Complainants/Respondents filed complaints before the District Forum and the State Commission against the Parsvnath Developers Ltd., Appellant/Petitioner herein (hereinafter to be referred to as “the Developer”) and the Chandigarh Housing Board, Appellant/Petitioner herein (hereinafter to be referred to as ‘the CHB”) depending upon the pecuniary jurisdiction of the claim. Complaints were filed based on the same/similar tripartite agreement entered into by the complainants with the Developers and the CHB.  District Forum allowed the complaints directing the Developer and the CHB to refund the amount paid by the Complainants along with interest varying from 9% to 12% and compensation varying from Rs.50,000/- to Rs.1,00,000/-.  State Commission allowed the complaints directing the Developer and the CHB to refund the amount deposited by the Complainants along with interest @ 7.75% (being the SBI term deposit rate prevalent at the relevant time in terms of clause 9 (d) of the agreement) and compensation @ Rs.107.60 per sq. mtr. (Rs.10/- per sq. ft.) of the super area of the unit per month after the expiry of 36 months of entering into the agreement till the date of payment in terms of clause 9 (c) of the tripartite agreement.  Since the facts and the law points except the compensation and rate of interest involved are the same, all the Appeals and the Revision Petitions are disposed of by a common order.

Facts are being taken from the First Appeal No. 306 of 2010 titled M/s. Parsvnath Developers Ltd. Vs. Shamsher Singh Sidhu & Anr.

FACTS:-

            CHB, Opposite Party No.2 before the State Commission invited bids to implement a project for developing residential/commercial and other related infrastructure at Rajiv Gandhi Chandigarh Technological Park at Chandigarh on the land admeasuring 123.79 acres.  The bid sent by the Developer was accepted by the CHB. CHB and the Developer entered into a Development Agreement dated 06.10.06.  Developer thereafter widely advertised their project of a township in the name of “Parsvnath Pride Asia”, Chandigarh envisaging sale of flats/pent houses to be constructed by them in the township. Complainant/Respondent (hereinafter to be referred to as “the Complainant”) applied for allotment of a flat of Category-C, Type-1 vide his application No.A-07282 dated 18.09.07. The total cost of the flat including the amenities was Rs.2,08,50,000/-. Rs.9,81,000/- being 5% of the total sale consideration were paid by the Complainant to the Developer at the time of booking. Developer issued allotment letter dated 28.09.07 followed by a subsequent letter dated 20.10.07 to the Complainant allotting flat No.3/Second Floor, Block No.C4-203 with tentative super area of 2825 sq. ft. for Rs.1,96,33,750/-. Subsequently, Complainant requested the Developer to upgrade the flat to a pent house. Developer acceded to the request and demanded an additional sum of Rs.46,31,500/- which was paid by the Complainant on 6.12.07.  A tripartite Flat Buyer Agreement was executed between the Developer, CHB and the Complainant on 25.01.08. As per clause 2(d) of the Flat Buyer Agreement, all the payments towards the sale consideration were to be paid by account pay cheque/Bank Draft in the name of Pasrsvnath Developers Ltd. – CHB Account No.30184417088 payable at Chandigarh.  As per clause 4.2.1 of the Development Agreement dated 6.10.06, the amount deposited by the Complainant was to be shared in the ratio of 70:30 between the Developer and the CHB. Further, as per clause 9 (a) of the Flat Buyer Agreement, the construction of the residential units was likely to be completed within a period of 36 months of signing of the Development Agreement, i.e., 6.10.06 between the Developer and the CHB.  

Since there was no intimation from the Developer regarding the status of the project, Respondent on enquiry made by him, learnt that the project had not taken off and no construction had commenced at the site. Complainant requested the Developer to refund the deposited amount to which Developer agreed subject to deduction of Rs.10,00,000/- @ 5% of the basic sale price out of the payment made by the Complainant. Complainant, being aggrieved, filed the complaint  before the State Commission.

Developer, on being served, entered appearance and filed its written statement resisting the complaint, inter-alia, on the grounds; that as per Clause 2.2.2 of the Flat Buyer Agreement, the period of 36 months for completion of the project was from the time when the unencumbered project land was handed over to it; that after signing the Development Agreement on 6.10.06, the CHB handed over 123.79 acres of land to the Developer claiming it to be free from any encumbrance but on erection of fencing  around it, the Haryana Government claimed ownership over a part of the land; that vide letters dated 9.2.07 and 12.04.07, CHB informed the Developer that the matter had been resolved with the Haryana Government; that CHB handed over a revised demarcation plan of the land but refused to deliver physical possession of the revised area;  that due to non-delivery of unencumbered land the delay occurred in the development of the project; that as per clause 5(a) of the Flat Buyer Agreement, Developer was entitled to forfeit 5% of the basic price in the event of cancellation.

CHB, on service, put in appearance and filed its separate written statement contesting the complaint on the grounds that as per clause 5(a) of the Flat Buyer Agreement, in the eventuality of cancellation, earnest money being 5% of the basic price was to be forfeited and the balance, if any, was to be refundable without interest; that as per clause 9 (e) of the Agreement, it was the responsibility of the Developer to timely deliver the residential unit to the buyer; that the delay in delivery of possession of the residential unit was attributable to the Developer; that there was no deficiency in service on their part.

The State Commission, after considering the material available on record and going through the evidence led by the parties, came to the conclusion that the Developer was not entitled to forfeit 5% of the basic price as per clause 5(a) of the tripartite agreement as there was no breach of any condition by the Complainant. State Commission further held that the dispute was between the Developer and the CHB regarding delivery of the possession of unencumbered land for construction of flats for which the Complainant could not be allowed to suffer.

State Commission allowed the complaint in the following terms:-

(i)           Parsvnath Developers Ltd. and Chandigarh Housing Board jointly and severally are held liable to refund the amounts deposited by the complainants in each complaint case along with interest @ 7.75% p.a. with effect from respective dates of deposit till actual realization;

(ii)          Parsvnath Developers Ltd. shall also pay compensation in each complaint case for not offering the built up flat within 36 months @ Rs.107.60 per sq. mtr. (Rs.10/- per sq. ft.) of the super area of the unit per month from 5.10.2009 (i.e. the last date of completion of the project) till actual realization.

(iii)        The aforesaid directions shall be complied with by the Ops in all these complaints within 30 days from the date the copy of order is received, failing which they shall be liable to pay penal interest @ 12% p.a. on the aforesaid payable amount.

State Commission in its order observed thus:-

“10.  We have given our thoughtful consideration to the above points raised on behalf of the parties and have also gone through the relevant terms and conditions of the Development Agreement dated 6.10.06 and Flat Buyer Agreement.  Before we proceed further, it is pertinent to mention here that both OPs, i.e. Parsvnath Developers Ltd. and Chandigarh Housing Board have fairly admitted that at the spot the project in terms of the scheme and the agreement could not take off in spite of the expiry of 36 months period within which the possession of the flat was agreed to be handed over.  Thus, now the question to be determined before us is as to who is liable to refund the amounts deposited by the complainants and interest thereon as well as compensation.  In this regard, both parties have made reference to various clauses of the Flat Buyer Agreement which is duly signed by the Complainants, Developers and CHB.  Clause-(a) at page -3 of this Agreement goes to show that the Development Agreement had already been signed between OPs, i.e. Parsvnath Developers Ltd. and CHB on 6.10.06 and thereafter developer had also acquired development rights in 123.79 acres of land (project land) which was meant for residential purposes.  Meaning thereby, the project was to be completed on or before 5.10.09 but no steps whatsoever are shown to have been taken so far for raising construction thereon.

11.    It is apparent from clause 2(d) that all the payments towards the construction amount including basic price and other charges payable in terms of Scheme of Allotment and the said agreement was to be paid by Account Payee Cheque/bank drafts in the name of Parsvnath Developers Ltd. – CHB A/C No.30184417088 payable at Chandigarh.  This indicates that both OPs are jointly holding the account in which the amounts of complainants are lying deposited.  No doubt that in the case of any breach of condition or terms of the Agreement by the buyer, the allotment was liable to be cancelled and in that eventuality 5% of the basic price was to be forfeited and the balance, if any, was refundable with interest as laid down in clause 5(a) of the aforesaid tripartite Agreement.  Admittedly, there is no breach of any condition of the Agreement committed by any of the complainants regarding payment towards the cost of the flat whereas OPs are proved to have not carried out the terms and conditions in its letter and spirit as required under the Agreement which was duly signed by the parties.  Moreover, if there was any dispute between OPs regarding delivery of the possession of the Project land or raising of construction thereon for that complainants cannot be allowed to suffer and at the same time OPs also cannot be allowed to bake benefit of their own wrongs.  Thus, it is a clearcut case of deficiency in service on the part of the OPs.  It is well established that the Parsvnath Developers Ltd. had constructed a sample flat at the site of the project land which allured the complainants who deposited huge amounts in order to fulfill their dreams of having a same kind of flat.  Admittedly, not a single brick has been laid at the spot and the money collected from the buyers in crores is being used by OPs without taking any steps to refund the same to them.  All these acts on the part of the OPs further also amount to unfair trade price.  In this view of the matter, question of making any deduction while refunding the deposited amounts of complainants does not arise.

12.    Now adverting to the clause 9(d) of the Flat Buyer Agreement, therein it was agreed upon between both the parties that if the developer is unable to deliver the unit to the buyer, the Developer and the CHB shall be liable to refund the buyer the amount received from them with interest.  The said clause in fact reads as under :-

          “9(d)   If as a result of any rules or directions of the Government or if any competent authority delays, withholds, denies the grant of necessary approvals for the project, or if due to any force majeure conditions, the Developer is unable to deliver the unit to the Buyer, the Developer and CHB shall be liable to refund to the buyer the amounts received from the buyer with interest at the SBI Term Deposit Rate at applicable on the date of refund”

13.    Thus, a perusal of the aforesaid clause goes a long way to show that the complainants are entitled to interest over their amounts deposited with Ops at the SBI term deposit rate as applicable on the date of refund.  In this regard, a tabulated statement showing latest revised payable terms deposit interest effective from 17.08.10 has been placed on file which indicates that on the term deposit amount for two years to less than three years the interest is 7.75% p.a. which in the given facts and circumstances of the complaints is applicable in all the cases before us.”     

          Developer as well as CHB, being aggrieved, have filed the separate appeals/Revision Petitions.

          Appeals/Revision Petitions came up for preliminary hearing on 8.09.11. This Commission, after hearing the counsel for the Developer, CHB, Appellants/Petitioners herein and the Complainants, passed the following order:-

“1.    We have heard learned counsel for the parties.

2.      It goes to the credit of the counsel that they have come to the agreement for interim arrangements to be made for refund of the amounts deposited by the original complainants, at least to the extent of the principle amount, though the issue pertaining to interest payable is yet to be determined.

3.      Learned counsel make a statement for following agreed agreement to be made for refund of the principle amount to the claimants:

4.      In supercession of earlier interim orders, now it is agreed that M/s Parasvnath Developers will deposit the amount to the extent of 70% in the “ESCROW” account and if any amount is deposited in this Commission, it will be inclusive of such 70% of the amount, which is the liability of the developer to make the payment as per the terms of the Tripartite Agreement. In other words, if in some cases the developer has not deposited 50% of the amount in this Commission then the amount will be deposited in the ‘Escrow” account to make deficit of 70% and if 50% amount is deposited in this Commission as per the earlier order, the remaining 20% will be deposited in the ‘Escrow” account. Thus the developer will make the entire payment to the extent of 70% in the “Escrow” account or this Commission, as the case may be, so as to arrange for the refund of the principle amounts deposited by the complainants (consumers), which is its liability.

5.      The learned counsel for Chandigarh Housing Board (CHB) seeks time to deposit 30% of the amount in the “Escrow” account, as per the expressed terms of the Tripartite Agreement. So also the developer’s counsel seeks time to complete the payment by making the deficit payment or whatever is the remaining amount in order to complete the payment to the extent of 70% for each of the complainant before this Commission in all the matters pending before this Commission.

6.      The learned counsel for the consumers before this Commission has no objection for granting three (3) weeks time for making such deficit payment by the Developer as well as for depositing of 30% of the principle amount by the Chandigarh Housing Board (CHB). Consequently, three weeks time is granted to the parties i.e. the Developer and CHB to deposit their respective parts of the amounts i.e. 70% - 30% in “Escrow” account keeping with the above terms.

7.      The respective consumers will be entitled to get the principle amounts released which are deposited by the developer in this Commission to the extent of their respective shares and also from “Escrow” account, with appropriation of the amounts. For example, if the Developer has deposited 50% amount in case of consumer “X” in this Commission, then that amount will be released to the consumer “X” by this Commission and if 20% amount is deposited by the Developer in “Escrow” account and 30% is deposited by the CHB in the “Escrow” account then such consumer “X” will be entitled for payment of that 20% + 30% from the “Escrow” account. So also in the case of Developer and if the Developer has not deposited the amount in this Commission, the Developer shall deposit 70% of the amount in “Escrow” so as to complete the transaction within three weeks. There will be no further modification in this order and the entire amount to the extent of principle sums shall be released in favour of each of the consumer without any delay. The parties may take note that no further extension of time will be granted for depositing of the amount. The parties to complete pleadings so that the expeditious hearing of the appeals and revisions can take place.

8.      M/s Parasvnath Developers Ltd. shall file tabulated information in tabular form about the amount deposited in each of the case per consumer, with this Commission and the deficit amount to meet bench mark of 50%, if any, which shall be deposited as per the agreement within a period three weeks. The tabular information shall be verified by the Registry as per the accounts so deposited by M/s Parasvnath Developers Ltd. from which account the repayment is required to be made to the complainants and information may be also confirmed from each of the complaint or counsel of the complainant before the amount is so released by the Registry. The Registry, however shall not release any amount deposited by the Chandigarh Housing Board (CHB) in this Commission to any of the consumer because the release of such amount to the extent of 30% is to be made from the “Escrow” account in which the CHB is to deposit such amount to make good of 30% of that account.

9.      The consumers will be entitled to get release of the principle amount of their respective shares from the concerned bank i.e. State Bank of India being “Escrow” agent without any further order and on appropriate identification and completion of the other formalities. The rest of the matter in controversy is pending before the Arbitrator and therefore, the above arrangement is by way of an ad interim relief.

10.    The registry to take stock of the Vakalatnamas and show names of the concerned advocates in the cause list and make comprehensive cause list of all these connected appeals and revisions.

11.    Notice be also issued in all the matters, in which notices have not been already issued.

12.    Stand over to 21-02-2012. Dasti allowed.”

          We have heard the Ld. Counsel for the parties at length.

          Ld. Counsel appearing for the Developer contends that as per clause 2.2.2 of the Flat Buyer Agreement, the period of 36 months for completion of the project was from the time when the unencumbered project land was handed over to the Developer by the CHB; that the CHB has not handed over to the Developer the vacant unencumbered possession of the project site till date; that had the CHB handed over the vacant unencumbered possession of the project site, Developer would have completed the construction of the flats within the stipulated time; that as such the Developer cannot be held liable to pay any compensation to the Complainants; that the amount deposited by the Complainants towards the cost of flat was not with the Developer rather it was lying deposited in the joint account with the CHB and that account was not being operated upon by the Developer; that as per clause 5(a) of the Flat Buyer Agreement, Developer was entitled to forfeit 5% of the basic price in the event of cancellation.

          Ld. Counsel appearing for the CHB contends that there was no legal hitch in raising construction over the area of 123.79 acres of land which was meant for residential purpose only;  that the dispute, if any, was with regard to remaining project land which was earmarked for commercial activities; that as per clause 9 (e) of the tripartite agreement, it was the responsibility of the Developer to timely deliver the residential units to the buyers and the CHB cannot be held liable to pay any compensation to the Complainants for non-delivery of the residential units.

          As against this, Ld. Counsel appearing for the Complainants supports the orders passed by the State Commission.

Facts are not in dispute before us.

Complainant entered into a tripartite Flat Buyer Agreements with the Developer and the CHB for allotment of a flat.  The total cost of the flat including amenities was Rs.2,08,50,000/- and 5% being earnest money to the tune of Rs.9,81,000/- was deposited by the Complainant in the joint account of the Developer and the CHB at the time of booking.   Vide letters dated 28.09.07 and 20.10.07,  Complainant was allotted flat No.3/Second Floor, Block No. C4-203 with tentative super area of 2825 sq. ft. for Rs.1,96,33,75/-.  As per clause 9 (a) of the tripartite agreement, the construction of the flats was to be completed within 36 months from the date of signing of the Development Agreement between the Developer and CHB on 6.10.06.  As per clause 9 (c) of the tripartite agreement, Developer was liable to pay compensation to the buyers @ Rs.107.60 per sq. mtr. (Rs.10 per sq ft.) of the super area of the unit per month in case the possession of the built up area was not offered to the buyer within a period of 36 months. CHB handed over the possession of 123.79 acres of land to the Developer for raising the construction of the flats.  There was some dispute on the land with the Haryana Government which was resolved later on.  As the Developer did not/could not take any step to construct the flats on the said land, Complainant requested the Developer to refund the deposited amount.  Developer agreed to refund the deposited amount subject to forfeiture of 5% of the basic price in the case of cancellation in terms of clause 5(a) of the tripartite agreement. Complainants, being aggrieved, filed the complaints before the District Forum and the State Commission as per pecuniary jurisdictions.  District Forum and State Commission allowed the complaints with a direction to the Developer and CHB to refund the amount along with interest and compensation.   Developer and the CHB have filed the present Appeals and the Revision Petitions before us.  

As regards the dispute pertaining to the proportionate share of the Developer and the CHB in the refund of the deposited amounts to the Complainants in the Revision Petitions and the First Appeals, as per clause 4.2.1 of the Development Agreement dated 06.10.06 executed between the Developer and the CHB, it was agreed that 30% of the revenues received in the Escrow account shall be transferred to a designated bank of CHB and correspondingly, the balance 70% shall be transferred to the account of the Developer.  As such, in terms of clause 4.2.1 of the Development Agreement, Developer is liable to refund 70% of the deposited amount and the CHB is liable to refund 30% of the deposited amount. 

Developer and CHB in terms of the interim order dated 08.09.11 have deposited the amount in the ratio of 70:30. The amount deposited by the Developer and the CHB in terms of the interim directions issued on 8.09.11, has already disbursed to the Complainants/Respondents.

Admittedly, the project has been abandoned and the respective counsel appearing for the Developer and the CHB have no grievance against the directions issued by the fora below directing the Developer and the CHB to refund the amounts to the Complainants as per their entitlement. The only dispute which remains between the parties is regarding the payability and liability of the interest and compensation in terms of clause 9(c) and 9(d) of the Flat Buyer Agreement.  

Ld. Counsel appearing for the Developer submits that the Complainants are not entitled to any interest as they sought the refund voluntarily. We do not find any substance in the submission made by the Ld. Counsel for the Developer that the deposited amount should be refunded to the Complainants without any interest. Complainants have been deprived of use of their money for the period the deposited amount remained with the Developer and the CHB and as such they are entitled to get the interest as per clause 9(d) of the tripartite agreement being the normal accretion on the capital. Clause 9 (d) reads as under:-

“9(d)   If as a result of any rules or directions of the Government or if any competent authority delays, withholds, denies the grant of necessary approvals for the project, or if due to any force majeure conditions, the Developer is unable to deliver the unit to the Buyer, the Developer and CHB shall be liable to refund to the buyer the amounts received from the buyer with interest at the SBI Term Deposit Rate at applicable on the date of refund”

A perusal of the clause 9(d) of the Flat Buyer Agreement reveals that in case the Developer was unable to deliver the units to the buyers, the Developer and the CHB were liable to refund to the buyers the amounts received from them with interest at the SBI Term Deposit Rate as applicable on the date of refund.

Apart from this, Hon’ble Supreme court of India in “Alok Shanker Pandey vs. Union of India & Ors. (2007) 3SCC 545”  has held that interest is not a penalty or punishment at all, but is the normal accretion on capital; that in equity the person keeping the money is required to pay the interest being normal accretion on the principal amount.  Relevant observations of the Supreme Court are as under: -

“It may be mentioned that there is misconception about interest. Interest is not a penalty or punishment at all, but it is the normal accretion on capital. For example if A had to pay B a certain amount, say 10 years ago, but he offers that amount to him today, then he has pocketed the interest on the principal amount. Had A paid that amount to B 10 years ago, B would have invested that amount somewhere and earned interest thereon, but instead of that A has kept that amount with himself and earned interest on it for this period. Hence equity demands that A should not only pay back the principal amount but also the interest thereon to B.”

The District Forum as well as the State Commission in most of the cases while allowing the complaint have directed the Developer and the CHB jointly and severally to pay interest at the rate of SBI term deposit prevalent at the relevant time, i.e. 7.75% p.a. in terms of clause 9 (d) of the Flat Buyer Agreements. However, in some cases it varies from 9% to 12% p.a.

To avoid the contradiction in the directions given by the District Forum and the State Commission regarding the payment of interest to the Complainants, we modify the orders passed by the fora below and direct the Developer and the CHB to pay interest at the uniform rate of 9% p.a (payable to the senior citizen on Bank fixed deposit at the relevant time) to the Complaints in the ratio of 70:30 from the respective dates of deposit till the date of deposit of the amount by the Appellants/Petitioners  in the Escrow Account.

Adverting to the point of compensation, Ld. Counsel for the Developer has tried to shift the burden on the CHB by stating that the CHB has failed to hand over the possession of the unencumbered land to the Developer to raise the construction.  That had the CHB handed over the possession of the unencumbered land to the Developer, the construction of the residential units would have been completed within the stipulated time. As against this, Ld. Counsel appearing for the CHB states that an area of 123.79 acres of land was handed over to the Developer for construction of the residential units.  That there was no dispute with regard to the said land and the dispute was regarding the remaining project land which was earmarked for commercial activities.  For a dispute between the Developer and the CHB, Complainants cannot be deprived of their legitimate dues which have become payable in terms of clause 9 (c) of the tripartite agreement. The Developer and the CHB cannot be allowed to have the benefit of their own/mutual wrongs. The dispute arising between the Developer and the CHB already stands referred to the Sole Arbitrator appointed by the Hon’ble Supreme Court (Hon’ble Mr. Justice R.V. Raveendran, Retd. Judge of the Supreme Court of India).

In terms of clause 9 (c) of the Flat Buyer Agreement, the Developer is liable to pay the compensation @ Rs.107.60 per Sq. Mt. (Rs.10 per sq. ft.) of the super area of the unit per month in case the possession of the built up area was not offered to the Buyer within a period of 36 months as stipulated in the tripartite agreement. Clause 9 (c) reads as under:-

“        9(c) In case of possession of the built up area is not offered to the buyer within a period of 36 months or extended period as stipulated in sub clause (a) above the Buyer shall be entitled to receive from the Developer compensation @ Rs.107.60 per sq. mtr. (Rs.10/- per sf. Ft) of the super area of the unit per month and to no other compensation of any kind.  In case the Buyer fails to clear his account and take possession of the unit within 30 days of offer, the Buyer shall be liable to pay to the developer holding charges @ 107.60 per sq. mtrs. (Rs.10 per sq. ft) of the super area of the unit per month in addition to the liability to pay interest to the sellers and other consequences of default in payment.”

          Admittedly, the Developer has failed to construct the residential units and hand over the possession of the same to the Complainants.  In terms of clause 9 (c) of the Agreement, Developer is liable to compensate the buyers @ Rs.107.60 per sqr. mtrs. (Rs.10 per Sq.ft) of the super area of the unit per month. By way of  interim measure, we direct the Developer to pay the compensation to the Complainants in terms of clause 9 (c) of the agreement @ Rs.107.60 per sqr. mtrs. (Rs.10 per Sq.ft) of the super area of the unit per month which would be subject to the final outcome of the arbitration proceedings. 

The orders passed by the State Commission in the original complaints and in the First Appeals arising of the complaint filed before the District Forum stand modified in terms of the directions given above.  Any direction either contrary or at variance to these directions stands modified.

The amount of interest and compensation shall be paid by the Developer and the CHB as directed above within a period of three months from today failing which the amount shall carry interest @ 12% p.a.

The First Appeals and the Revision Petitions are disposed of in above terms.  No order as to costs.