JUSTICE V.K. JAIN (ORAL)

CC/395/2015

Ashish Vinimay Pvt. Ltd. booked a residential apartment No.1402  with the opposite party in a project, namely, Escape which the opposite party was to develop at Nirvana Country, Gurgaon. The total sale consideration for the aforesaid flat was agreed at Rs.10235940/- and a Buyers Agreement in this regard was executed on 5.9.2006. The aforesaid allotment was purchased by the complainants on 25.10.2011 and the transfer of the allotment was duly approved by the opposite party which had by that time received sale consideration to the extent of Rs.10235940/-. The possession of the flat was to be delivered within 36 months from the execution of the Buyers Agreement, i.e., by 5.9.2009. Since possession was not offered to them by the committed date, they are before this Commission seeking refund of the amount paid by them along with compensation, etc.

CC/397/2015

One R.V.G. Enterprises Pvt. Ltd. booked a residential flat No.1102 with the opposite party in the aforesaid project, namely, Escape.   The total sale consideration for the aforesaid flat was agreed at Rs.10235940/-  and a Buyers Agreement dated 5.9.2006  was executed between them and the opposite party. The possession was to be delivered within 3 years from the execution of the Buyers Agreement, i.e., on or before 5.9.2009. The aforesaid allotment was purchased by the complainants on 23.8.2011 and the transfer of the allotment was duly confirmed by the opposite party, which also acknowledged receipt of the entire sale consideration. Since, possession was not offered to them by the stipulated date, they are before this Commission seeking refund of the amount paid to the opposite party along with compensation, etc.

CC/408/2015

The complainant, namely, Gurdarshan Singh Sachdeva and his wife Jasjeet Kaur Sachdeva booked a residential flat No.502 with the opposite party in the same project,  for a   total sale consideration of Rs.9140996/-  and a Buyers Agreement between the parties to the complaint was executed on 25.8.2006. The possession was to be delivered to him on or before 25.8.2009. Since, possession was not offered to them, they are before this Commission seeking refund of the amount paid by them to the opposite party along with compensation, etc.

CC/1435/2015

The complainants, namely, Manish Dhawan and his wife Mrs. Bhavana Dhawan booked a residential flat No.1801 with the opposite party in the aforesaid  project for a total consideration of Rs.10338440/- and a  Buyers Agreement between the parties  was  executed on 5.8.2006. The possession was to be delivered within 36 months thereof, i.e.,  by 5.8.2009. Since the opposite party has failed to offer possession of the flat to him, the complainant  is before this Commission seeking refund of the payment of Rs.9313450/- along with compensation on that amount.

2.      The complaints have been resisted by the opposite party on the grounds which this Commission has repeatedly rejected in a number of consumer complaints. The first objection taken by the opposite party is that in some of the cases the agreed sale consideration was less than Rs.1 crore and, therefore, this Commission lacks pecuniary jurisdiction to entertain those complaints. It has been further alleged that a number of complainants had purchased the flat at a later date knowing fully well that the opposite party will not be able to deliver possession of the said flat, by the date stipulated in the Buyers Agreement and, therefore, it is evident that the flat was purchased by them for commercial purpose. As regards the delay in offering possession of the flats, the opposite party has alleged that (i) the project faced various road blocks and hindrances including approval from different authorities (ii) there was slow down in the real estate, affecting the demand and supply of the flats (iii) there was shortage of labour in NCR region on account of requirement of labour in  the projects relating to Commonwealth Games (iv) there was shortage of labour in the market due to implementation of social schemes such as National Rural Employment Guarantee Scheme and Jawarhar Lal Nehru National Urban Renewal Mission which diverted the labour to the employment  guaranteed by the Government  under the said schemes. It is also alleged that there was shortage of ground water and Punjab and Haryana High Court had stopped the  usage of ground water for construction purposes. This is also claimed that there was shortage of bricks in the market due to restrictions placed by Ministry of Environment and Forests, Govt. of India, which had barred the excavation of top soil for the manufacture of bricks and had stopped the said manufacturing within a radius of 15 km from coal and lignite  based thermal power plants without mixing at least 25% of ash with soil. It is also alleged that there was shortage of sand in the market since mining operations in the Aravali Hill were stopped due to a ruling by the Hon’ble Supreme Court. It is also alleged that it took a long time for the concerned authorities to give environmental  clearance to the project.

3.      The grounds taken by the opposite party to justify the delay in offering possession of the flats to the allottees are almost identical to the grounds which it had taken in C.C. No.347 of 2014 - Swarn Talwar & Ors. Vs. Unitech Ltd., and connected matters decided by this Commission  on 14^th August, 2015.

4.      The complainants in Swarn Talwar & Ors. (supra) and connected matters had booked residential apartments with the OP in a project, namely, Unitech Habitat which the opposite party was to develop on plot No.9 in Sector Pi-II (Alistonia Estate), Greater Noida. The complainants in the above-referred matters, felt aggrieved on account of the failure of the opposite party to honour its contractual obligation and offer possession of the flats booked by them. Therefore, they approached this Commission by way of separate consumer complaints seeking refund of the amount paid by them along with interest @ 18% p.a. They also sought damages and cost of litigation besides rent for the period the possession was delayed.

The complaints were resisted by the OP primarily on the grounds that (i) the amount paid by the complainants being less than Rs.1,00,00,000/- in each case, this Commission lacks pecuniary jurisdiction to entertain the complaints, (ii) as per clause 4(c) of the allotment letter the opposite party is required to pay only the holding charges calculated at Rs.5/- per sq. ft. per month of the super area for the period of delay in offering delivery of the flat beyond the agreed period, (iii) the delay was attributable to a recession in the economy, affecting the availability of the resources such as labour and raw materials, (iv) there was major disruption in the construction activity of the opposite party due to massive agitation and strikes by farmers whose lands were acquired by NOIDA, which resulted in slackening and availability of supply of raw material, (v) there was acute shortage of labour, underground water and raw material besides delayed approval from Greater Noida Authority and (vi) In terms of clause 4(e) of the allotment letter the opposite party is entitled either to offer an alternative property or refund the amount paid by the complainant with simple interest at the rate of 10% per annum without damages or other compensation. It was also alleged that notification dated 14-09-2006 issued by Government of India imposed restrictions and prohibitions on new projects or activities or on the extension or modernization of the existing projects without prior environmental clearances and the procedure for obtaining such clearances led to delay in construction schedule. It was also claimed that the Dharna by farmers who were agitated on account of acquisition of their land, in front of the projects of various builders also halted the construction work and there was default in payment of installments by several flat buyers, dues against whom amounted to nearly Rs.57,00,00,000/-.

5.      Rejecting all the contentions advanced by the opposite party, this Commission directed it to refund the amount paid to it by the complainants along with compensation in the form of simple interest on that amount @ 18% p.a. from the date of deposit till the date of payment. The payment was directed to be made within six weeks.

          The following was the view taken by this Commission, on the issue of pecuniary jurisdiction, while allowing the aforesaid complaints:-

“In our view, the interest claimed by the flat buyers in such a case does not represent only the interest on the capital borrowed or contributed by them but also includes compensation on account of appreciation in the land value and increase in the cost of construction in the meanwhile. As noted by us in CC No.232 of 2014, Puneet Malhotra Vs. Parsvnath Developers Ltd. decided on 29-01-2015, there has been steep appreciation in the market value of the land and cost of construction of the residential flats in Greater Noida in last about 7-10 years and consequently the complainants cannot hope to get a comparable flat at the same price which the opposite party had agreed to charge from them. In fact it would be difficult to get a similar accommodation, even at the agreed price plus simple interest thereon at the rate of 18% per annum. Therefore, the payment of interest to the flat buyers in such a case is not only on account of loss of income by way of interest but also on account of loss of the opportunity which the complainants had to acquire a residential flat at a particular price.

          In Ghaziabad Development Authority Vs. Balbir Singh (2004) 5 SCC 65, the Hon’ble Supreme Court inter alia observed and held as under:

        “As seen above what is being awarded is compensation i.e. a recompense for the loss or injury. It therefore necessarily has to be based on a finding of loss or injury and has to correlate with the amount of loss or injury. Thus the Forum or the Commission must determine that there has been deficiency in service and/or misfeasance in public office which has resulted in loss or injury. No hard and fast rule can be laid down, however a few examples would be where an allotment is made, price is received/paid but possession is not given within the period set out in the brochure...

…Along with recompensing the loss the Commission/Forum may also compensate for harassment/injury both

mental and physical.

That compensation cannot be uniform and can best of illustrated by considering cases where possession is being directed to be delivered and cases where only monies are directed to be returned. In cases where possession is being directed to be delivered the compensation for harassment will necessarily have to be less because in a way that party is being compensated by increase in the value of the property he is getting. But in cases where monies are being simply returned then the party is suffering a loss inasmuch as he had deposited the money in the hope of getting a flat/plot. He is being deprived of that flat/plot. He has been deprived of the benefit of escalation of the price of that flat/plot. Therefore the compensation in such cases would necessarily have to be higher.

          It would, thus, be seen that the Hon’ble Supreme Court recognized that the interest to the flat buyers in such cases is paid by way of compensation. Therefore, there is no reason why the interest claimed by the complainants or at least part of it should not be taken into consideration for the purpose of deciding the pecuniary jurisdiction of this Commission. If this is done, the aggregate amount claimed in each of the complaints exceeds Rs.1,00,00,000/- and, therefore, this Commission does possess the requisite pecuniary jurisdiction.

The following was the view taken by this Commission on the quantum of compensation in such cases:-

As regards the plea that in terms of Clause (c) of the allotment letter the opposite party is required to pay only the holding charges calculated at the rate of Rs.5/- per sq.ft. per month of the super area for the period the possession is delayed, such a contention was expressly rejected by us in Puneet Malhotra (supra) holding that such clause applies only in a case where construction of the flat is delayed but despite delay the buyer accepts the possession of the flat from the seller and consequently the accounts have to be settled between the parties. We observed in this regard that the buyer would have to pay the agreed holding charges to the seller and the seller to pay the agreed compensation on account of delaying the construction of the flat. The said clause, however, does not apply to a case where the buyer on account of delay on the part of the seller in constructing the flat is left with no option but to seek refund of the amount which he had paid to the seller. We further held that 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 also noted in this regard that enumeration of the unfair trade practices in Section 2(r) of the Act is inclusive and not exhaustive. 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.

The grounds taken by the opposite party to justify the delay were rejected with the following reasoning:-

“Neither any new legislation was enacted nor an existing rule, regulation or order was amended stopping suspending or delaying the construction of the complex in which apartments were agreed to be sold to the complainants.  There is no allegation of any lock-out or strike by the labour at the site of the project.  There is no allegation of any slow-down having been resorted to by the labourers of the opposite party or the contractors engaged by it at the site of the project.  There was no civil commotion, war, enemy action, terrorist action, earthquake or any act of God which could have delayed the completion of the project within the time stipulated in the Buyers Agreement.  It was contended by the counsel for the OP that the expression ‘slow down’ would include economic slow-down or recession in the Real Estate sector.  I, however, find no merit in this contention.  The word ‘slow down’ having been used alongwith the words lock-out and strike, I has to be read ejusdem generis with the words lock-out and strike and therefore, can mean only a slow down if resorted by the labourers engaged in construction of the project.

          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 the alleged delay in obtaining environmental clearances there is no material on record to show when the opposite party applied for such clearances, where they submitted all the requisite documents etc. while applying for such clearances and how much was the time taken by the concerned authorities in granting the said clearances. In the absence of such particulars, it would be difficult for us to accept that development of the project was delayed on account of any notification imposing restrictions on new projects. In any case, the opposite party has failed to produce before us any notification imposing restriction or prohibition on development of the project in which the flats were to be constructed for the complainants.”  

6.      Being aggrieved from the order passed by this Commission, the opposite party approached the Hon’ble Supreme Court by way of an appeal. The said Appeal being Civil Appeal D.No.35562/2015 was dismissed by the Hon’ble Supreme Court vide its order dated 11.12.2015 which reads as under:-

“We have heard learned counsel for the appellant and perused the record. We do not see any cogent reason to entertain the appeal. The judgement impugned does not warrant any interference.

The Civil Appeal is dismissed.”

7.      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.…………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.

8.      The learned counsel for the complainants state on instructions from the complainants that though this Commission has awarded compensation in the form of interest upto @ 18% p.a. in the cases where refund was ordered, the complainants in order to avoid any reasonable possibility of further litigation on the part of the opposite party, are ready and willing to accept compensation in the form of interest @ 10% p.a.

9.      The complaints are, therefore, disposed of with the following directions:-

1. The opposite party shall refund the entire amount received by it from the complainants/allottees or their predecessor in interest in respect of the flat in question within 12 weeks from today along with compensation in the form of interest @ 10% p.a. from the date of receipt of each payment till the date on which the entire amount payable to the aforesaid complainants/allottees in terms of this order along with compensation in the form of interest is refunded.

2. The opposite party shall pay Rs.5,000/- each as the cost of litigation in each complaint.