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

          The complainants who were the owners of some land in village Dharuhera, District Rewari in Haryana entered into an agreement dated 10.12.2007 titled as ‘Collaboration Agreement’ with the opposite party, where-under the aforesaid land measuring about 8.47 acres was made available to the opposite party for development and construction of a Group Housing Residential Complex / Commercial Complex / any other purpose for the benefit of both parties over the said land.  Clause 1, 15, 16, 23 and 24 of the said agreement read as under:

          “1.     That in consideration of development and construction of the project over the said land at Promoter(s)’s cost, the owner shall be entitled to all rights, title and interest over fully developed residential apartments/ commercial complex / hotel / serviced apartment and other kind of project to the extent of 23% of total saleable area along with proportionate right / interest in land, including proportionate rights in the open area, parking, terrace, roof and in all other areas, which cannot be divided, which the owner shall be free and entitled to lease, sell or deal with in any manner whatsoever.  The promoter(s) shall be entitled to retain balance saleable area along with proportionate rights in the open area, parking, terrace, roof and in all other areas, which cannot be divided.

          15.    That at the time when LOI is being received, the promoter(s)will allot the 23% of super built up area by way of apartments/office space/shops etc. to be booked after receipt of license to the owners and owners will execute the relevant documents viz. agreement to sell, general power of attorney, Will, possession letter, license transfer permission etc. in favour of the promoter(s) for the entire project land.  The terms and conditions of the allotment will be same as applicable to prospective customers and promoter(s) shall be allowed to transfer the land only after making allotment to the land owners share, approval of building plans and transfer permission from the Director, Town and Country Planning, Haryana.

          16.    The company shall endeavors to give possession of the apartment to the applicant(s)/intending allottee (s) within thirty six months from the date of the execution of flat buyer agreement and after providing necessary infrastructure in the sector by the Government but subject to force majeure, circumstances and reasons beyond the control of the company.  The company on obtaining certificate for occupation and use by the Competent Authorities shall hand over the Apartment to the Applicant(s)/intending allottee(s) for his / her occupational and use and subject to the applicant(s)/intending allottee(s) having complied with all the terms and conditions of the flat buyer agreement.  In the event of his / her failure to take over and / or to occupy and use the apartment provisionally and / or finally allotted within thirty days from the date of intimation in writing by the company, then  the same shall lie at his / her risk and cost and the applicant(s)/intending allottee(s) shall be liable to pay compensation @ Rs.5/- sq. ft. of the super area per month as holding charges for the entire period of such delay.  If the company fails to complete the construction of the said building / apartment within thirty six months from the date of execution of flat buyer agreement and after providing necessary infrastructure in the sector by the Government as aforesaid, then the company shall pay to the applicant(s)/intending allottee (s) compensation @ Rs.7/- per sq. ft. of the super area per month for the entire period of such delay.  The adjustment of compensation shall be done at the time of conveying the apartment and not earlier.  The said compensation shall be a distinct charge in addition to maintenance charges and not related to any other charges as provided in this application and flat buyer agreement.  If there is any delay in payments / remittances by the applicant(s)/intending allottee(s) or in order to comply with any specific request of the applicant (s)/intending allottee(s) such as providing additional fitments in his / her apartment, then the above said period of thirty six months will automatically and correspondingly get extended by the period of such delay.”

          23.    The promoter(s) and owners represent and warrant to the other party that they shall not sell, book, dispose of or alienate any part or whole of their portion in the said project until the LOI has been procured and its terms have been complied with AND until the owner’s share in the said project has been demarcated in writing between the parties.

          24.    Subject to the provisions of this Agreement the parties shall be entitled to book / sell the respective areas allocated to their share and receive advance payments at their own risk and cost without any liability upon the other party.  Parties shall be free to market their shares of areas independently on their own without undercutting each other in prices.  In case the owners want to get their allocation/share of areas marketed through the promoter(s), the owners shall be entitled to do so by paying charges to be mutually decided at that time between the parties.”

2.      The parties thereafter entered into another agreement dated 10.1.2008, similarly titled as “Collaboration Agreement’ in respect of land measuring 0.4125 acres in the village Dharuhera on identical terms.  The LOI for setting up a Group Housing colony on the aforesaid land was issued by Directorate of Town & Country Planning, Haryana vide its Memo dated 15.10.2010.

3.      Vide letter dated 02.8.2011, the opposite party allotted / allocated 23% of the saleable area of the project as per list attached thereto.  The copies of tentative plans for their apartment along with total saleable area of the project were also enclosed. 

4.      Thereafter, as recorded in the revised allotment / allocation letter dated 17.10.2012, the parties entered into another agreement dated 17.10.2012 where-under the area to be allotted / allocated to them was reduced.  A revised allotment / allocation letter, after deduction of specified area as mentioned in the agreement dated 17.10.2012 was thereafter issued by the opposite party to the complainant.

5.      Before issuance of the aforesaid revised allotment / allocation letter, the opposite while responding to a letter of the complainant dated 02.5.2011 had inter-alia stated as under:

“3.     As far as completion of the work is concerned the time that we have agreed was 36 months from execution of flat buyers agreement i.e. 36 months after allotment subject to availability of necessary infrastructure provided by the government.

4.      We are confident that the project will be delivered to you well before the time. We do not understand the basis of calculation of completion time mentioned by you in your cited letter.”

6.      The grievance of the complainant is that the construction of the area allotted to them by the opposite party is not anywhere near completion though, more than eight years from the date of collaboration agreement, more than five years from the date of the issuance of the original allotment / allocation letter and almost four years from the issuance of the revised allotment / allocation letter had expired by the time this complaint was instituted on 30.8.2016.  The complainants are therefore before this Commission with the following prayers:

1.      Direct the opposite parties to complete the construction of the project, and

2.      Direct the opposite parties to hand over possession of the constructed area of the complainants in terms of the agreements,

3.      Direct the opposite parties to pay compensation for delay @ Rs.7/- per sq. ft. in handing over possession in residential complex from July, 2011 till date as mentioned in para-49 (i.e. after 42 months of agreement, as per Clause-2 of agreement six months for obtaining LOI and as per Clause-16, 36 months for delivering possession)

4.      Direct the OPs to pay compensation or delay @ Rs.7/- per sq. ft. from August, 2011 till date in the commercial complex as mentioned in para-49, (i.e. after 42 months of agreement, as per Clause-2 of the agreement six months for obtaining LOI and as per Clause 16, 36 months for delivering possession).

5.      Immediate handing over and earmarking the shortage portion of share in the built-up area in the projects, which have been wrongly not marked as per the letter dated 30.8.2010, and 02.8.2011,

6.      Compensation for Mental agony, harassment and torture, loss of public image etc. for Rs.2,000,00,000.00

7.      Litigation expenses for Rs.5,00,000.00

8.      Interest on the above referred sum as may be allowed by this Hon’ble Forum.

7.      The complaint has been resisted by the opposite party primarily on the ground that (i) the complainants are not consumers within the meaning of Section 2(1)(d) of the Consumer Protection Act and therefore this Commission lacks jurisdiction to entertain he complaint. (ii) no specific time limit was agreed between the parties for delivery of possession of the area allotted to them and (iii) the complainants are not entitled to any compensation for the delay, if any, in completion of the construction.

8.      Coming to the first issue, in my opinion, the matter is squarely covered by the pronouncement of the Hon’ble Apex Court in Civil Appeal No. 944 of 2016 Bunga Daniel Babu Vs. M/s. Sri Vasudeva Constructions & Ors. Decided on 22.7.2016.   In Bunga Daniel Babu (supra) the appellant, owner of the three plots admeasuring 1347 sq. yards had entered into an MOU with the respondents for development of his land by construction of a multi-storied building, comprising of five floors with elevator facility and parking space.  Under the MOU, the apartment construction was to be shared in the proportion of 40% and 60% between the appellant and respondent No.1.  In addition, it was also agreed that the construction would be completed within nineteen months from the date of approval of the plans and in case of non-completion within the said time, a rent of Rs.2,000/- per month for each flat would be paid to the appellant.  On account of the delay of about three years and three months, in handing over possession of the flats to him, the appellant approached the concerned District Forum by way of a consumer complaint.  One of the issues, which fell for determination was whether the complainant was a consumer within the definition of Section 2(1)(d) of the Consumer Protection Act.  The District Forum held that the complainant was a consumer and partly allowed the complaint.  The respondent challenged the order passed by the District Forum, before the concerned State Commission, which did not agree with the District Forum and held that the appellant / complainant was not a consumer and accordingly dismissed the complaint.  An challenge preferred by the appellant before this Commission having been dismissed he approached the Hon’ble Supreme Court by way of a Special Leave Petition.  Allowing, the appeal, the Hon’ble Supreme Court inter-alia held as under:

          “18.   It worthy to note that in the said case a stand was taken by the respondent that the agreement was a collaboration agreement as it was so tilted.  Emphasis was laid on the fact that the agreement showed the intention to collaborate and, therefore, it was a joint venture.  The Court ruled that the title or caption or nomenclature of the instrument / document is not determinative of the nature and character of the instrument / document, though the name usually gives some indication of the nature of the document and therefore, the use of the words ‘joint venture’ or ‘collaboration’ in the title f an agreement or even in the body of the agreement will not make the transaction a joint venture, if there are no provisions for shared control of interest or enterprise and shared liability for losses.  After so stating, the Court proceeded to observe that if there is a breach b the land owner of his obligations, the builder will have to approach a civil court as the land owner is not providing any service to the builder but merely undertakes certain obligations towards the builder, breach of which would furnish a cause of action for specific performance and / or damages.  It has also been stated therein that while the builder commits breach of his obligations, the owner has two options, he has the right to enforce specific performance and / or claim damages by approaching civil court or an approach consumer forum under the Act.  In the course of delineation, the Court proceeded to state:

          “But the important aspect is the availment of services of the builder by the landowner for a house construction (construction of the owner’s share of the building) for a consideration.  To that extent, the landowner is a consumer, the builder is a service provider and if there is deficiency in service in regard to construction, the dispute raised by the landowner will be a consumer dispute.  We may mention that it makes no difference for this purpose whether the collaboration agreement is for construction and delivery of one apartment or one floor to the owner or whether it is for construction and delivery of multiple apartments or more than one floor to the owner.  The principle would be same and the contract will be considered as one for house construction for consideration……..”.

19.    In our considered opinion, the aforesaid passage is extremely illuminative.  It can be unhesitatingly stated that though the controversy in the said case had arisen before the amendment of 2002, the principles laid down therein would apply even after the amendment if the fact situation comes within the four corners of the aforesaid principles.”

20.    The obtaining factual matrix has to be tested on the touchstone of the aforestated legal position.  The National Commission has affirmed the order passed by the State Commission on the ground that the complainant is not a consumer as his purpose is to sell flats and has already sold four flats.  In our considered opinion, the whole approach is erroneous.  What is required to be scrutinized whether there is any joint venture agreement between the appellant and the respondent.  The MOU was entered into between the parties even remotely does not indicate that it is a joint venture, as has been explained in Faqir chand Gulati (supra).  We think it appropriate to reproduce the relevant clauses form the MOU:-

          3.      The apartments shall be shared by the owner and the builder in the proportion of 40% and 60% respectively in the built up area including terrace rights all additional construction in the said complex.  The common areas shall be enjoyed jointly.

          5.      The builder shall commence construction and complete the same within a period of nineteen months form the date of granting of approval for the plans by the Municipal Corporation, Visakhapatnam.  In case of non-completion of the constructions in the complex within the above mentioned time, builder should pay rent Rs.2,000/- per month for each flat in a 40% share of the owner.

          11.    The builder shall pay a sum of Rs.5.00 lacs to the owner as interest free security deposit. The security deposit of Rs.5.00 lacs shall be refunded at the time of completion of the apartment by way of cash.

          15.    The owner hereby agrees that out of his 40% share in the built – up area of the apartment complex to be given to him by the builder, the owner shall register one flat of his choice of a value of Rs.6,00,000/- in the fourth floor of the said building in favour of the builder or his nominee towards the cost of the items set out in the specifications hereto attached agreed to be provided by the builder for the benefit of the owner in the apartments intended for the share of the owner.  In case the cost of the flat is found to be more or less than Rs.6.00 lacs, then both parties shall adjust the difference by payment of the same by way of cash.”

21.    On  a studied scrutiny of the aforesaid clauses, it is clear as day that the appellant is neither a partner nor a co-adventurer.  He has no say or control over the construction.  He does not participate in the business.  He is only entitled to, as per the MOU, a certain constructed area.  The extent of area, as has been held in Faqir Chand Gulati (supra) does not make a difference.  Therefore the irresistible conclusion is that the appellant is a consumer under the Act.”

9.      It is true that the area of the land subject matter of the agreement between the parties in Bunga Daniel Babu (supra) was much much smaller as compared to the area of the land, subject matter of the agreements between the parties to this complaint. It is also true that under the agreement in Bunga Daniel Babu (supra) only 18 flats were to be constructed out of which 14 were to be delivered to the complainants whereas the number of flats to be constructed by the opposite party in this project as well as the number of the flats which would be come to the share of the complainants would be many times more, that would hardly be of any consequence since the legal proposition laid down by the Hon’ble Supreme Court in Bunga Daniel Babu (supra) would apply with full force, irrespective of the size of the project and the area to be shared between the parties.  A reference in this regard can be made to the following observations from Faqir Chand Gulati Vs. Uppal Agencies Pvt. Ltd. & Anr. (2008) 10 SCC 345 extracted by the Hon’ble Supreme Court in Bunga Daniel Babu (supra):

“But the important aspect is the availment of services of the builder by the landowner for a house construction (construction of the owner’s share of the building) for a consideration.  To that extent, the landowner is a consumer, the builder is a service provider and if there is deficiency in service in regard to construction, the dispute raised by the landowner will be a consumer dispute.  We may mention that it makes no difference for this purpose whether the collaboration agreement is for construction and delivery of one apartment or one floor to the owner or whether it is for construction and delivery of multiple apartments or more than one floor to the owner.  The principle would be same and the contract will be considered as one for house construction for consideration……..”.

In para 21 of its Judgment in Bunga Daniel Babu (supra), the Hon’ble Supreme Court expressly stated that the extent of the area, as has been held in Faqir Chand Gulati (supra), does not make a difference.

10.    Though the controversy in Bunga Daniel Babu (supra) had arisen before the amendment of the Consumer Protection Act in 2002, the Hon’ble Apex Court expressly held that the principles laid down in Faqir Chand Gulati (supra) would apply even after the amendment, if the fact situation comes within the four corners of the afore-stated principles. 

11.    In view of the aforesaid decision of the Hon’ble Supreme Court,
I have no hesitation in holding that the complainants are consumers within the meaning of Section 2(1)(d) of the Consumer Protection Act.

12.    Coming to the merits of the case, as noted earlier, the agreements between the parties are not in dispute.  The contention of the learned counsel for the opposite party is that the parties consciously and deliberately did not fix any particular time limit for completion of the area which was allotted / allocated to the complainants and did not refer to any time limit for delivery of its possession.  According to him, in fact the agreement did not even envisage the delivery of possession of the said area to the complainants, who were entitled to sell the same either themselves or through the opposite party.  In my view, this is of no consequence that no specific time limit was laid down in the agreement for completing the construction of the area allotted / allocated to the complainants since in the absence of such a stipulation, a reasonable time limit has to be fixed by this Commission for the said completion.  In terms of Clause 16 of the agreements, the opposite party was to endeavor to give possession of the apartments to the applicant(s) and intending allottee(s) within thirty six months from the date of execution of the flat buyers’ agreement and after providing necessary infrastructure in the sector by the Government but subject to force majeure circumstances.  Considering all the facts and circumstances of the case and also the size of the project, the opposite party, should in my opinion have completed construction of the area allotted /allocated to the complainants within three years from the issuance of the revised allotment letter dated 17.10.2012 though it should be entitled to a grace period of six months for some unforeseen circumstances beyond its control.  Computed accordingly, and after allowing the grace period of six months, the construction of the area allotted / allocated to the complainants ought to have been completed by 17.4.2016.

13.    As far as the compensation is concerned, it is true that there is no term in the agreement for payment of any compensation to the complainant in the event of delay in completion of the construction of the area allotted / allocated to them.  This however would not mean that the opposite party is at liberty to prolong the construction of the said area to an indefinite period, without paying any compensation for such a deficiency on its part in rendering services to the complainants.  If the contention advanced by the learned counsel for the opposite party in this regard is accepted that would result in a situation where there will be no compulsion on the builder to complete the construction of the area allotted / allocated to the complainant within a reasonable time period.  Therefore, the opposite party, in my opinion, must pay a reasonable compensation to the complainants for the delay beyond 17.4.2016.

14.    Clause 16 of the Agreement provides for payment of compensation @ Rs.7-/- per sq. ft. of the super area per month for the entire period of delay in the case of the flat buyers / allottees.  The complainants also being allottee / allocatees of the area to be constructed by the opposite party, should be treated at par with them and paid compensation @ Rs.7/- per sq. ft. of super area per month for the period of delay beyond 17.4.2016.

15.    During the course of hearing, the learned counsel for the opposite party was requested to take instructions and inform this Commission as to within how much time period the opposite party would be able to complete the construction of the area allotted / allocated to the complainants.  The learned counsel for the opposite party states on instructions that the construction of the said area is likely to be completed within about two years.  The learned counsel for the complainants however, has a serious doubt as to whether the opposite would be able to complete the said construction even within two years from today, taking into account the existing stage of the construction.

16.       During the course of arguments, it was pointed out by the learned counsel for the opposite party that the area to be constructed by the opposite party as well as the area allotted / allocated to the complainants, includes not only the residential flats but also the convenient shops and therefore, the complainants cannot be treated at par with the complainants in       Bunga Daniel Babu (supra).  The learned counsel for the complainants submits in this regard that though a Group Housing Colony and not a commercial project was approved by Directorate of Town & Country Planning, Haryana and the convenient shops are only a part of the residential group housing colony, he, in order to avoid any possible objection in this regard restricts the claim in the present complaint to the completion of the construction and placement of only the residential portion at the disposal of the complainant.  The learned counsel for the opposite party submits in this regard that the complainants cannot be allowed to bifurcate the agreements in this manner.  However, in my view, this does not amount to bifurcation of the agreement.  It is only restricting the scope of the remedy availed under the Consumer Protection Act to the residential portion and the complainants would have liberty to avail such remedy as are available to them in law as far as their share in the convenient shops are concerned.  It would also be pertinent to note here that vide statement made on 11.5.2018, the complainants had already restricted the scope of this complainant to the reliefs in respect of residential project namely ‘Raheja Oma’ wherein only residential apartments are to be constructed.  Of course, the complainants would have liberty to avail such remedy as is open to them in law in respect of the other project, namely ‘Raheja Highway Arcade’, as may be open to them in law.

The learned counsel for the opposite party also submits that under the agreements, the complainants are entitled to sell the area allotted / allocated to them even before completion of the construction.  That however, would make no difference as far as the outcome of this case on merits is concerned.

17.    Considering all the facts and circumstances of the case, the complaint is disposed of with the following directions:

(i)      The opposite party shall complete the construction of the residential area allotted / allocated to the complainants, in the project ‘Raheja Oma’, in all respects and obtain the requisite occupancy certificate thereof on or before 30.6.2020.

(ii)      The opposite party, after completing the construction and obtaining the requisite occupancy certificate place the said area at the disposal of the complainants on or before 30.9.2020.

(iii)     The opposite party shall pay compensation calculated @ Rs.7/- per sq. ft. per month of the super area allotted / allocated to the complainants with effect from 17.4.2016 till the date on which the said residential area in the project ‘Raheja Oma’ is placed at the disposal of the complainants, in terms of this order.

(iv)    The compensation shall be paid at the time the constructed area in terms of this order is placed at the disposal of the complainants.

The complaint is disposed of, with no order as to costs.