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

The complainants in CC No. 143 of 2015 namely Sh. Amit Garg and Smt. Shipra Agarwal were allotted a residential flat by the opposite party in a project namely Harmony which the opposite party is developing in Sector-50 of Gurgaon.  The total sale consideration for the said apartment was fixed at Rs. 15026500/- out of which, Rs. 14436241/- already stand paid to the opposite party.  The parties entered into a Buyer’s Agreement dated 21.09.2010 and as per the said agreement, the possession of the apartment was to be delivered by 30.06.2011, subject to force majeure circumstances.

The complainants in CC No. 696 of 2015 namely Shayne Prithi Singh and Gitanjali Roy were also allotted an apartment in the above referred project and the sale consideration agreed in their case was Rs. 17623565/- out of which, the sum of Rs.17372269/- already stands paid. They also entered into a Buyer’s Agreement with the opposite party on 20.03.2012 and as per the said agreement, the possession was to be delivered to them within 12 months of signing the said agreement, meaning thereby that it would be delivered to them by 20.03.2013.

The complainants in CC No. 972 of 2015 namely Sharat Goyal and Megha Goyal agreed to purchase a residential flat in the same project namely Harmony in Sector-50 of Gurgaon for a total consideration of Rs. 16989160/- out of which, a sum of Rs. 16751946/- already stands paid. They also entered into a Buyer’s Agreement dated 07.11.2011 and as per the said agreement, the possession was to be delivered to them by third quarter of 2012 which would mean by 30.09.2012.

The complainant in CC No. 940 of 2015 namely Mr. Inder K. Chawla also agreed to purchase a residential apartment in the said project namely Harmony for a total sale consideration of Rs. 12978293/- out of which Rs. 12477824/- already stand paid.  The possession of the said apartment was to be delivered to him within 31 months of the execution of the Buyer’s Agreement, which came to be executed on 28.06.2008, meaning thereby that the possession was required to be delivered to him by 28.01.2011.

The complainant in CC No. 194 of 2015 namely Sumant Mehta is the successor in interest of one Sh. Harishankar Singhania who was allotted an apartment for a total consideration of Rs. 16061053/-. The said apartment was purchased by the complainant from Mr. Singhania on 25.10.2012. Out of the agreed sale consideration, Rs. 15642699/- already stands paid to the opposite party.  As per the agreement with the original allottee executed on 20.12.2010, the possession was to be delivered to him by 30.06.2011. The aforesaid complainant made further payment to the opposite party, during pendency of this complaint and the possession of the allotted flat has since been delivered to him sometime in November/December 2015.

The complainant in CC No. 196 of 2015 namely Sh. Ashok Kumar Taneja is the successor in interest of Mr. Kamal Gupta and Mrs. Achala Gupta to whom a residential flat in the aforesaid project was allotted by the opposite party, for a total consideration of Rs. 13561424/-. The said flat was purchased by the aforesaid complainant on 23.05.2011 and a sum of Rs. 12489260/- already stands paid to the opposite party. As per the Buyer’s Agreement executed between the original allottee and the opposite parties on 24.08.2007, the possession of the apartment was to be delivered by 30.09.2009.

The complainants in CC No. 1223 of 2015 namely Mr. Gaurav Yadav and his wife Mrs. Tanu Ganguly are the successors in interest of Mr. Viresh Sethi and Ms. Neelam Sethi who were allotted a residential flat in the same project namely Harmony for a total sale consideration of Rs. 11324946/-. The said purchase was made by the aforesaid complainants on 10.09.2011 and a sum of Rs. 10689356/- already stands paid to the opposite party.  As per the Buyer’s Agreement executed between the opposite party and the original allottees on 09.11.2006, the possession of the apartment was to be delivered by 30.09.2009.

          Since the opposite party failed to deliver possession of the apartments by the date stipulated in the Buyer’s Agreements in this regard, the aforesaid complainants have approached this Commission by way of separate complaints, seeking possession of the flats allotted to them alongwith appropriate compensation and cost of litigation etc.

2.      The complaints have been resisted by the opposite party primarily on the grounds which this Commission has repeatedly rejected in a number of decisions including CC No. 427 of 2014 Satish Kumar Pandey & Anr. Vs. Unitech Ltd. and connected matters, decided on 08-06-2015 and CC No. 347 of 2014 Swarn Talwar & Ors. Vs. Unitech Ltd., and connected matters decided on 14.08.2015. It is claimed in the reply that in case of any delay in completion of the apartment, for the reasons beyond the control of the developer, he is entitled to an extension of time for delivery of the possession.  It is stated that in case of delay the buyer is entitled only to compensation @ Rs. 5 per sq. ft. per month of the super area as stipulated in the Buyer’s Agreement. It is also alleged that Punjab & Haryana High Court had vide order dated 16.07.2012, restrained the usage of ground water for construction purposes and directed use of water from available sewage treatment plants, availability from which was very limited in comparison to the requirement.

3.      In Satish Kumar Pandey (supra), this Commission inter-alia observed and held as under:

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. 

          As regards the stay on extraction of ground water for construction purpose, this Commission observed and held as under in Captain Gurtaj Singh Sahni & Anr. Vs. Unitech Limited & Anr. and connected matters in CC No. 603 of 2015, CC Nos. 958 to 966, 1000, 1007 to 1011, 1408 and 1409 of 2015, decided on 02.05.2016 :

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.

4.      The opposite party has not been able to establish that the completion of the construction was delayed on account of the reasons beyond its control. Therefore, for the reasons stated in the above referred decisions of this Commission, we hold that the opposite party is required to pay appropriate compensation to the complainants for the delay in delivering possession of the flat allotted to them.

5.      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.

6.      The learned counsel for the opposite party states that all these complainants, except the complainant in CC No. 194 of 2015, who was allotted residential flat in Tower No. 4 and to whom the possession has already been delivered, were allotted residential flats in Tower No. 7, construction of which is complete in all respects and they have also applied for grant of NOC from the fire department. The learned counsel for the opposite party further submits that their effort is to obtain clearance from the fire department followed by the completion certificate/occupancy certificate and deliver possession to the allottees at the earliest possible. He expects all the clearances including the Occupancy Certificate to come through very soon. The learned counsel for the complainants however, has pointed out that in their affidavits, the opposite party has stated that they had been unsuccessful in obtaining fire NOC which as per their information, would be available within 6-8 months.

7.      As regards payment of compensation to the subsequent purchasers, this Commission observed and held as under in Satish Kumar Pandey & Ors. (supra):

In the cases of those complainants who are the initial allottees of the apartments or who acquired the same within one year of the initial allotment, the opposite party should also pay compensation to them in the form of simple interest at the rate of 12% per annum with effect from the date of possession stipulated in the agreement till the date on which the possession is actually handed over to them.  The persons who purchased the flats within one year of the initial allotment, ought to be treated at par with the initial allottees, because atleast two more years being still available to the opposite party at the time of purchase by them, they could not have anticipated that the builder will not be able to honour its commitment, as regards the stipulated date of delivery of possession.  No separate compensation for the mental agony, harassment and suffering needs to be paid by the opposite party to the complainants. However, in the case of those complainants who acquire the flats by way of resale more than one year after the initial allotment, the opposite party should pay compensation in the form of simple interest at the rate of 12% per annum with effect from three years from the date of the repurchase till the date on which the possession is delivered to them. As in other cases no compensation would be payable for the first three years from the date of initial allotment of the flat. For the interregnum i.e. between three years from the date of initial allotment and three years from the date of repurchase by them, compensation shall be paid by the opposite party at the rate of Rs.5/- per sq. ft. of the super area in terms of clause 4.c of the buyers agreement.  I am awarding lesser compensation to those purchased the flat from the initial allottee more than one year after the date of initial allotment, considering the decision of the Hon’ble Supreme Court in Haryana Urban Development Authority Vs. Raje Ram, AIR 2009 SC 2030. In that case, HUDA allotted a plot of land to one Madan Lal who deposited the 25% of the cost of the plot. Later, HUDA notified revision of the price and gave an option to the allottees to either accept the revision or receive back the initial deposit with interest.  Onn the request of the allottee and the respondent the allotment was transferred in favour of the respondent. Since HUDA failed to deliver possession of the plot within the stipulated time, the respondent approached the concerned District Forum expressing grievance against non-delivery of the possession within the stipulate time. HUDA then offered possession of the plot to him and the District Forum disposed of the complaint with a direction to HUDA to pay interest to the respondent at the rate of 18% per annum from the date of deposit till the date of offer of possession. Having been unsuccessful before the State Commission and this Commission, HUDA approached the Hon’ble Supreme Court by way of special leave. It was held by the Hon’ble Supreme Court that the respondent knew at the time the plot was realloted to him that there was delay and in spite of that he took the re-allotment. It was held that the case of the respondent could not be compared to the case of the original allottees. The respondents were aware at the time of purchase that the time for performance was not stipulated as the essence of the contract and the original allottee had accepted the delay. It was, therefore, held that the respondents were not entitled to interest on the amount deposited by them.  The persons who purchased flats more than one year after the date of initial allotment, could foresee that the builder will not be able to deliver the possession of the flat by the stipulated date.  This is not their case that when they acquired the allotment by way of repurchase, they had found that the builder had already completed the development which it was expected to complete by that time or that the builder had assured them that it would give possession to them by the original date stipulated in the agreement. Such persons therefore cannot be treated at par with the original allottees or those who acquired the allotment within one year of the initial allotment. 

8.      For the reasons stated hereinabove, these complaints are disposed of with the following directions:

(1)     In CC No. 143 of 2015, CC No. 196 of 2015, CC No. 696 of 2015, CC No. 972 of 2015, CC No. 1223 of 2015 and CC No. 940 of 2015, the opposite party shall obtain all the approvals and clearances including occupancy certificate, at its own cost and responsibility on or before 30.11.2016 and offer possession to the complainants on or before 31.12.2016.

(2)     The opposite party shall pay to the original allottees, compensation in the form of simple interest @ 12% per annum with effect from the committed date of possession as per the Buyer’s Agreement, till the date possession is actually offered to them. The compensation payable till 31.07.2016 shall be paid by 10.08.2016, whereas the compensation for the subsequent period shall be paid by the 10^th of each succeeding month.

(3)     The complainants in CC No. 196 of 2015 and CC No. 1223 of 2015 who are the subsequent purchasers shall be paid compensation by way of simple interest @ 12% per annum with effect from 01.07.2013 and 30.07.2014 respectively till possession is delivered to them. They will also be paid compensation @ Rs. 5 per sq. feet of the super area of their respective flats for the period between the committed date of possession as per the Buyer’s Agreement of their respective flats and the aforesaid commencement dates.

(4)     The complainant in CC No. 194 of 2015 who also is a subsequent purchaser shall be paid compensation by way of simple interest @ 12% per annum with effect from 06.05.2013 till the date on which the possession was actually offered to him. He will also be paid compensation @ Rs. 5 per sq. ft. of the super area of his flat for the period from 01.07.2011 to 05.05.2013.

(5)     If the opposite party fails to deliver possession and pay compensation in terms of this order, the complainants shall be entitled to seek execution in terms of Section 25 & 27 of the Consumer Protection Act.

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