JUSTICE V.K. JAIN (ORAL)

CC/340/2015 (seeking execution of the conveyance deed + compensation)

One Mr. Kulbushan and his mother Mrs. Ishwar Loond booked a residential flat No.201 with the opposite party in a project, namely, Escape which the opposite party was to develop at Nirvana Country, Gurgaon. The sale consideration for the aforesaid flat was agreed at Rs.9587556/-. The aforesaid allotment was purchased by the complainants Nidhi Chawla and Ashish Kochar from them on 27.11.2012 and the transfer of the allotment was duly approved by the opposite party. The possession of the flat was agreed to be given within 36 months of the Buyers Agreement dated 31.8.2006, i.e., by 31.8.2009. The opposite party, however, failed to offer possession of the flat to the complainant.  Being aggrieved, the complainants approached this Commission by way of this complaint seeking possession of the flat allotted to him along with compensation, etc. During pendency of this complaint, possession of the flat has already been delivered to him on 9.11.2015. The complainants are now pressing for payment of compensation for the period the possession has been delayed. They are also seeking execution of the conveyance deed of the aforesaid flat in their favour.

CC/426/2015(seeking execution of the conveyance deed + compensation)

One Mr. K.G. Yadav booked  a residential flat No1802 with the opposite party in the above-referred project for a total sale consideration of Rs.10338440/- and the  Buyers Agreement with him was executed on 30.8.2006. The possession to the allottee was to be delivered by 30.8.2009. The aforesaid allotment was transferred to the complainant on 3.1.2012. Since possession was not offered to them, they approached this Commission seeking possession of the flat allotted to them along the compensation, etc. The possession of the flat was delivered to them during the pendency of this complaint on 9.9.2015 and now they are seeking compensation for the period the possession has been delayed, along with execution of the conveyance deed in their favour.

CC/451/2015 (compensation for the delay)

The complainant, namely, Davinder Kumar Jain booked a residential flat No. 702 with the opposite party in the aforesaid  project for a total consideration of Rs.10133440/- which was later on reduced to Rs.9908440/- and a Buyers Agreement between the parties was executed on 25.8.2006. The possession of the flat was to be delivered on or before 25.8.2009. The complainant had already paid Rs.9099795/- to the opposite party. Since possession was not offered to him, he approached this Commission seeking possession of the flat allotted to him along with compensation etc. The possession of the flat was taken by him during the pendency of the complaint on 26.2.2016 and now he is seeking compensation for the period the possession has been delayed. The Conveyance Deed in his favour has already been executed.

CC/502/2015 (seeking execution of the conveyance deed + compensation)

One Partha Sarathi Sarkar booked a residential apartment No.1702  with the opposite party in the above-referred project and a Buyers Agreement between him and the opposite party was executed on 24.10.2006. The total consideration for the aforesaid flat was agreed at Rs.10133440/-. The aforesaid allotment was purchased by the complainants – Anuj Khanduja and his wife Anuradha Khanduja on 16.10.2012 and the said transfer was duly approved by the opposite party. Since possession was not offered to them, they approached this Commission seeking possession of the allotted flat along with compensation, etc. The possession was delivered to them during pendency of this complaint on 13.8.2016 and now they are seeking compensation for the period the possession has been delayed along with execution of the Conveyance Deed in their favour.

 CC/1080/2015 (seeking execution of the conveyance deed + compensation)

The complainant, namely, Jaideep Minocha  booked a residential flat No.1801 with the opposite party in the above-referred project for a total consideration of Rs.21236766/- and a Buyers Agreement dated 2.7.2007 was executed between the parties . The possession was to be delivered to him by 2.7.2010. Since the opposite party failed to offer possession of the allotted flat to him, he approached  this Commission by way of this complaint seeking possession of the allotted flat along with compensation etc. During pendency of this complaint, possession of the flat has been given on 23.3.2016. Now he is seeking compensation for the period the possession has been delayed along with execution of the Conveyance Deed in his favour.

CC/1171/2015 (seeking execution of the conveyance deed + compensation)

Varun Sethi and his father R.P.Sethi  booked a residential flat No.402  with the opposite party in the above-referred project for a total consideration of Rs.10133440/- and a Buyers Agreement was executed on 5.9.2006 between the parties . The possession to them was to be delivered by 5.9.2009. The said allotment was purchased by the complainants – Dr. Bhaskar Jyoti Sonowal and his wife Bhairavi Anil Buch on 6.4.2012 and was duly approved by the opposite party. Since the opposite party failed to offer possession of the said flat to them, they approached  this Commission by way of this complaint seeking possession of the allotted flat along with compensation etc. During pendency of this complaint, possession of the flat was given to them on 1.8.2016. Now they are seeking compensation for the period the possession has been delayed along with execution of the Conveyance Deed in their favour.

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.      Section 21(a)(i) of the Consumer Protection Act confers jurisdiction upon this Commission to entertain complaints where the value of the goods or services and compensation if any claimed exceeds Rs.1 crore. Only in CC No.340 of 2015, the agreed sale consideration was less than Rs.1 crore. If the amount of compensation claimed by the said complainants is added to the agreed sale consideration, the aggregate amount comes to more than Rs.1 crore. Therefore, all the complaints are within the pecuniary jurisdiction of this Commission.

4.      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.427 of 2014 – Satish Kumar Pandey & Anr. Vs. Unitech Ltd., and connected matters decided by this Commission  on 8^th June, 2015. Rejecting these grounds, this Commission interalia held as under:

“7. It would thus be seen that but for the exceptional circumstances mentioned in Clause 4.a.ii, the opposite party was required to hand over the possession of the  apartment to the  flat buyers within 36 months from the date of signing the agreement  with them.      The exceptional circumstances which could justify delay in hand over the possession of the apartments were:-

(a)   Lock-out

(b)   Strike

(c)   Slow-down

(d)   Civil Commotion

(e)   War, enemy action, terrorist action, earthquake or act of God and

(f)    any reason or circumstance beyond the control of the developer.

        The delay in handing over the possession of the apartments could also be justified if there was to be a new legislation, regulation or order suspending, stopping or delaying the construction of the complex and the apartments.

8.     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.

9.     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.”

5.       The plea that in case of delay, the opposite party is bound to pay only the agreed compensation has repeatedly been rejected by this Commission in a number of cases including Satish Kumar Pandey (supra) and CC No.347 of 2014 – Swarn Talwar & Ors. Vs. Unitech Ltd. decided on 14.8.2015. The following was the view taken by this Commission in this regard:-

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.

If the builder is made to pay only the paltry compensation stipulated in the Buyers Agreement, this may result in a situation where the completion of the flats is unjustifiably delayed by the builder for an indefinite time since he know that the compensation he will have to pay to the flat buyer, on account of the delay in offering possession to him would only be a fraction of the cost of the borrowing in the market. Such a view may also encourage the builder to divert funds collected from the flat buyers in one project to the other projects promoted by him or even for his own purposes. This Commission, therefore, must necessarily eschew from taking such a view.

6.       An appeal preferred by the opposite party against the decision of this Commission in Swarn Talwar & Ors. 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.      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.

 8.     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 had 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. On the issue of Punjab & Haryana High Court banning the use of groundwater in construction activities, this Commission inter-alia observed and held as under:

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.

9.      For the reasons stated hereinabove, I hold that the delay in completion of the construction is not at all justified and, therefore, the opposite party must pay adequate and realistic compensation to the flat buyers, for the said delay.

10.    The learned counsel for the complainants state on instructions from the complainants that though this Commission has awarded compensation in the form of interest @ 12% p.a. in the cases where the opposite party was directed to deliver possession within the time stipulated by this Commission and has awarded compensation in the form of interest @ 18% p.a. in 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. for the period the possession has been delayed. They, however, are insisting upon the execution of the Conveyance Deed. In my view, the contention is well founded. The opposite party, besides paying compensation, must execute the Conveyance Deed of the flats in favour of the allottees so as to provide clear title deed of the said flats to them The title deed will also enable the allottess to raise finance if they so desire, against mortgage of the flats purchased by them.

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

The complainants in CC No. 451 and 1080 of 2015 shall be paid compensation in the form of simple interest @ 10% p.a. from the committed date of possession till the date on which the possession was offered to them by the opposite party.

The complainants in CC No. 340 of 2015  shall be paid compensation in the form of interest @ 10% p.a. w.e.f. 27.11.2015 till the date the possession was offered to him. He shall also be paid agreed compensation for the period between 31.8.2009 to 27.11.2015.

The complainants in CC No. 426 of 2015 shall be paid compensation in the form of interest @ 10% p.a. w.e.f. 17.2.2015 till the date the possession was offered to him. He shall also be paid agreed compensation for the period between 30.8.2009 to 17.2.2015.

The complainants in CC No. 502 of 2015 shall be paid compensation in the form of interest @ 10% p.a. w.e.f. 19.9.2015 till the date the possession was offered to him. He shall also be paid agreed compensation for the period between 24.10.2009 to 19.9.2015.

The complainants in CC No. 1171 of 2015  shall be paid compensation in the form of simple interest @ 10% p.a. w.e.f. 06.04.2015 till 31.7.2016. They shall also be paid agreed compensation for the period between 5.9.2009 and 6.4.2015.