The beneficial legislation of Consumer Protection Act aims at reducing the grievances of the all classes of customers by providing them the preferential treatment. According to the Consumer Protection Act, the consumer dispute is the entity where the consumer/ customers have been given the convenient safeguards against ample exploitation like bad customer service, faulty goods or any unfair trade practices. The interest of the customers is protected by setting up, the three tier quasi-judicial consumer Redressal machinery which are at national, state and district levels as per section 9 of Consumer Protection Act. The Consumer Protection Act, 1986 (CPA) has been enacted in light of certain concerns related to public policy and the benefit of consumer.
In India, people are least aware with the consumer’s rights and lags behind having low general understanding of arbitration as dispute resolution mechanism. The arbitration clause can curtail the grounds on which the consumers can raise the disputes, whereas on the other side the consumer protection act may grant the consumer various grounds on which he can file the complaint which may not be otherwise permitted in the standard form agreement having the arbitration clause.
Arbitration has equal bargaining powers and the resources at hand which makes it private, efficacious, and timely form of dispute resolution. Whereas in case of consumer disputes, the case is different, where they are exposed to the standard form agreements making them submit to the unfair or the repressive terms. They are several times made part of the one-sided arbitration clause, which is drafted keeping in mind the interest of one party only.
These days Indians are shifting to the online purchasing platform and being ignorant of not checking the agreements which makes them to be covered under the blanket provision and end up being the party to the arbitration. This makes less options opened for the consumer to resort to the statutory remedies which in turns endangers the interest of the consumers. This may also build the hostile market against the e-commerce in India. It may have the adverse effect not only on the Indian economy but also on the e-commerce giants who aims at invest in the growing market.
It was held in the case of Aftab Singh v. Emaar MGF Land Limited & Anr., that the provisions of the arbitration act does not apply to the consumer courts, as they are the special courts set up for the public purpose. In this case, the group of the home owners filed the complaint against Emaar MGF Land Private Limited (Builder) before NCDRC. The complaint was filed for the non-delivering the plots to the buyers as per the Buyers’ Agreement. The builder filed the application under section 8 of the Arbitration and Conciliation Act, on the basis of the arbitration agreement made between the parties which was mentioned there in the Buyer’s Agreement.
It was argued by the petitioner that the remedies provided under the Consumer Protection Act are not in exclusion of the existing laws, but are in addition to it, which has been sated in the case of National Seed Corporation Limited v M. Madhusudhan Reddy( (2012) 2 SCC 506 ) . It was also argued that the consumer protection act is the piece of the legislation which intends to confer the benefits and it is the, for which the purpose should be advanced. Therefore, regardless of having entered into the arbitration clause, the consumer can invoke the section 3 of the Consumer Protection Act and bring the complaint to the consumer forum( Skypak Couriers Ltd. Vs. Tata Chemicals Ltd)Booz Allen Hamilton Inc v. SBI Home Finance Ltd(2011) 5 SCC 532), which provided the country with the disputes that are not arbitrable. In this case, Supreme Court, came with the 7 categories of the disputes that are not arbitrable A. Ayyasamy v. A Paramasivam(2016)10 SCC 386; N. Radhakrishnan v. Maestro Engineers that the dispute will not be arbitrable if the civil court’s jurisdiction has been exclusively given to a tribunal or the special court. The Consumer Courts were made to create an organized system for dispute between the people who possess the unequal power i.e. the consumer and the large corporations. The commission also pointed out the section 2(3) of the Arbitration and Conciliation Act which refers to the situations where the special categories of disputes are protected from being referred to the arbitration. Therefore this provision protects the Consumer disputes. The court concluded that if the court allows party to go for the arbitration and being in favor of the builder, it will defeat the goals and the main purpose of the Consumer Protection Act.
Section 8 of the Arbitration and Conciliation Act states that the judicial authority can instruct the parties to go for arbitration in the case when there exists the arbitration clause in the arbitration agreement. It does not bars oust the jurisdiction of the Consumer Court, it will continue to hold and enjoy the jurisdiction irrespective of presence of an arbitration clause in the agreement.
The Supreme Court contented that there was no legislative intent of the amended provisions of the section 8(1) in the Arbitration and Conciliation Act, so as to override the other statutes which have the specific remedies. Neither it intends to make disputes related to trusts, criminal law, tenancy, telecom, family law, IPR, etc, as the arbitrable subject and to against the judgment of A. Ayyasamy v. A Parasivam & Ors. (2016) 10 SCC 729 ) and Booz Allen Hamilton Inc. v SBI Home Finance Limited & Ors.(2011) 5 SCC 532).
Supreme Court analyzed the situations prior to 2015 Amendment, related to referring the consumer disputes to arbitration. Supreme Court referred to the judgments prior 2015 which had the settled law in cases of Fair Air Engineering Pvt. Ltd . & Anr. V N K Modi (1996) 6 the SCC 385, National Seeds Corporation Limited v. Madhusudhan Reddy & Anr. (2012) 2 SCC 506 and Rosedale Developers Private Limited V. Aghor Bhattacharya & Ors. (2018) 11 SCC 337. These cases held that even if the dispute arise from the contract having the arbitration clause, it will not impede the parties to resort to file a complaint before the consumer forum under Consumer Protection Act. All of the judgements had the rationale that provision of section 3 of Consumer Protection Act states that “the provision is in addition to, and not in the derogation of any other law for the time being in force.”
The Supreme Court acknowledged the 2015 amendment which restricted the power of any judicial authority to refuse to refer the dispute to arbitration under section 8(1) and appointment of arbitrator under section 11(6A) and also acknowledged the fact that it invalidated the earlier precedent in the case of Sukanya Holding (P) Ltd. v. Jayesh H Pandya & Anr.(2003) 5 SCC 531 Supreme Court considering section 2(3) of the arbitration act, states that the Part I of the arbitration act shall not affect any other law for the time being in force, by virtue of which certain disputes may not be submitted to the arbitration. Supreme Court stated that the legislative intent of 2015 Amendment was never to override section 2(3) of the Arbitration Act and other statute which offers the public remedy like that of CPA. The Supreme Court in 1994 already held that CPA is a beneficial legislation which provides the economical and expeditious remedies to the aggrieved consumer in the case of Lucknow Development Act V M K Gupta(1994) 1 SCC 243).
Referring to all of the above cases, the Supreme Court in this case affirmed that the decision given by NCDRC is valid and stated that the consumer dispute are the subject matter where the dispute cannot be referred to arbitration as it pertains to rights in rem (public rights). It comes under the ambit of the non-arbitrable dispute defined under Booz Allen and Ayyasamy case. The disputes are non-arbitrable in disputes related to criminal laws, tenancy, trusts, family law, telecom, IPR, insolvency and winding up, and in certain cases, fraud.
It can be ensured with the judgement that consumers who have lesser bargaining power than that of the service providers shall not be pushed towards the relatively cumbersome process of the arbitration where there can be other more affordable and efficacious low public law remedies available. The CPA is a special legislation which has the public law remedies dealing with the rights under the umbrella of “right in rem” which has been espoused by Booz Allen. The case had many critics for it, as it was delivered during the course of time, when India has been continuously focusing upon the survival and the supremacy of the arbitration proceeding over litigation in the Indian dispute resolution. And it was the major reason that it appeared for some of the people as a diversion from the object of Indian arbitration system to be an arbitration-friendly hub. This also draws our attention towards the fact that the arbitration shall be made a more consumer-friendly method of dispute resolution. It is because of this judgement that people were able to depict the heightened element of the public interest consumer dispute in India.
Thus it has become clear that the special act of Consumer Protection Act is not in derogation of any act but it is in addition of another act. So this court has jurisdiction to decide the consumer cases even if there is any clause of the matter to the arbitrator.
In a case where no time limit has been mentioned for the delivery opposition, Hon’ble Supreme Court has said that it should not be limitless and there shall be deemed reasonable period of three years for the delivery of possession.
However the Hon’ble Supreme Court in CIVIL APPEAL NO(S). 3533-3534 OF 2017 M/S. FORTUNE INFRASTRUCTURE (NOW KNOWN AS M/S. HICON INFRASTRUCTURE) & ANR. VS TREVOR D’LIMA & ORS. (Judgement March 12, 2018) has held:
“15. Moreover, a person cannot be made to wait indefinitely for the possession of the flats allotted to them and they are entitled to seek the refund of the amount paid by them, along with compensation. Although we are aware of the fact that when there was no delivery period stipulated in the agreement, a reasonable time has to be taken into consideration. In the facts and circumstances of this case, a time period of 3 years would have been reasonable for completion of the contract i.e., the possession was required to be given by last quarter of 2014. Further there is no dispute as to the fact that until now there is no redevelopment of the property. Hence, in view of the above discussion, which draw us to an irresistible conclusion that there is deficiency of service on the part of the appellants and accordingly the issue is answered. When once this Court comes to the conclusion that, there is deficiency of services, then the question is what compensation the respondents/complainants is entitled to ?”
In the above-mentioned case Hon’ble Supreme Court also held regarding payment of compensation or quantum of compensation as follows:
“18. This Court in Ghaziabad Development Authority v. Balbir Singh, (2004) 5 SCC 65, has observed that there is no fixed formula for fixing damages in the following manner
8. However, the power 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 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. The Commission/Forum would then need to determine the loss. Loss could be determined on basis of loss of rent which could have been earned if possession was given and the premises let out or if the consumer has had to stay in rented premises then on basis of rent actually paid by him.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 be 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. … We clarify that the above are mere examples. They are not exhaustive. The above shows that compensation cannot be the same in all cases irrespective of the type of loss or injury suffered by the consumer.” (emphasis supplied)
Before discussing further, we have to see the basic object of the Consumer Protection Act.
The Consumer Protection Act, came into existence and implemented in 1986, provides Consumer Rights to prevent consumers from fraud or specified unfair practices. It safeguards and encourages and gives an opportunity to consumers to speak against insufficiency and flaws in goods and services. If traders, manufacturers and distributors follow any foul trade, this act protects their rights as a consumer.
This Protection Act covers entire goods and services of all sectors that are public, private, or cooperative sectors, except those exempted by the central government. The act provides a floor for a consumer where one can file their complaint against the product and the forum takes an action against the concerned supplier and compensation is granted to the consumer for the inconvenience he/she has encountered. The objectives of the consumer petition act may be summarised as –
- To Provide better and all round protection to consumer.
- To Provide machinery for the speedy redressal of the grievances.
- To Create framework for consumers to seek redressal.
- To Provide rights to consumers.
- To Safeguarde rights of Consumers.
What are the rights of consumers? Let us know more about the rights of consumer. Listed below are the Rights of the Consumer:
- Right to Safety- Before buying, a consumer can examine on the quality and guarantee of the goods and opt for ISI or AGMARK products.
- Right to Choose- Consumer must have the right to choose from a variety and number of goods and in a competitive price
- Right to be informed- The buyers must be provided with complete information with all the necessary and adequate details of the product, make her/him act wise, and change the buying decision.
- Right to Consumer Education- The consumer must be aware of his/her rights and avoid exploitation.
- Right to be heard- The consumer will get due attention to express their grievances at a suitable platform.
- Right to seek compensation- The consumer has the right to seek or ask for redressal against unfair and inhumane practices or exploitation of the consumer.
So it is clear that the Consumer Protection Act has been passed to safeguard the interest of the consumers. Now we come to the facts of the present case. If the consumer is depositing lakhs of rupees in hope of getting possession of the flat/plot, he cannot be deprived of his right to get a flat or plot within a reasonable time. If the builder takes money from the allottees beforehand and executes allotment letter after many years and a condition has been inserted in the allotment letter that the project will be completed within three years from the date of the allotment order is totally unfair trade practice and it cannot get support from the court of law because here rule of law prevails. If a person has deposited ₹ 850,000 in September 2006, the period of construction shall be reckoned from that month and not from the date when the allotment order was delivered because because due to highhandedness of the builders the main issue allotment letter after years and years of the deposition of the money by the allottees. So in this case and in the light of judgement of the Supreme Court the reasonable time for handing over the possession of the flat or unit is three years. In this case the builder has taken six months grace period that is the allottees are assured that they will get possession of the flat/unit/plot within 42 months. So if this 42 months are added to September 2006 the cut of date for delivery of possession comes March 2010. So the opposite party was bound to deliver the possession of the flat/unit to the complainant by March 2010. The delivery of possession and execution of sale deed and restriction of the flat in question place on 31 July 2013. So in this case possession has been given after 40 months from the assured giving possession.
No interest has been paid on the deposited amount to the complainant. So as far as cost of action is concerned, it is continuing cause of action after 42 months from the date of tentative date for delivery of possession that is March 2010 and possession has been handed over on 31 July 2013 so the cause of action also arose from 31 July 2013 because the conditions by the buyer were not fulfilled.
There is not a single word regarding completion certificate, occupancy certificate, NOC from pollution department, NOC from civil aviation Department and NOC from fire department. Without these, offer of giving possession is no offer in the eye of law.
In the case of Faqir Chand Gulati Vs. Uppal Agencies Pvt. Ltd. & Anr., Civil appeal no.3302 of 2005, judgment dated 10.06.2008, Hon’ble Supreme Court has held that a prayer for completion certificate and C&D Forms cannot be brushed aside by stating that the builder has already applied for the completion certificate or C&D Forms. If it is not issued, the builder owes a duty to make necessary application and obtain it. If it is wrongly withheld, he may have to approach the appropriate court or other forum to secure it. If it is justifiably withheld or refused, necessarily the builder will have to do whatever is required to be done to bring the building in consonance with the sanctioned plan so that the municipal authorities can inspect and issue the completion certificate and also assess the property to tax. If the builder fails to do so, he will be liable to compensate the complainant for all loss/damage.
Hon’ble Supreme Court in the case of Ireo Grace Realtech Private Limited Vs. Abhishek Khanna & Ors., civil appeal no.5785 of 2019, with other civil appeals, judgment 11.01.2021, has held where the development makes an alternate offer of allotment of apartment, the allottees are however not bound to accept the same because of inordinate delay in completing the construction of the towers or units were allotted to them and if the Occupation Certificate is not available even as on date, clearly amounts to deficiency of service.
Now it is clear that the reasonable period for handing over the possession of the flat/plot is three years from the date of allotment order and also if the occupancy certificate has not been obtained, offering delivery of possession is deficiency of service. Also the completion certificate is of utmost importance. In the present case the above mentioned certificates have not been produced before this court. In addition to it there is no NOC of fire department, civil aviation Department and pollution department. Therefore it will be said that the said flat is not ready for the delivery of possession in the absence of these certificates.
In the present case, and eye-opening fact has also been raised by the complainant that the circle rate of the area for calculation of stamp duty was about Rs.27,000/- per square metre in June 2009 and this date was for the first date which was promised by the opposite party for delivery of possession vide their email as mentioned above. Due to delay in handing over possession by the opposite party, the circle rate for the calculation of the stamp duty has been enhanced from Rs.27,000/- per square metre to Rs.55000/- m². So this is due to fault, deficiency in service of the opposite party and the complainant has to bear this enhanced circle rate without any fault of their own. Who will pay damages for this fault? Clearly it is the builder/party who will compensate this enhanced amount to the allottee. So the difference in the circle rate comes Rs.28,000/- per square metre. The area of the unit is 148.64 m² say 149 m². The the difference in circle rate unnecessarily by the complainant is 149 x Rs.28,000/-.
Now the next question comes as to whether the opposite party was entitled to claim interest on the delayed payment? The opposite party also contributed towards delay. So he cannot claim interest when he is on fault of his own. The complainant has stated that he has paid Rs.7,088,396.15/to the opposite party which is more than the actual cost of the flat. We have seen the payment plan of the unit filed by the opposite party in which total cost has been mentioned as Rs.6,707,090/– inclusive of all the charges. There is no mention of interest paid to the complainant due to delay in project. It shows that the builder is on a dominating position over the complainant. He can take exorbitant rate of interest on delayed payment but he will not give any interest or any damages on the delayed delivery of possession.
Now some case laws of Hon’ble Supreme Court and Hon’ble NCDRC are to be discussed in this light.
In R. V. Prasannakumaar v. Mantri Castles Pvt. Ltd., 2019 SCC on Line SC 224, under the terms of the ABA, possession of the flats was to be handed over to the buyers on 31 January 2014. However, the developer received an occupation certificate only on 10 February 2016 and it was thereafter from May 2016 that the developer started issuing letters offering possession. Based on this, the NCDRC awarded compensation in the form of interest at the rate of 6 per cent per annum. The developer had pleaded that since the agreement provided compensation at the rate of Rs.3 per square foot per month for delayed possession, the purchasers were not entitled to anything in addition. Dealing with the submission, this Court observed:
“9. We are in agreement with the view of the NCDRC that the rate which has been stipulated by the developer, of compensation at the rate of Rs.3 per sq. ft. per month does not provide just or reasonable recompense to a flat buyer who has invested money and has not been handed over possession as on the stipulated date of 31 January 2014. To take a simple illustration, a flat buyer with an agreement of a flat measuring a 1000 sq. ft. would receive, under the agreement, not more than Rs. 3000/- per month. This in a city such as Bangalore does not provide just or adequate compensation. The jurisdiction of the NCDRC to award just compensation under the provisions of the Consumer Protection Act, 1986 cannot in the circumstances be constrained by the terms of the agreement. The agreement in its view is one sided and does not provide sufficient recompense to the flat purchasers.”
The Court observed that there was a delay of two years and hence the award of interest at the rate of 6 per cent was reasonable and justified.
In Pioneer Urban Land and Infrastructure Limited v. Govindan Raghavan, (2019) 5 SCC 725, there was a delay of almost two years in obtaining an occupancy certificate after the date stipulated in the ABA. As a consequence, there was a failure to provide possession of the flat to the purchaser within a reasonable period. This Court dwelt on the terms of the ABA under which the builder was entitled to charge interest at 18 per cent per annum for the delay in payment of instalments by the purchaser. On the other hand, the failure to provide possession on the part of the developer was subject to a grace period of twelve months followed by a termination notice of ninety days and a further period of ninety days to the developer to effect a refund. Adverting to these clauses, the court noted:
“6.4. A perusal of the apartment buyer's agreement dated 8-5- 2012 reveals stark incongruities between the remedies available to both the parties. For instance, Clause 6.4(ii) of the agreement entitles the appellant builder to charge interest @18% p.a. on account of any delay in payment of instalments from the respondent flat purchaser. Clause 6.4(iii) of the agreement entitles the appellant builder to cancel the allotment and terminate the agreement, if any instalment remains in arrears for more than 30 days. On the other hand, as per Clause 11.5 of the agreement, if the appellant builder fails to deliver possession of the apartment within the stipulated period, the respondent flat purchaser has to wait for a period of 12 months after the end of the grace period, before serving a termination notice of 90 days on the appellant builder, and even thereafter, the appellant builder gets 90 days to refund only the actual instalment paid by the respondent flat purchaser, after adjusting the taxes paid, interest and penalty on delayed payments. In case of any delay thereafter, the appellant builder is liable to pay interest @9% p.a. only. Another instance is Clause 23.4 of the agreement which entitles the appellant builder to serve a termination notice upon the respondent flat purchaser for breach of any contractual obligation. If the respondent flat purchaser fails to rectify the default within 30 days of the termination notice, then the agreement automatically stands cancelled, and the appellant builder has the right to forfeit the entire amount of earnest money towards liquidated damages. On the other hand, as per Clause 11.5(v) of the agreement, if the respondent flat purchaser fails to exercise his right of termination within the time limit provided in Clause 11.5, then he shall not be entitled to terminate the agreement thereafter, and shall be bound by the provisions of the agreement.”
Hon’ble Justice Indu Malhotra speaking for the Court noted:
“6.8. A term of a contract will not be final and binding if it is shown that the flat purchasers had no option but to sign on the dotted line, on a contract framed by the builder. The contractual terms of the agreement dated 8-5-2012 are ex facie one-sided, unfair and unreasonable. The incorporation of such one-sided clauses in an agreement constitutes an unfair trade practice as per Section 2(1)(r) of the Consumer Protection Act, 1986 since it adopts unfair methods or practices for the purpose of selling the flats by the builder.” The Court observed that in these circumstances, the flat purchasers could not be compelled to obtain possession which was offered almost two years after the grace period under the agreement had expired. Hence, the NCDRC was held to have correctly awarded interest at the rate of 10 percent per annum.
The decision of this Court in Dhanda Case, 2019 SCC On Line SC 689 has been relied upon by learned Senior Counsel appearing on behalf of the developer as elucidating the principle that where a flat buyers agreement stipulates a consequence for delayed possession, exceptional and strong reasons must be established before the forum constituted under the Act of 1986 awards compensation in addition to what has been contractually agreed. In Dhanda’s case, the SCDRC issued a direction for handing over physical possession of the residential unit to the complainant and for execution of a sale deed. In addition, compensation was awarded by way of interest at the rate of 12 per cent per annum with effect from twelve months after the stipulated date under the agreement. In an appeal by the developer, the NCDRC directed that the rate of interest for a house building loan for the corresponding period in a scheduled nationalised bank would be appropriate and if a floating rate of interest was prescribed, the higher rate of interest should be taken for the computation. A sum of Rs.1 lac per annum from the date for handing over possession to the actual date of possession was regarded as appropriate in the facts of the case. In that case under the terms of the buyer’s agreements, possession was to be delivered within twenty-four months of the execution of the agreement i.e. 10 February 2013 – failing which the developer was liable to pay compensation at the rate of Rs.10 per square foot per month for the delay. The developer contended that construction activities were delayed as a result of an injunction granted by this Court over a period of eight months and consequently sought an extension of the period for handing over possession by one year. Alternatively, the developer offered to refund the money deposited with interest at 9 per cent per annum. Construction of 258 independent floors was completed while about 1,500 units were nearing completion. In two sets of Civil Appeals which came up before this Court earlier, agreed terms were arrived at providing for the award of interest at 9 per cent per annum from the date of deposit till refund. While considering the order of the NCDRC, this Court observed:
“16. The District Forum under the Consumer Protection Act, 1986 is empowered inter-alia to order the opposite party to pay such amount as may be awarded as compensation to the consumer for any loss or injury suffered by the consumer due to the negligence of the opposite party including to grant punitive damages. But the forums under the Act cannot award interest and/or compensation by applying rule of thumb. The order to grant interest at the maximum of rate of interest charged by nationalised bank for advancing home loan is arbitrary and no nexus with the default committed. The appellant has agreed to deliver constructed flats. For delay in handing over possession, the consumer is entitled to the consequences agreed at the time of executing buyer's agreement. There cannot be multiple heads to grant of damages and interest when the parties have agreed for payment of damages at the rate of Rs. 10/- per sq. ft. per month. Once the parties agreed for a particular consequence of delay in handing over of possession then, there has to be exceptional and strong reasons for the SCDRC/NCDRC to award compensation at more than the agreed rate.”
Now the interest may be 6% to 10% in favour of the allottees if they have not been given possession of the flat/plot within promised or within a reasonable time. The complainant has deposited the entire agreed cost of the flat before June 2009. Now it is the duty and obligation of the opposite party to deliver the possession within stipulated time but they failed to do so.
In the case of PRIYANKA MITTAL & ANR. V. PARSVNATH DEVELOPERS LTD. & ANR. (NCDRC). These appeals arise out of single order of State Commission, hence, decided by common order. These appeals have been filed against the order dated 25.2.2015 in Complaint Nos.18 of 2013- Nalin Bhargava &Anr. Vs. Parsvnath Developers Ltd. & Anr.; 34 of 2013- Jasleen Viswanathan & Anr. Vs. Parsvnath Developers Ltd. & Anr.; 58 of 2011- Janmejai Mani Tiwari Vs. Parsvnath Developers Ltd. &Anr.; 68 of 2013- Indu Singh Vs. Parsvnath Developers Ltd. & Anr.; 69 of 2013- Poonam Sagar Vs. Parsvnath Developers Ltd. & Anr.; 86 of 2010- Priyanka Mittal &Anr. Vs. Parsvnath Developers Ltd. & Anr.; 101 of 2011- Mohd. Aslam Khan & Anr. Vs. Parsvnath Developers Ltd. & Anr.; 130 of 2012- Dr. Sunil Kr. Singh & Anr. Vs. Parsvnath Developers Ltd. & Anr.; 49 of 2012- Neera Mittal & Anr. Vs. Parsvnath Developers Ltd. & Anr.; 74 of 2011- Deepak Bhalla Vs. Parsvnath Developers Ltd. & Anr.; 87 of 2010- Syed Gufran Ali Alvi & Anr. Vs. Parsvnath Developers Ltd. &Anr.; 96 of 2011- Uppasana Malik Vs. Parsvnath Developers Ltd. & Anr.; 175 of 20130- Umesh Chandra Dixit & Anr. Vs. Parsvnath Developers Ltd. & Anr.; 97 of 2011- Pravin Kumar Goel & Anr. Vs. Parsvnath Developers Ltd. & Anr. which complaints were partly allowed.
The Hon’ble NCDRC held that:
“Brief facts of the cases are that opposite parties/respondents are engaged in the activity of housing construction and accordingly they have launched a project named as Parsvnath Planet situated in Gomti Nagar, Lucknow. The project was demonstrated to be very lucrative and made attractive to the vendees, in order to procure/collect money from the needy persons demonstrating themselves to be excellence in the field of construction activity as compared to other builders and assured the buyers/complainants that it has been duly approved by the Lucknow Development Authority and necessary permission has also been obtained from them. The emphasis was made by the opposite parties that the possession of the Unit shall be given within a scheduled period of 36+6=42 months stipulated in agreements executed in between the parties for the project launched in the year 2006. The complainants/appellants attracted by the promise and assurance of the opposite parties, somehow managed and arranged the money from their personal sources as well as on loan at attractive rate of interest and the hard earned money was paid by them to the opposite parties in a hope that the possession of the units shall be provided to them in the year 2009 and they can leave peacefully in their own houses, since the complainants are living in rented houses.
The complainants visited the construction site of the opposite parties after depositing the entire amount, where it was revealed that the construction activities were on halt and the persons available on the site told the complainants that the apartments are likely to be completed till 2015. Even the partial construction done by the opposite parties was defective and did not match the specifications provided in the agreement. The complainants were shocked on hearing it and observing the site. The complainants immediately contacted the Area Manager, who told the complainants that there is some delay in the construction of the apartment and the apartments shall be ready till June, 2010. The complainants have to repay the amount taken on loan alongwith interest without getting the possession of the allotted units causing irreparable loss and injury to them. The complainants have come to know that the opposite parties have invested the funds earmarked for this project into their other projects in other city due to which they have not been able to complete the project in time. Besides this, it has also come to the light that although the opposite parties had collected huge funds from the buyers but in spite of that the opposite parties have miserably failed to pay the dues of Lucknow Development Authority which forced the Lucknow Development Authority to issue coercive measures against the opposite parties for the recovery of their dues. Alleging deficiency on the part of opposite parties/ respondents, complainants filed separate complaints before State Commission. Aggrieved by the order of Hon’ble State Commission, these appeals preferred before Hon’ble National Consumer Disputes Redressal Commission.
Hon’ble NCDRC discussed various case laws and after hearing the parties held,
“Learned Counsel for appellants submitted that as complainants have been deprived of possession for a long period beyond agreed period, it amounts to restrictive trade practice under and complainants are entitled to get compensation. Section 2 (nnn) runs as under:- means a trade practice which tends to bring about restrictive trade practice manipulation of price or its conditions of delivery or to affect flow of supplies in the market relating to goods or services in such a manner as to impose on the consumers unjustified costs or restrictions and shall include- Delay beyond the period agreed to by a trader in supply of such goods or in providing the services which has led or is likely to lead to rise in the price; Any trade practice which requires a consumer to buy, hire or avail of any goods, or, as the case may be, services as condition precedent to buying, hiring or availing of other goods or services; Perusal of aforesaid provision reveals that when opposite party delays in delivery of goods which leads to rise in the price of goods meaning thereby, more price is charged from complainant, it amounts to restrictive trade practice. In the case in hand, opposite party on account of delayed delivery of possession is not charging higher rate than the agreed rate for delivery of possession of flat, so, it does not fall within the purview of restrictive trade practice under
“Admittedly, agreements were executed in 2006 and as per agreements, possession of flats was to be delivered within 42 months, meaning thereby, possession was to be given in the year 2009-2010 and possession has not been handed over so far though year 2016 has started. No doubt, complainants are entitled to get penalty amount for delayed delivery of possession as per clause 10 ( c) of the agreement but opposite party cannot be permitted to avail benefit of aforesaid clause for indefinite period. This penalty clause should be allowed for the benefit of parties for a limited period and in the cases in hand, I deem it appropriate to extend applicability of aforesaid clause for a period of one year beyond 42 months and after that, complainants are certainly entitled to compensation. Opposite party cannot be allowed to avail huge funds of complainants by paying merely Rs. 5/- per sq. ft. for example, complainants who have purchased flat measuring 164.901 sq. mtr., they have made payment of about Rs. 31.00 to 32 lakhs and in the garb of clause 10 (c), opposite party is paying penalty @ approximately Rs. 9,000/- per month against enjoying funds more than Rs. 30.00 lakhs. As complainants have been deprived to shift to their flats for a long period which would not only have given them satisfaction of living in their own house but also have raised their social status and opposite party has enjoyed funds of complainants for a long period, I deem it appropriate to allow compensation @ Rs. 15,000/- p.m. to the complainants who have applied for flats upto 175 sq. mtr and Rs. 20,000/- per month to complainants who have applied for flats above 175 sq. after 54 months of execution of agreement till delivery of possession”.
Against this judgment, parties went to Hon’ble Supreme Court. The judgment of Hon’ble Supreme Court is:-
In Nalin Bhargava vs. Parsvnath Developers Ltd. CA 6662/2018 @ SLP(C) 7596/2016 etc and other related civil appeals on 13 July, 2018, Hon’ble Supreme Court held:-
“Leave granted in all the special leave petitions.CA 6662/2018 @ SLP(C) 7596/2016 etc.
It is submitted by Mr. M.L. Lahoty, learned counsel appearing for the appellants in all the appeals that the possession has been handed over and the deficiencies have been removed and, therefore, he has no grievance. However, Mr. Lahoty would insist that there should be imposition of costs as compensation.
Mr. Sachin Datta, learned senior counsel appearing for the developer has raised objections with regard to imposition of costs.
Having heard learned counsel for the parties, we are of the considered opinion that the cause of justice would be best subserved if each of the appellants in the present appeals are given Rs.1,50,000/- (Rupees one lakh fifty thousand only) per flat, towards costs. When we say “cost”, we mean costs alone and nothing else.”
In the case of Kolkata West International City Pvt. Ltd. Vs. Devasis Rudra [Civil Appeal No. 3182 of 2019 @ SLP (C) No(S). 1795 of 2017] judgment delivered on 25.03.2019, the Hon’ble Supreme Court has held:-
“Interestingly, where the buyer is in default, the agreement stipulates that interest at the rate of 18 per cent from the date of default until the date of payment would be charged for a period of two months, failing which the allotment would be cancelled by deducting 5% of the entire value of the property. The agreement was evidently one sided. For a default on the part of the buyer, interest at the rate of 18% was liable to be charged. However, a default on the part of the developer in handing over possession would make him liable to pay interest only at the savings bank rate prescribed by the SBI. There is merit in the submission which has been urged by the buyer that the agreement was one sided.
In the Case of Wg. Cdr. Arifur Rahman Khan and Aleya Sultana and Ors. Versus DLF Southern Homes Pvt. Ltd (now Known as BEGUR OMR Homes Pvt. Ltd.) and Ors. (Civil Appeal No. 6239 of 2019 With Civil Appeal No. 6303 of 2019); The Hon’ble Supreme Court has held:-
“24. A failure of the developer to comply with the contractual obligation to provide the flat to a flat purchaser within a contractually stipulated period amounts to a deficiency. There is a fault, shortcoming or inadequacy in the nature and manner of performance which has been undertaken to be performed in pursuance of the contract in relation to the service. The expression “service” in Section 2 (1) (o) means a service of any description which is made available to potential users including the provision of facilities in connection with (among other things) housing construction. Under Section 14(1)(e), the jurisdiction of the consumer forum extends to directing the opposite party inter alia to remove the deficiency in the service in question. Intrinsic to the jurisdiction which has been conferred to direct the removal of a deficiency in service is the provision of compensation as a measure of restitution to a flat buyer for the delay which has been occasioned by the developer beyond the period within which possession was to be handed over to the purchaser. Flat purchasers suffer agony and harassment, as a result of the default of the developer. Flat purchasers make legitimate assessments in regard to the future course of their lives based on the flat which has been purchased being available for use and occupation. These legitimate expectations are belied when the developer as in the present case is guilty of a delay of years in the fulfillment of a contractual obligation. To uphold the contention of the developer that the flat buyer is constrained by the terms of the agreed rate irrespective of the nature or extent of delay would result in a miscarriage of justice.”
“Undoubtedly, as this court held in Dhanda, courts ordinarily would hold parties down to a contractual bargain. Equally the court cannot be oblivious to the one-sided nature of ABAs which are drafted by and to protect the interest of the developer. Parliament consciously designed remedies in the CP Act 1986 to protect consumers. Where, as in the present case, there has been a gross delay in the handing over of possession beyond the contractually stipulated debt, we are clearly of the view that the jurisdiction of the consumer forum to award just and reasonable compensation as an incident of its power to direct the removal of a deficiency in service is not constrained by the terms of a rate which is prescribed in an unfair bargain.”
These builders are just earning money from the consumers to whom they issued allotment letters and got a huge amount. They keep this amount for a long time and earn interest on it. Property dealing is that part of business where they never pay a penny to the consumers on their amounts deposited for a long-term or if they pay, they pay a meagre interest of about 5% or so but they charge 18 to 24% or more if the consumers default in depositing any instalment. It reminds us the story of “The Merchant of Venice” The Merchant of Venice is the story of a Jewish money lender Shylock who demands that an antisemitic Christian offer “a pound of flesh” as collateral against a loan. These acts of builders also remind us the age of Sahukari during ancient India and also during British Raj. Whether these builders have power to frame their own law? They put their terms and conditions in such a way that the sufferer will always be the consumer. The Consumer Protection Act 1986 has been enacted for the benefits of consumers, so the courts dealing with Consumer Protection Act 1986 should come forward for their rescue. The courts are not governed by the builders but they are governed by the law, Custom and Usages. Now in the background of all the facts and also the facts of the present case, we will also discuss something more.
Now it has been very well established that the opposite party completely failed to deliver the possession of the said flat on June 2009 as per their own promise. Later on vide an email the complainant was assured that he will get the possession by March 2010. But the possession has also not been delivered in June 2009 or in March 2010. It is deficiency of services on the part of opposite party and demanding more and more money and extending time regarding completion of the project is unfair trade practice. So in the circumstances they are not entitled to demand any more amount. They have not filed the copies of the completion/occupancy certificate and NOC from the various departments as said earlier. Keeping in view the judgment of the different Hon’ble higher courts we come to the conclusion that the complainant is entitled to the following reliefs are:-
- The opposite party is liable to pay the complainant, the stamp duty levied on account of the difference of circle rate which is Rs.1,74,240/- within 60 days from the date of judgment with interest at a rate of 10% per annum. If the amount is not paid within 60 days from the date of judgment, the rate of interest will be 15% per annum.
- We are of the view that the complainants are entitled to get monthly damage according to the area. The area of the said unit is less than 175 m² and keeping in view the judgment of Hon’ble NCDRC in the case of Priyanka Mittal (supra)The complainant is entitled to get Rs.15,000/- per month towards rent from March 2010 till July 2013 with interest at a rate of 10% per annum within 60 days from the date of judgment. If the amount is not paid within 60 days from the date of judgment, the rate of interest will be 15% per annum.
- The complainant is entitled to get Rs.150,000/- in view of Nalin Bhargava Case (supra) as cost.
- The complainant is entitled to get interest on his total deposits at the rate of 10% per annum from 01.03.2010 to 31.08.2013 and it shall be paid within 60 days from the date of this judgement and if not paid within 60 days, the rate of interest shall be 15% per annum.
- In the relief clause of the complaint, the complainant has prayed that any other relief as deemed fit and proper in the circumstances of the case may also be granted. So keeping in view all the fraud, unfair trade practice and deficiency in service committed in this case, all the harassment and mental agony given to the complainant we find that the complainants are also entitled to get ₹ 20 lakhs towards mental harassment, agony sufferings, course of the suit
- No amount shall be adjusted by the opposite parties to these amounts whatsoever it may be.
The present complaint is decided accordingly.
ORDER
- The opposite party is directed to pay the complainant, the difference in the stamp duty due to increase of circle rate which is Rs.1,74,240/- within 60 days from the date of judgment with interest at a rate of 10% per annum. If the amount is not paid within 60 days from the date of judgment, the rate of interest will be 15% per annum.
- The opposite party is directed to pay Rs.15,000 per month towards rent from March 2010 till July 2013 with interest at a rate of 10% per annum within 60 days from the date of judgment. If the amount is not paid within 60 days from the date of judgment, the rate of interest will be 15% per annum.
- The opposite party is directed to pay Rs.150,000/- in view of Nalin Bhargava Case (supra) as cost.
- The opposite party is directed to pay interest on the total deposits of the complainant at the rate of 10% per annum from 01.03.2010 to 31.07.2013 and it shall be paid within 60 days from the date of this judgement and if not paid within 60 days, the rate of interest shall be 15% per annum.
- The opposite party is directed to pay Rs.20 lakhs to the complainant towards all the harassment and mental agony, depression, cost of the suit within 60 days from the date of judgment without any interest but if the amount is not paid within 60 days from the date of judgment, the rate of interest will be 15% per annum.
No amount shall be adjusted by the opposite party to these amounts whatsoever it may be.
All the decreetal amount shall be paid within 60 days from the date of judgment of this appeal, otherwise the opposite parties shall pay interest at a rate of 15% per annum on all the decreetal amount. If it is not paid within 60 days from the date of judgment of this appeal, the complainant shall be entitled to present Execution proceedings before this court at the cost of the opposite parties.
The stenographer is requested to upload this order on the Website of this Commission today itself.
Certified copy of this judgment be provided to the parties as per rules.
(Rajendra Singh) (Justice Ashok Kumar)
Member President
Judgment dated/typed signed by us and pronounced in the open court.
Consign to the Record Room.
(Rajendra Singh) (Justice Ashok Kumar)
Member President
Jafri, PA II
C-1
