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

          The complainants booked a residential flat with the OP in a project namely ‘Fresco Nirvana Country’ which the OP was to develop in Gurgaon.  A residential flat in the aforesaid project having been allotted to them for a consideration of Rs.62,30,295/- they executed a sale agreement with the OP on 15.01.2007, incorporating their respective obligations in respect of the said allotment.  As per clause 4(a)(i) of the agreement, the possession was to be delivered to the complainants by March 2009.  Vide letter dated 21.05.2016, the authorized signatory of the OP advised its Site Engineer of the project to deliver possession of the flat to the complainants.  A copy of the said letter was endorsed to the complainants.  The case of the complainants is that on receipt of the aforesaid letter, they asked the OP to show the Occupancy Certificate and also execute the Conveyance Deed in their favour but no satisfactory reply to the said request was given by the OP.  Since the physical possession of the flat was not given to them despite they having paid more than Rs.60,00,000/- to the OP, the complainants are before this Commission seeking refund of the amount paid to the OP or in the alternative, delivery of possession of the allotted flat complete in all respects in a habitable condition.

2.      The OP filed its written version contesting the complaint on several grounds but has not filed any affidavit by way of evidence.  I have heard the learned counsel for the complainants and have considered the affidavits filed by the complainants by way of evidence. 

3.      The allotment made to the complainants as well as the execution of the agreement with them has not been disputed in the written version filed by the OP.  They have also not disputed the amount received from the complainants. 

4.      The learned counsel for the complainants submitted that several Consumer Complaints in respect of the allotments made in this very project have already been allowed by this Commission.  A reference in this regard is made to the decision of this Commission dated 12.02.2018 in CC No.509 of 2015 Nilesh Tandon Vs. M/s Unitech Ltd., which to the extent it is relevant, reads as under:

2.      The complaint has been resisted by the opposite party taking plea which this Commission has already rejected in a number of consumer complaints including Satish Kumar Pandey & Ant. Vs. Unitech Ltd. & Connected matters – Consumer Complaint No.427 of 2014 decided on 8.6.2015 and Sumeet Singh Vs. M/s Unitech Ltd. & Anr. Consumer Complaint No.13 of 2015 and connected matters decided on 18.1.2016. The said grounds were also rejected by this Commission in Vineet Jain & Anr. Vs. M/s Unitech Ltd. & Anr. in Consumer Complaint No.135 of 2014 decided on 24.5.2016. This order of this Commission in Sumeet Singh (supra) to the extent it is relevant reads as under:-

“(7) The learned counsel for the complainants has pointed out that a number of complaints filed by the allottees of the project Vistas in Sector-70 of Gurgaon were allowed by this Commission vide order dated 08.06.2015. In CC No. 427/2014, Satish Kumar Pandey & Anr. Vs. M/s. Unitech Ltd. and connected matters. The order passed in the Satish Kumar Pandey & Anr. (supra) to the extent it is relevant, reads as under:

“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.

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”.

(9)     In a recent decision in CC No. 368/2014, Shweta Kapoor & Anr. Vs. M/s. Unitech Ltd. & Anr., decided on 14.01.2016, the complainants had agreed to purchase a residential flat from the opposite party Unitech Ltd. in a project which it was developing in Sector-50 of Gurgaon and had made payment of Rs. 95.5% of the total sale consideration. The Buyers Agreement executed between the parties in that case stipulated delivery of possession by September 30, 2009. Since the possession was not delivered by the stipulated date, the complainants approached this Commission by way of a complaint.  The delay in offering possession is sought to be justified on the following grounds:-

1. “Common Wealth Games during April, 2010 to March, 2011 – the Common Wealth Games were organized in the NCR region which resulted into an extreme shortage of labours in the region as most of the labour force was employed and / or was engaged by the Government to expedite the completion of the pending projects required for the Common Wealth Games.
2. Active implementation of social schemes like NREGA and JNNURM – In addition to the above due to active implementation of alluring and promising schemes floated by the Central and State Government, there was a sudden shortage of labour / workforce especially in the real estate market.  The workforce / labour forces were tempted to return to their respective states due to the guaranteed employment.
3. Order dated 16.7.2012 passed by the Hon’ble High Court of Punjab & Haryana (hereinafter referred to as the “Order” – The above mentioned Order strictly restrained the usage of ground water and directed to use only treated water from available Sewerage Treatment Plants (hereinafter referred to as “STP”).  As the availability of STP, basic infrastructure and availability of water from STP, was very limited in comparison to the requirement of water in the ongoing constructions activities in NCR region.

This scarcity of an essential commodity for construction purposes made it difficult for the Opposite Parties to cope up with the pre-decided schedules as the availability of treated water became very limited and against the total requirement of water.  It is to be highlighted here that only approx. 10-15% of required quantity was available at construction sites to continue with the planned construction activities.

In addition to the above, the Opposite Parties were later completely banned to use underground water for construction purposes and were vehemently directed to use recycled water only.

4.  Notification dated 14.9.1999 published by Ministry of Environment and Forest –The Notification dated 14.09.1999 barred the excavation of top soil for the manufacture of bricks and further directed that no manufacturing of clay bricks or tiles or blocks be done within a radius of 50 (fifty) kilometres from coal and lignite based thermal power plants without mixing atleast 25% of ash with soil.  As a consequence of this Notification dated 14.09.1999 various brick kiln were shut creating shortage of essential commodity bricks for construction purposes. 
5. Further, another raw material i.e. the sand which is used as mixture along with cement was also not available in the vicinity of the Complex due to restrictions from Mining Department imposed in the entire Aravali region and the same had to be procured from neighbouring State of Rajasthan.
6.  Later in a completely unforeseeable ruling by the Hon’ble Supreme Court of India dated 08.05.2009 the Hon’ble Court suspended all the mining operations in the Aravalli Hill range falling in State of Haryana within the area of approx.. 448 sq. kms. In the district of Faridabad and Gurgaon including Mewat which directly affected the construction schedules and activities of the Respondents herein.
7. Notification dated 14.09.2006 published by the office of Director, Town and Country Planning, Haryana – This Notification dated 14.09.2006 imposed certain restrictions and prohibitions on new projects or activities, or on the expansion or modernization of existing projects or activities based on their potential environmental impact being undertaken in any part of India unless prior environmental clearances are obtained.  Therefore, due to the said Notification dated 14.09.2006, the procedure of obtaining approvals and sanctions by the opposite parties led to the delay in the present construction schedule.

Recession in the economy – That since the real estate industry is a cyclical industry that is affected by both local and national economic conditions.  While macroeconomic conditions affect the overall state of the real estate industry, local supply and demand conditions are by far more important factors affecting the real estate markets as a result of which the availability of essential resources namely the labour and various raw materials became scarce.”

(10)   Rejecting all the pleas taken by the opposite party and allowing the complaint, this Commission inter-alia observed and held as under:

6.      In the case before us, there is no evidence of the opposite parties having been prevented from completing the construction due to an Act of God or reasons beyond their control. There is no evidence of any Tribunal or Authority having restrained them going ahead with construction of this particular project, which could not be completed even after more than 6 years after the date stipulated for this purpose in buyers agreement.  The averments made in the reply are vague and general in nature, without even specifying when, by which order and for how much period a Tribunal or Authority had stopped the opposite parties from completing the construction.  The opposite parties ought to have obtained all the requisite approvals and clearances before coming in the market for accepting booking of the flats.  If some building material or water was not available in Gurgaon (though there is no evidence of the opposite parties having been unable to get building material and water in Gurgaon) it was for them to arrange building material and water from alternative sources, wherever it could be available.  The shortage of labour, building material or the water required for construction cannot be said to be Acts of God or reasons beyond the control of the opposite parties.  This is not the case of the opposite parties that no construction came up in Gurgaon in last 7-8 years. If others could construct buildings during this period, the opposite parties also could have done so, if they so intended.  This is not the case of the opposite parties that the entire money collected by them from the flats buyers in this project was used only for this project.  Hence, there seems to be truth in the contention of the complainants that the opposite parties have diverted the money collected from them to other projects or for other purpose, thereby financing their other business activities at the cost of the flat buyers in this project. In these circumstances, the aforesaid pleas are accordingly rejected.  

(13)   The learned counsel for the opposite party submits that since the apartment in question was purchased for less than Rs.1 Crore, this Commission lacks pecuniary jurisdiction to entertain this complaint and the complainants should be relegated to the concerned State Commission for the redressal of their grievance.  We however find no merit in this contention.  This issue was raised by the opposite party in Swarn Talwar (Supra) and was rejected.  The aforesaid decision to the extent relevant to this plea reads as under:-

“5.      The first question which arises for our consideration in these cases is as to whether this Commission possesses the requisite pecuniary jurisdiction to entertain these complaints. Section 11(1) of the Consumer Protection Act read with Section 21 of the Consumer Protection Act to the extent it is relevant provides that this Commission shall have jurisdiction to entertain complaints where the value of the goods or services and compensation if any claimed exceeds Rs.1,00,00,000/-. The contention of the learned counsel for the opposite party is that interest claimed by the complainants cannot be termed as compensation and if the interest component is excluded, the pecuniary value of the complaint does not exceed Rs.1,00,00,000/- except in one case. The learned counsel for the complainants on the other hand contended that the interest which they have claimed along with refund of the principal sum even if not so described specifically, is by way of compensation only, since the opposite party has been deficient in rendering services to the complainants by not delivering possession of the flats on or before the time agreed in this regard.

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

        “However, the power to and duty to award compensation does not mean that irrespective of facts of the case compensation can be awarded in all matters at a uniform rate of 18% per annum. 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. Similarly, compensation can be given if after allotment is made there has been cancellation of scheme without any justifiable cause.

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.

5.      The learned counsel for the complainants states on instructions that the complainants are not interested in taking refund of the amount paid to the OP and wants possession of the allotted flat with compensation.  Hence, the complaint is disposed of with the following directions:-

1. The OP shall deliver possession of the allotted complete in all respects to the complainants after obtaining the requisite Occupancy Certificate, within six months from today.

2. The OP shall pay compensation in the form of simple interest @ 8% per annum to the complainants w.e.f. 01.04.2009 till the date on which the possession in terms of this order is offered.

3. The balance amount if any, payable by the complainants to the OP, shall be adjusted out of the compensation payable to them in terms of this order.The contractual compensation already credited by the OP in the account of the complainants shall be deducted while complying with this direction.

4. The OP shall also pay Rs.25,000/- as cost of litigation to the complainant.

5. The payment in terms of this order shall be made within three months from today.