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

          The complainant booked a residential flat with the opposite party in a project namely Raheja Developers Ltd., which the opposite party was to develop in Sector 78 of Gurgaon. A residential unit termed as ‘independent floor’ in the aforesaid project was allotted to the complainant, who executed an agreement to sell with the opposite party on 6.7.2012, incorporating their respective obligations in respect of the said allotment.  Clause 4.2 of the said agreement pertained to the delivery of possession and to the extent it is relevant, reads as under:

          “4.2   That the seller shall sincerely endeavor to give possession of the unit to the purchaser within thirty six months in respect of ‘TAPAS’ intendent floor and forty eight months in respect of ‘Surya Tower’ from the date of the execution of the agreement to sell and after providing of necessary infrastructure specially road, sewer and water in the sector / to the complex by the Government, but subject to force majeure conditions or any Government / Regulator authority’s action, inaction or omission and reasons beyond the control of the seller.  However the seller shall be entitled for compensation free grace period of six months in case the construction is not completed within the time period mentioned above……. If the seller fails to complete the construction of the said building / unit within thirty six / forty-eight months plus aforesaid grace period of six months form the date of execution of the agreement to sell and after providing of necessary infrastructure in the sector by the Government or for any reason other than the reasons stated above, then the seller shall be liable to pay to the Purchaser compensation @ Rs.7/- sq. ft. of the super areas per month for the entire period of such delay to compensate for the rental income for the similar property in the area or average rental of equivalent sized unit in the vicinity, whichever is higher.”

2.      The sale consideration for the said flat was agreed at Rs.1,02,77,939/- in addition to some other charges.  The payment plan stipulated in the agreement read as under:

          Installment payment plan for independent floors

          The possession of the independent floor, according to the complainant, was required to be delivered to him by 5.1.2016.  Since the construction was not complete by that time, the complainant vide email dated 9.4.2016, requested the opposite party to consider buying back at the current price on account of significant delay in the project.  Before the email was written, the complainant had received an email of even date from the opposite party, informing him that the possession was likely to be offered in the second quarter of the next year.

3.      Since neither the units was repurchased by the opposite party nor the amount, which he had paid to the opposite party was refunded, he is before this Commission seeking refund of the entire amount of Rs.71,42,236/-, which he has paid to the opposite party, along with compensation etc.

4.      The complaint has been resisted by the opposite party, which has admitted the allotment made to the complainant as well as the payment received from him.  It has however, been stated in the written version filed by the opposite party that the time was not the essence of the contract and in the event of delay in offer of possession, the complainant was entitled to the agreed compensation of Rs.7/- per sq. ft. or average rental of equivalent sized unit in the vicinity, whichever is higher.  It is however, not in dispute that even till today, the construction of the independent floor allotted to the complainant is not complete.  The opposite party has also denied the alleged timely payment of the installment by the complainant.

5.      The first contention of the learned counsel for the opposite party is that in terms of Clause 4.2 of the agreement, extracted hereinabove, the period of thirty six months in respect of the independent floor was to expire either on completion of thirty six months from the execution  of the agreement or on the Government providing the infrastructure such as road, sewer and water, whichever be later.  I however, do not find any merit in the contention.  The obligation of the builder was to complete the construction of the independent floor within thirty six months of the execution of the agreement, whereas the obligation of the Government was to provide the project infrastructure such as road, sewer and water in the sector / complex.  Since the construction of the independent floor has not been completed even within forty two months of the execution of the agreement, which includes grace period of six months for completing the construction, the opposite party, in my view, failed to perform its contractual obligation under the agreement executed with the complainant.  Moreover, this is not the case of the opposite party in the written version filed by it that the construction of the independent floor could not have been completed, without the Government first providing infrastructure such as road, sewer and water to the complex.  The allegation in the written version is that the possession could not be offered for the reasons such as non-availability of labour due to MGNREGA restrictions / prohibition of use of ground water for construction purposes, ban on sand mining on Yamuna River, default of payment by allottees, non-availability of necessary infrastructure such as roads in this sector in question.  Moreover, there is absolutely no evidence to prove that the construction of the independent floor allotted to the complainant could not have been completed in the absence of construction of roads by the Government.

6.      It is next contended by the learned counsel for the opposite party that time was not the essence of the construction and in the event of delay the purchaser is entitled to the agreed compensation as stipulated in Clause 4.2 of the agreement but he cannot get out of the project and seek refund of the amount paid by him to the developer. I however find no merit in this contention as well. The question as to whether the time is essence of the contract in such cases or no, came up for consideration of this Commission in CC/315/2014 Pradeep Narula & Anr. Vs. M/s. Granite Gate Properties Pvt. Ltd. & Anr. Decided on 23.8.2016, and the following view was taken:

“10.    Relying upon the decision of the Hon’ble Supreme Court in Smt. Chand Rani Vs. Smt. Kamal Rani, Civil Appeal No. 3377 of 1979, it was contended by the learned counsel for the opposite party that time is not the essence of the contract in a transaction for the sale of an immovable property. In Chand Rani (supra), the Hon’ble Supreme Court inter-alia observed as under:

It is a well-accepted principle that in the case of sale of immovable property, time is never regarded as the essence of the contract. In fact, there is presumption against time being the essence of the contract. This principle is not in any way different from that obtainable in England. Under the law of equity which governs the rights of the parties in the case of specific performance of contract to sell real estate, law looks not at the letter but at the substance of the agreement.

It is not merely because of specification of time at or before which the thing to be done under the contract is promised to be done and default in compliance therewith, that the other party may avoid the contract. Such an option arises only if it is intended by the parties that time is of the essence of the contract. Intention to make time of the essence, if expressed in writing, must be in language which is unmistakable: it may also be inferred from the nature of the property agreed to be sold, conduct of the parties and the surrounding circumstances at or before the contract. Specific performance of a contract will ordinarily be granted, notwithstanding default in carrying out the contract within the specified period, if having regard to the express stipulations of the parties, nature of the property and the surrounding circumstances, it is not inequitable to grant the relief. If the contract relates to sale of immovable property, it would normally be presumed that time was not of the essence of the contract. Mere incorporation in the written agreement of a clause imposing penalty in case of default does not by itself evidence an intention to make time of the essence.

          In Hind Construction Contractors Vs. State of Maharashtra (1979) 2 SCR 1147, the Hon’ble Supreme Court quoted the following extract from Halsbury’s Laws of England (para 1179, Vol-IV):

          Other provisions of the contract may, on the construction of the contract, exclude an inference that the completion of the works by a particular date is fundamental, time is not of the essence where a sum is payable for each week that the work remains incomplete after the date fixed, nor where the parties contemplate a postponement of completion.  

The aforesaid contention, in my view, does not really rise for consideration in a case where the flat buyer is seeking possession of the flat booked by him and does not insist upon refund of the sale consideration paid by him, with or without compensation. Moreover, the decision in Chand Rani (supra) was rendered in the context of a suit for specific performance of an agreement to sell the first floor of an existing house, whereas the decision in the Hind Construction (supra) was rendered in the context of a Government contract. In neither of these cases, the Hon’ble Supreme Court was called upon to decide as to whether an unjustified and explained delay on the part of the builder/service provider in construction of a residential flat booked by a person seeking to have a shelter over his head amount to a deficiency in the service rendered by him to the consumer, or not. The primary purpose of a consumer in booking a residential flat which the builder is to construct for him, is to start living in that house on or about the date committed to him by the builder for delivering possession of the flat booked by him. If the builder does not deliver upon his contractual obligation and at the same time, is unable to show that the delay in completion of the flat and offering its possession to the consumer was on account on circumstances beyond his control, this would constitute deficiency on the part of the builder/service provider in rendering services to the consumer. If I accept the contention that the builder can indefinitely postpone and delay the construction of the flat and the flat buyer has no option but to wait till the builder decides to complete the construction and offer possession to the buyer, that would be nothing but a travesty of justice and result in a situation where the flat buyer is left at the mercy of the builder, without recourse to an appropriate legal remedy. Such an interpretation, if taken, is bound to defeat the very objective behind the enactment of the Consumer Protection Act, as far as housing construction is concerned. Therefore, I am unable to accept the contention advanced by the learned counsel for the opposite party. In my view, wherever the builder commits a particular date or time frame for completion of the construction and offering possession to the buyer, he must necessarily honour the commitment made by him, though a minor delay may not constitute deficiency in the service rendered by him to the buyer. Of course, if the builder is able to how that the delay in completion of the construction and offering possession to the buyer is attributable wholly to the circumstances beyond his control, that may not be a case of deficiency in the services rendered to the consumer.”

7.      A reasonable delay in a large project of this nature can be very well understood.  However in the present case, the delay cannot be said to be the usual delay which can be allowed even in large projects.  In the presence case, the delay is more than three years AS the last date for delivery of possession, inclusive of the grace period expired on 05.1.2016 whereas construction is not complete even today.  Considering such an abnormal delay on the part of the developer, the complainant, in my view, cannot be compelled to wait indefinitely for the possession of the allotted flat.  This is more so, when the opposite party is not even offering the possession of the allotted unit to the complainant in a time bound manner, after obtaining the requisite occupancy certificate.  Though, the learned counsel for the opposite party submits that the period subsequent to institution of the complaint would not be relevant,  I find no merit in the contention since the aforesaid delay would be a relevant circumstance for the purpose of enabling this Commission to decide whether to direct refund or to ask the complainant to wait for the possession of the allotted flat. 

8.      As far as the delay on the part of the complainant in making timely payment of the installments is concerned, the learned counsel for the opposite party submits that there was delay in payment of 6^th, 7^th and 8^th installments, which were payable on completion of foundation casting of ground floor and casting of first floor respectively.  Admittedly, the said payment had been made by the complainant and had been accepted by the opposite party even before institution of this complaint. Though, initially interest was levied by the opposite party for the said delay but it was later waived on the same day.  Having not terminated the contract and having not cancelled the allotment on account of the said delay and having accepted the payment of installments made at a belated stage, the opposite party, in my opinion, condoned the said default and therefore, is now estopped from contesting the claim on account of the alleged delays.

9.      The learned counsel for the opposite party during the course of arguments relied upon Section 54 and 55 of the Indian Contract Act. The said reliance in my view, is wholly misplaced since the default on the part of the complainant in making timely payment was condoned by the OP by accepting payment at a belated stage instead of cancelling the allotment and there was no provision in the agreement executed between the parties for unilateral extension of time by the developer for completion of the construction and offering possession of the allotted flat.

The learned counsel for the opposite party also relies upon the decision of the Hon’ble Supreme Court in Arosan Enterprises Ltd. Vs. Union of India & Anr. (1999) 9 SCC 449.  The said judgment, in my view would not apply to a case of this nature where the contract itself does not provide for extension of time for performance of the obligation.

10.    Coming to the quantum of compensation, it has consistently been held by this Commission in several consumer complaints that a clause whereby the developer agrees to pay a paltry compensation of say Rs.5/- 7/-, 10/- per sq. ft. per month for delay in delivery of possession would be unfair trade practice when the developer himself is entitled to charge interest at exorbitant rates for any delay on the part of the allottee in making payment to him.  The following was the view taken by this Commission in this regard in CC No. 427 of 2014, Satish Kumar Pandey & Anr. Vs. Unitech Ltd. and connected matters decided on 8.6.2015:

“10.    Since the delay in construction of the apartments could not be justified by the OP, it is required to pay compensation to the flat buyers.  The contention of the learned counsel for the OP is that such compensation has to be calculated @ ₹5/- per sq. ft. of the super area of the apartment for the period of delay in offering the possession beyond the period indicated in clause 4.a.i of the Buyers Agreement, the complainants having agreed to the aforesaid term while agreeing to purchase the apartments.  This was also the contention of the learned counsel for the OP that the terms of the contract are binding on the parties and cannot be altered by a consumer forum. 

          The learned counsel for the complainant on the other hand, submitted that since they are required to pay interest to the OP @18% p.a. compounding quarterly, in the event of delay in making payment as stipulated in clause 2.c of the Buyers Agreement, there is no reason why the opposite party should not pay interest at the same rate to them, as compensation.  The learned counsel for the parties, however, admitted that the current interest of taking housing loans from the banks is about 10% p.a. though it had shot up to 11.5% per annum in last few years.  It is also an admitted position that had the complainants deposited their money with a bank in a FDR instead of investing in the project of the OP, they would have earned interest @ about10% p.a.

          However, a term of a contract, in my view will not be final and binding if it is shown that the consent to the said term was not really voluntary but was given under a sort of compulsion on account of the person giving consent being left with no other choice or if the said term amounts to an unfair trade practice.  It was submitted by the learned counsel for the complainants that the term providing for payment of a nominal compensation such as Rs.5/- per square foot of the super area having become the order of the day in the contracts designed by big builders, a person seeking to buy an apartment is left with no option but to sign on the dotted lines since the rejection of such term by him would mean cancellation of the allotment.  He further submitted that a person seeking to acquire a built up flat instead of purchasing a plot and then raising construction on it, therefore, is not in a position to protest resist the inclusion of such a term in the Buyer’s Agreement, and has to rely upon the reputation of the builder, particularly if he is a big builder such as Unitech Ltd.  He also submitted that the format of the Buyer’s Agreement is never shown to the purchasers at the time of booking the apartment and if he refuses to sign the Buyer’s Agreement on the format provided by the builder, not only will he lose the booking, even the booking amount/earnest money paid by him will be forfeited by the builder.  I find merit in the above referred submissions of the learned counsel.  A person who, for one reason or the other, either cannot or does not want to buy a plot and raise construction of his own, has to necessarily go in for purchase of the built up flat.  It is only natural and logical for him to look for an apartment in a project being developed by a big builder such as the opposite party in these complaints.  Since the contracts of all the big builders contain a term for payment of a specified sum as compensation in the event of default on the part of the builder in handing over possession of the flat to the buyer and the flat compensation offered by all big builders is almost a nominal compensation being less than .25% of the estimated cost of construction per month, the flat buyer is left with no option but to sign the Buyer’s Agreement in the format provided by the builder.  No sensible person will volunteer to accept compensation constituting about 2-3% of his investment in case of delay on the part of the contractor, when he is made to pay 18% compound interest if there is delay on his part in making payment. 

          It can hardly be disputed that a term of this nature is wholly one sided, unfair and unreasonable.  The builder charges compound interest @ 18% per annum in the event of the delay on the part of the buyer in making payment to him but seeks to pay less than 3% per annum of the capital investment, in case he does not honour his part of the contract by defaulting in giving timely possession of the flat to the buyer.  Such a term in the Buyer’s Agreement also encourages the builder to divert the funds collected by him for one project, to another project being undertaken by him.  He thus, is able to finance a new project at the cost of the buyers of the existing project and that too at a very low cost of finance.  If the builder is to take loan from Banks or Financial Institutions, it will have to pay the interest which the Banks and Financial Institutions charge on term loan or cash credit facilities etc.  The interest being charged by the Banks and Financial Institutions for financing projects of the builders is many times more than the nominal compensation which the builder would pay to the flat buyers in the form of flat compensation.

          Though, such a practice does not specifically fall under any of the Clauses of Section 2(r) (1) of the Act that would be immaterial considering that the unfair trades, methods and practices enumerated in Section 2(r) (1) of the Act are inclusive and not exhaustive, as would be evident from the use of word “including” before the words “any of the following practices”.

11.    For the reasons stated hereinabove, I hold that the complainant is entitled to refund of the entire amount paid by him to the opposite party, along with appropriate compensation.  The learned counsel for the complainant states on instructions of the complainant, who is present in the Court, that in order to avoid any further litigation in the matter and considering the interest rates prevailing at that time, the complainant is restricting his claim to the refund of the principal amount paid by him to the opposite party all-inclusive of compensation in the form of simple interest @ 10% per annum from the date of each payment till the date of refund.

The learned counsel for the complainant also states that an additional payment of Rs.74,168/- was made during the pendency of this complaint and the total payment made to the opposite party comes to Rs.72,16,404/-.

12.    The complaint is therefore disposed of with the following directions:

(i)      The opposite party shall refund the entire principal amount to the complainant, 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 opposite party shall pay a sum of Rs.25,000/- as cost of litigation to the complainant.

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