of the said amount with interest etc. 

4.      The complaint has been resisted by the OP which has admitted the allotment made to the complainant in the project namely ‘Parsvnath Preston’ as well as execution of the agreement with him on 06.05.2008 in respect of the said allotment.  It is also admitted that the first allotment was cancelled and the complainant was allotted residential flat no. T4-1103 in the project namely ‘Parsvnath Privilege’ in Greater Noida for a consideration of Rs.52,86,750/-.  The execution of the agreement dated 30.04.2013 has also been admitted. 

5.      Though the OP has given several reasons for the delay in completion of the project namely ‘Parsvnath Preston’, it has not given any cogent reasons for the delay in completion of the construction of the flat allotted to the complainant in the project namely ‘Parsvnath Privilege’. 

6.      The learned counsel for the complainant has also submitted that several other Consumer Complaints relating to allotment of residential flats in this project namely ‘Parsvnath Privilege’ have already been allowed by this Commission.  A reference in this regard is made to the decision of this Commission in ‘CC No. 232 of 2014 - Puneet Malhotra Vs. Parsvnath Developers Ltd. and connected matters decided on 29.01.2015.

7.      The decision of this Commission in Puneet Malhotra (supra) to the extent is relevant, reads as under:

“4.     The complaints have been resisted by the respondent company on the ground that the complainants are seeking refund with exorbitant interest.  It is also claimed that since the basic value of the property is much less than Rupees one crore, this Commission lacks pecuniary jurisdiction to entertain the complaints.  It is also pointed out in the reply that as per the tripartite agreement executed between the complainants and opposite party and the Banks from which the loan was taken by the complainants, the bank has lien over the refund amount, in the event of cancellation and/or termination of the agreement.  As regards the delay in construction, it is claimed that the said delay occurred due to recession in Real Estate Sector.  It is also submitted in the reply that in view of the terms of the agreement between the parties, a complainant cannot claim more than the compensation stipulated in the Flat-Buyer Agreement.

6.     Vide Clause 10 (a) of the Flat-Buyers Agreement, the opposite party represented to the complainants that the construction of the flat was likely to be completed within thirty-six months from the date of commencement of the construction of the particular block in which the flat was located, on receipt of all requisite approvals but subject to force-majeure and restraints/restrictions from any Court/Authorities, non-availability of building material and any circumstances beyond the control of the Developers, subject to timely payment by the buyer.  It is an admitted case that the opposite party failed to complete the construction within the aforesaid time.  As far as the statutory approvals are concerned, the same were to be obtained by the opposite party and the complainants cannot be held responsible for any delay in grant of such approvals  though, it is not the case of the opposite party that the construction could not be completed for want of aforesaid statutory approvals.  The case of the opposite party is that the project could not be completed on account of the recession in the Real Estate market, including reduction in the number of bookings and default on the party of the some of the allottees in making timely payment.  The terms of the agreement between the parties do not justify the delay in completion of the project on the aforesaid grounds and therefore, the opposite party was duty bound to complete the construction irrespective of the recession in the market, reduction in bookings and the alleged default on the part of some of the allottees in making timely payment.  This is not the case of the opposite party; that the construction could not be completed due to any restriction from any Court/Authority or due to non-availability of building material.  If some of the allottees had not made timely payment, it was for the opposite party to arrange the requisite finance either by taking loan or from its own resources or by liquidating Inventory at a lower price.  Therefore, the delay in completion of the projects cannot be justified.

7.     Since the opposite party could not compete the projects in which the residential flats were booked by the complainants, either within the agreed time of thirty-six months or even within a reasonable time thereafter, and even today the projects are nowhere near completion, the complainants are entirely justified in seeking refund of the amount, which they had paid to the opposite party.  In fact, during the course of hearing, the only contention on behalf of the opposite party was that the complainants are not entitled to interest at the rate claimed by them nor are they entitled to the compensation claimed by them and they can be awarded only the refund of the amount paid by them, along with compensation in terms of Clause-10(c) of the Flat-Buyer Agreement.

8.     The Clause on which the reliance is placed by the opposite party, reads as under:

        “In case of delay in construction of the Flat beyond the period as stipulated subject to force majeure and other circumstances as aforesaid under Clause 10 (a), the Developer shall pay to the Buyer compensation @ Rs.53.82/- (Rupees Fifty three and paise eighty two only) per sq. meter or @ Rs.5/- (Rupees Five only) per sq. ft. of the super area of the Flat per month for the period of delay.  Likewise, if the Buyer fails to settle the final account of the Flat within thirty days from the date of issue of the final call notice, the buyer shall be liable to pay to the Developer holding charges @  Rs.53.82/- (Rupees Fifty three and paise eighty two only) per sq. meter or @ Rs.5/- (Rupees Five only) per sq. ft. of the super area of the Flat per month on expiry of thirty days’ notice.  Further, in the event of his failure to take possession for any reason whatsoever, the Buyer shall be deemed to have taken possession of the Flat on expiry of thirty days of offer of possession for all intents and purpose under this Clause/Agreement including for liability to payment of maintenance and any other charges, levies in respect of the Flat”.

9.     In our opinion, the aforesaid Clause applies only in a case where construction of the flat is delayed but despite delay, the buyer accepts possession of the said flat from the seller, and consequently, accounts have to be settled between the parties.  At that stage, the buyer would pay the agreed holding charges to the seller, who will pay the agreed compensation on account of delaying the construction of the flat.  The aforesaid Clause, in our opinion would not apply to a case where the buyer, on account of the delay on the part of the seller in constructing the flat, is no more interested in the flat subject matter of the agreement and wants to take refund of the amount, which he had paid to the seller. In any case, such a clause, where the seller, in case of default on the part of the buyer, seeks to recover interest from him at the rate of 24% per annum will amount to an unfair trade practice since it gives an unfair advantage to the seller over the buyer.  We may note here that the enumeration of the unfair trade practices in Section 2(r) of the Act is inclusive, not exhaustive.”

8.      Reliance is also placed upon the decision of this Commission in CC No.1503 of 2016 Surinder Kumar Sarna Vs. Parsvnath Developers Limited & connected matter decided on 11.04.2019 which to the extent it is relevant, reads as under:

7.      A clause similar to clause 10(c) of the Buyers Agreement providing for payment of compensation @ 5/- per sq.ft. of super area per month in the event of delay, came up for consideration of the Hon’ble Supreme  Court recently in  Civil Appeal No. 12238 of 2018 - Pioneer Urban Land & Infrastructure Ltd. Vs. Govindan Raghavan decided on 2.4.2019 and following was the view taken by the Hon’ble Supreme Court:-

6.3. The National Commission in the Impugned Order dated 23.10.2018 held that the Clauses relied upon by the Builder were wholly one-sided, unfair and unreasonable, and could not be relied upon.  

The Law Commission of India in its 199th  Report, addressed the issue of ‘Unfair (Procedural & Substantive) Terms in Contract’. The Law Commission inter-alia recommended that a legislation be enacted to counter such unfair terms in contracts. In the draft legislation provided in the Report, it was stated that :  

“A contract or a term thereof is substantively unfair if such contract or the term thereof is in itself harsh, oppressive or unconscionable to one of the parties.” 

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.  

In Central Inland Water Transport Corporation Limited and Ors. v. Brojo Nath Ganguly and Ors.,4 this Court held that :  

 “89. … Our judges are bound by their oath to ‘uphold the Constitution and the laws’. The Constitution was enacted to secure to all the citizens of this country social and economic justice. Article 14 of the Constitution guarantees to all persons equality before the law and equal protection of the laws. This principle is that the courts will not enforce and will, when called upon to do so, strike down an unfair and unreasonable contract, or an unfair and unreasonable clause in a contract, entered into between parties who are not equal in bargaining power. It is difficult to give an exhaustive list of all bargains of this type. No court can visualize the different situations which can arise in the affairs of men. One can only attempt to give some illustrations. For instance, the above principle will apply where the inequality of bargaining power is the result of the great disparity in the economic strength of the contracting parties. It will apply where the inequality is the result of circumstances, whether of the creation of the parties or not. It will apply to situations in which the weaker party is in a position in which he can obtain goods or services or means of livelihood only upon the terms imposed by the stronger party or go without them. It will also apply where a man has no choice, or rather no meaningful choice, but to give his assent to a contract or to sign on the dotted line in a prescribed or standard form or to accept a set of rules as part of the contract, however unfair, unreasonable and unconscionable a clause in that contract or form or rules may be. This principle, however, will not apply where the bargaining power of the contracting parties is equal or almost equal. This principle may not apply where both parties are businessmen and the contract is a commercial transaction. …

… These cases can neither be enumerated nor fully illustrated. The court must judge each case on its own facts and circumstances.”  

(emphasis supplied) 

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.  

7. In view of the above discussion, we have no hesitation in holding that the terms of the Apartment Buyer’s Agreement dated 08.05.2012 were wholly one-sided and unfair to the Respondent – Flat Purchaser. The Appellant – Builder could not seek to bind the Respondent with such one-sided contractual terms.”

9.      Admittedly, the construction of the flat allotted to the complainant is not complete even today and the Occupancy Certificate has not even been applied. Therefore, the complainant is entitled to refund of the amount paid by him to the OP alongwith compensation in the form of appropriate interest.

10.    The learned counsel for the complainant submits that in order to make payment to the OP, the complainant had taken a loan of about 43,90,000/- from Axis Bank which he has since repaid with interest.  He also states that the bank had charged floating rate of interest from the complainant and the average rate of interest paid by the complainant to the bank is about 11% per annum.  He therefore, seeks payment of compensation in the form of simple interest @ 11% per annum on the amount of Rs.43,90,000/- which the complainant had borrowed from Axis Bank and paid to the OP and compensation in the form of simple interest @ 10% per annum on the balance amount paid to the OP. 

11.    The complaint is, therefore, disposed of with the following directions:-

1. The opposite party shall refund the entire principal amount of Rs.52,14,170/- to the complainant.
2. The opposite party shall pay compensation in the form of simple interest @ 11% p.a. to the complainant on the amount of Rs.43.9 lacs with effect from the date of each payment till the date of refund.
3. On the balance principal amount paid to it by the complainant, the opposite party shall pay compensation in the form of simple interest @ 10% p.a. to the complainant from the date of each payment till the date of refund.
4. The opposite party shall pay a sum of Rs.25,000/- as the cost of litigation to the complainant.
5. The payment in terms of this order shall be made within three months from today.