JUSTICE V.K. JAIN (ORAL)

The complainant, namely Ved Prakash Saini booked a residential villa with the opposite party in a project, namely, Alder Grove, Nirvana Country II which the opposite party was to develop in sector 71 & 72 of Gurgaon. The sale consideration for the aforesaid villa was agreed at Rs.1,84,24,000/- and the possession was to be delivered within 24 months from the date of the Buyers Agreement, which came to be executed on 28.10.2010. Thus the possession of the villa ought to have been offered by 28.10.2012. The grievance of the complainant is that despite his having paid a total sum of Rs.73,69,600/-, the opposite party has failed to offer possession of the villa allotted to him. The complainant is, therefore, before this Commission seeking possession of the villa allotted to him or in the alternative payment of a sum of Rs.2,64,60,000/- that being the current market value of a same house. The complainant is also seeking compensation for the delay in offering possession of the villa to him.

2.      The complaint has been resisted by the opposite party primarily on the grounds which this Commission has already rejected in Aditya Mishra & Anr. Vs. M/s Unitech Ltd. in C.C. No.382 of 2015 and connected matters decided on 3.5.2016. In Aditya Mishra (supra), the complainants had initially booked a flat in a project in Greater Noida but later on they had shifted to the project Alder Grove Nirvana Country II. Since the opposite party failed to offer possession of the villa allotted to them, they approached this Commission seeking possession of the villa along with compensation. Allowing the complaints, this Commission inter alia observed and held as under:-

“2.  The complaints have been opposed by the opposite party, primarily on the grounds, which this Commission has repeatedly rejected in a number of Consumer Complaints, such grounds being the delay on the part of the authorities in according approvals, shortage of labour due to Commonwealth Games and implementation of schemes such as National Rural Employment Guarantee Scheme and Jawahar Lal Nehru National Urban Renewal Mission.  It is also alleged that by an order dated 16.7.2012, Punjab & Haryana High Court had stopped the usage of ground water for construction purposes and had permitted use of only treated water from the available Sewerage Treatment Plant but sufficient water from the Sewerage Treatment Plant was not available.  Another reason given by the opposite party for the delay in completion of the construction is the Notification issued by the Ministry of Environment and Forests, barring excavation of the top soil for manufacturer of bricks and consequent shortage of the bricks in the Region and restriction on mining in the Aravali Region which resulted in shortage of sand, which is a raw material used on the construction activities.  It is also claimed that Government of India had placed restriction and prohibition on new projects without obtaining the requisite environmental clearance and there was delay on the part of the Government in constitution of the Environment Impact Assessment Authority. It is also alleged in the reply that the opposite party is obliged to pay only agreed compensation of Rs.50/- per sq. yds for the period the possession has been delayed.

3.  Vide order dated 02.5.2016, this Commission disposed of a number of Consumer Complaints namely Cap. Gurtaj Singh Sahni Vs. Unitech Limited, Consumer Complaint No.603 of 2014 and connected matter, where the opposite party has delayed the delivery of the possession in the project namely Espace Premier, Unitech Nirvana Country-2, Gurgaon, Haryana,  in the same Colony Nirvana Country II in Sector 71 and 72 of Gurgaon. Those complaints were resisted on almost identical grounds. Rejecting such contentions, this Commission inter-alia observed and held as under:

          6. The next question which arises for consideration is the quantum of compensation which should be paid to the complainants for the delay in completion of the villas. As far as the prohibition on use of underground water in construction is concerned, the learned counsel for the complainant has drawn my attention to the order dated 21.08.2012 passed by a Divisional Bench of Punjab & Haryana High Court in Civil Writ Petition No. 20032 of 2008 wherein the High Court noted that the public notice issued under Section-5(3) of the Environment Protection Act, 1986 was published in the newspaper on 26.12.2000. It further shows that the said notice had imposed a complete ban upon the use of underground water in the construction without prior approval of the competent authority. It was noted by the High Court that despite publication of the aforesaid notice, the builders continued to use underground water for construction purposes. If there was a complete ban on use of underground water for construction and the said prohibition was notified on 26.12.2000, the opposite party must have taken into account, the impact of the said prohibition while entering into Buyers Agreements with the complainants. Therefore, it is not open to the opposite party to rely upon the said prohibition in order to justify the delay in construction of the villas sold to the complainants. The opposite party knew at the time of entering into agreements with the complainants that it will not be able to use underground water for construction of the villas and therefore, will have to make alternative arrangements from authorized sources for making the water available for the said construction. Therefore, the aforesaid prohibition on use of the underground water for construction purpose does not justify the delay in completion of the construction. In any case, no material has been placed by the opposite party on record to show that efforts were made by it during the relevant period to procure water from alternative sources but it was unable to obtain the water from the said sources. More importantly, in the Buyers Agreement executed between the parties, it was not disclosed to the buyers that since no underground water can be used for construction purpose, the developer will have to arrange water from alternative sources and in case it is not able to arrange water, the construction would be delayed and in that case, it will not be held responsible for the delay in completion of the construction.

7.      As far as quantum of compensation is concerned, considering all the facts and circumstances of the case including the cost of financing the purchase and construction of house, this Commission in Satish Kumar Pandey & Ors. Vs. M/s Unitech Ltd. and Swarn Talwar & Ors. Vs. M/s Unitech Ltd. has awarded compensation by way of simple interest @ 12% per annum. In my opinion, the complainants are entitled to grant of compensation at the same rate. The following view taken by this Commission in Satish Kumar Pandey (supra) is pertinent as far as the quantum of compensation for the period the possession is delayed is concerned:

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.

11.    It is an undisputed proposition of law that ordinarily the parties are bound by the terms and conditions of the contract voluntarily agreed by them and it is not for a Consumer Forum or even a Court to revise the said terms.  The following view taken by the Hon’ble Supreme Court in this regard in Bharathi Knitting Company Vs. DHL Worldwide Express JT 1996 (6) SC 254 is pertinent:

“It is seen that when a person signs a document which contains certain contractual terms, as rightly pointed out by Mr. R.F. Nariman, learned senior counsel, that normally parties are bound by such contract; it is for the party to establish exception in a suit.  When a party to the contract disputes the binding nature of the signed document, it is for him to prove the terms in the contract or circumstances in which he came to sign the documents need to be established.  It is true, as contended by Mr. M.N. Krishnamani, that in an appropriate case the Tribunal without trenching upon acute disputed question of facts may decide the validity of the terms of the contract based upon the fact situation and may grant remedy.  But each case depends upon its own facts”.

In PUDA Vs. Mrs. Shabnam Virk II (2006) CPJ 1(SC), it was stated in an advertisement issued by PUDA that the price quoted therein was purely tentative based on the then cost of construction and was likely to be revised on the higher side by the time houses were completed.  The respondent before the Hon’ble Supreme Court challenged the demand of the additional cost raised by PUDA.  The demand however, was upheld noticing the aforesaid clause in the advertisement. 

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. 

12.    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.  In fact, the opposite party has not even claimed that the entire amount recovered by it from the flat buyers was spent on this very project.  This gives credence to the allegation of the complainants that their money has been used elsewhere.   Such a practice, in my view, constitutes unfair trade practice within the meaning of Section 2(r) of the Consumer Protection Act, 1986 since it adopts unfair methods or practice for the purpose of selling the product of the builder.  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”.

14.    As noted earlier, the cost of the borrowing for individual home buyers is about 10% per annum though it had gone upto 11.5% in last few years.  In my view, if the opposite party, pays simple interest @ 12% per annum to the complainants, that would not only take care of the additional financial burden on them but also give some monetary compensation to them for their sufferings on account of the delay in handing over possession of the flat purchased by them.  

8.      If the compensation for the delay in construction is restricted to what is stipulated in the Buyers Agreement, there will be no pressure upon the builder to complete the construction since he will be more than happy to keep on paying paltry compensation of about 3% per annum of the capital investment, instead of arranging funds at much higher cost, to complete the construction.

9.      Though in Satish Kumar Pandey (supra), this Commission had also awarded higher interest of 18% per annum in the unlikely event of the builder not delivering possession by the date stipulated in the said order and this was done with a view to ensure timely compliance of the said order, it is felt that since the buyers are interested in timely possession of the flat booked by them and not in higher compensation, such an order may not be necessary and in the event of the opposite party not complying with the order, the complainants should seek execution in terms of Section 25 and 27 of the Consumer Protection Act. The learned counsel for the complainants is in agreement with the aforesaid course of action.

3.      On the grounds taken by the opposite party to justify the delay in completion of the construction, the following view taken by this Commission in Satish Kumar Pandey (supra) is pertinent:

As regards, alleged shortage of labour, I find that no material has been placed on record by the OP that despite trying, it could not be get labourers to complete the construction of the project within the time stipulated in the Buyers Agreement.  It was submitted by the learned counsel for the complainants that ordinarily big builders such as the OP in these cases, are contracting/sub-contracting the construction work to the contractors engaged by them, instead of employing their own labourers on a regular basis, the purpose being to ensure that they are not saddled with the wage bill of those regular labourers, in case the opposite party does not have adequate work for them.  There is no evidence of the OP having been invited tenders for appointment of contractors / sub-contractors for executing the work at the site of those projects and no contractor/ sub-contractor having come forward to execute the project on the ground that adequate labour was not available in the market.  Therefore, it cannot be accepted that the opposite party could not have arranged adequate labour, either directly or through contractors/sub-contractors, for timely completion of the project.  As regards the alleged shortage of water, bricks and sand in the market, I find that there is no evidence filed by the OP, to prove that it was unable to procure water, sand and brick in adequate quantity.  This is also their case that the notification of the Government, being relied upon by the opposite party, is an old notification, which was in force even at the time the opposite party promised possession in 36 months. There is no evidence of the opposite party having invited tenders for supply of bricks and water and there being no response to such tenders.  In fact, if the work is to be executed through contractors/sub-contractors, the material such as bricks, sand and even water will be arranged by the contractor/sub-contractor and not by the opposite party.  As noted earlier, there is no evidence of the opposite party having invited tenders after awarding the work of project in question to the contractors/sub-contractors and there being no response to such tenders.  Therefore, I find no merit in the plea that the completion of the project was delayed due to non-availability of water, sand and bricks in adequate quantity.  As regards common-wealth games projects work, on those projects was complete before the games were held in October 2010.  The project in question on the other hand was required to be completed in phases, beginning end of 2012, i.e., more than 2 years after the aforesaid games were concluded.  In any case, it has been more than 4 ½ years since common-wealth games were held and even today the project in question is far from complete.  Therefore, there is no merit in the contention that the completion of the project was delayed on account of commonwealth games.  Consequently, there is no escape from the conclusion that the delay in construction of the apartments cannot be attributed to any of the reasons mentioned in clause 4.a.ii of the Buyers Agreement.

4.      As regards, the alleged delay on the part of the Government in constituting the Environment Impact Assessment Authority, the reply / written version filed by the opposite party does not disclose when they applied for the requisite environmental clearance and when it was actually accorded by the concerned authority.  More importantly, in the Buyers Agreement, it was not disclosed to the complainants either that the opposite party is yet to apply for obtaining the requisite environmental clearance or that though it had applied for the said clearance, the same had not been granted to it.  Had the opposite party disclosed the said information to the flat buyers, only then it could have justified the delay, to the extent it was attributable only to the alleged delay in obtaining the environmental clearance. In the absence of such a disclosure, the buyers could not have suspected that the delivery of the possession could be delayed on account of the delay on the part of the concerned authority in granting the requisite environmental clearance for the project in which they had booked the Villas. The following view taken by this Commission in Arun Datta & Anr. Vs. Unitech Ltd. & Anr. CC No. 359/2015 decided on 06.04.2016 is relevant in this regard:

It would thus be seen that the opposite party knew, years before accepting booking from the complainants that since the size of the project was planned to be more than 20000 sq. ft. of built up area, environmental clearance would be required and the said clearance can be given only after the project is approved firstly by the State Environment Impact Assessment Committee and then by State Level Environment Impact Assessment Authority.  Obviously, the opposite party had no control over the time which the aforesaid authorities could take in granting the requisite environment clearance.  In my view, considering the aforesaid requirement it was obligatory for the builder to either obtain the requisite environment clearances before accepting any booking in the aforesaid project or at-least to inform the buyers that the construction would commence only after obtaining the requisite environment clearance and that they were yet to apply for obtaining the said clearance.  This would be more necessary in a case where the builder is promising a particular time frame for delivering a possession of the house to the buyer.  If such a disclosure is made to the buyer and thereafter he chooses to make a booking knowing fully well that the builder cannot be held responsible for the delay attributable solely to the concerned environmental authority in granting the requisite environmental clearance, it will not be possible to hold the builder responsible for delay to the extent the said delay is attributable solely to the inaction on the part of the concerned environment authority.”

5.      Since the complainant has been allotted villa in the same project, namely, Alder Grove, Nirvana Country II, on the principle of parity alone he is entitled to the same order which this Commission had passed in Aditya Mishra (supra) and others.

6.      The complaint is, therefore, disposed with the following directions:

(1)     Unless already resumed, the opposite party shall resume construction of the villas sold to the complainants on or before 31.10.2016. The construction shall be completed in all respects on or before 03.11.2017. The opposite party shall apply for and obtain the completion certificate in respect of the villas at its own responsibility and then offer possession to the complainants on or before 03.02.2018.

(2)         The opposite party shall pay compensation in the form of simple interest @ 12% per annum from the expected date of possession till the date on which the possession is actually offered to the complainants after completing the construction in all respects and obtaining the requisite completion certificate.

(3)         No separate compensation would be payable to the complainants either towards the rent if any paid by them or for the mental agony and harassment which they have suffered on account of the failure of the opposite party to perform its contractual obligation.

(4)         The opposite party shall also pay Rs. 10,000/- in each complaint as the cost of litigation.

   (5)          The compensation for the period till 31.10.2016 shall be paid by the opposite party on or before 30.11.2016 whereas the compensation for the period from 01.11.2016 shall be paid by the 10^th of each succeeding month.         

(6)             If the order passed by this Commission in Aditya Mishra & Anr. (supra) is varied  or modified  by the Hon’ble Supreme Court before the order passed in this complaint is implemented, the order of the Hon’ble Supreme Court in Aditya Mishra & Anr. (supra) will also apply to this complaint.