JUSTICE V.K.JAIN, (ORAL)

The complainant who is a citizen of Canada and a senior citizen returned to India in the year 2007 after taking retirement so that he could settle down in India with his aged parents. The complainant initially booked four residential flats with the opposite party out of which, one flat each was booked in the project, namely, Parsvnath Palacia   and Parsvnath King City whereas the remaining two flats were booked in another project, Parsvnath Privilege. The contention of the complainant is that in fact he wanted to book only one residential flat but was persuaded by the employees of the builder to book four flats instead of one flat and divide the amount available with him into four bookings. All the four bookings were made on 4.7.2007. On 27.7.2007, the bookings in Parsvnath Palacia and Parsvnath King City were converted into one booking in yet another project, namely Parsvnath Exotica in Ghaziabad. Thereafter, on 1.1.2010 both the bookings which the complainant had made in the project, Parsvnath Privilege were converted into one booking by cancelling one of the bookings. Initially, Flat No.1501 in Tower T-20 and Flat No.1502 in Tower T-1 had been allotted to him.  On 1.1.2010, the money which he had paid against Flat No.1501 in Tower T-20 was transferred to the booking of Flat No.1502 in Tower T-1. Flat No.1502 in Tower T-1 remained  allotted to the complainant at the time those two bookings were converted into one booking in the project Parsvnath Privilege.

2.      The complainant was allotted Flat No.1204 in Tower D-1 in Parsvnath Exotica, when the bookings in Parsvnath Palacia and Parsvnath King City were converted into one Parsvnath Exotica on 27.7.2007.

3.      The complainant had executed a Flat Buyers Agreement dated 21.8.2007 with the opposite party in respect of Flat No.1502 in Tower T-1. As per Clause 10(a) of the said agreement, the construction of the flat was likely to be completed in a period of 36 months from the date of commencement of construction of the particular block in which the flat was located. The construction of Tower T-1 according to the  learned counsel for the opposite party has not yet started. The grievance of the complainant is that the possession of the allotted apartment has not been offered to him despite he having paid Rs.5814271/- to the opposite party towards price of the said flat. The complainant is therefore, before this Commission by way of C.C. No.1503 of 2016 seeking refund of the said amount with compensation etc.

4.      The complainant had also executed an agreement with the opposite party on 11.9.2007 in respect of Flat No.803 in Tower D-4 of the project Parsvnath Exotica in Ghaziabad. As per Clause 10(a) of the said agreement, the possession was to be delivered within 36 months of the commencement of the particular block in which the flat was located. Since the possession of the allotted flat has not been offered to him, the complainant is before this Commission by way of C.C. No.581 of 2017, seeking refund of the amount paid to the opposite party along with compensation etc.

5.      The complaints have been resisted by the opposite party which has taken a preliminary objection that the complainant being an investor, he is not a consumer within the meaning  of C.P. Act. On merits, C.C. No.1503 of 2016 pertaining to allotment of a residential flat in Parsvnath Privilege is stated to have been contested on the grounds which this Commission has already rejected in CC No.232 of 2014 - Puneet Malhotra Vs. Parsvanath Developers Ltd. and connected matter decided on 29.1.2015. Since no additional ground has been urged before me, I need not revisit the grounds which this Commission has already rejected in Puneet Malhotra (supra).

6.      The decision of this Commission in Puneet Malhotra (supra) to the extent is  relevant, reads as under:

“4.     The complaints have been resisted by the respondent company on the ground that the complainants are seeking refund with exorbitant interest.  It is also claimed that since the basic value of the property is much less than Rupees one crore, this Commission lacks pecuniary jurisdiction to entertain the complaints.  It is also pointed out in the reply that as per the tripartite agreement executed between the complainants and opposite party and the Banks from which the loan was taken by the complainants, the bank has lien over the refund amount, in the event of cancellation and/or termination of the agreement.  As regards the delay in construction, it is claimed that the said delay occurred due to recession in Real Estate Sector.  It is also submitted in the reply that in view of the terms of the agreement between the parties, a complainant cannot claim more than the compensation stipulated in the Flat-Buyer Agreement.

6.     Vide Clause 10 (a) of the Flat-Buyers Agreement, the opposite party represented to the complainants that the construction of the flat was likely to be completed within thirty-six months from the date of commencement of the construction of the particular block in which the flat was located, on receipt of all requisite approvals but subject to force-majeure and restraints/restrictions from any Court/Authorities, non-availability of building material and any circumstances beyond the control of the Developers, subject to timely payment by the buyer.  It is an admitted case that the opposite party failed to complete the construction within the aforesaid time.  As far as the statutory approvals are concerned, the same were to be obtained by the opposite party and the complainants cannot be held responsible for any delay in grant of such approvals  though, it is not the case of the opposite party that the construction could not be completed for want of aforesaid statutory approvals.  The case of the opposite party is that the project could not be completed on account of the recession in the Real Estate market, including reduction in the number of bookings and default on the party of the some of the allottees in making timely payment.  The terms of the agreement between the parties do not justify the delay in completion of the project on the aforesaid grounds and therefore, the opposite party was duty bound to complete the construction irrespective of the recession in the market, reduction in bookings and the alleged default on the part of some of the allottees in making timely payment.  This is not the case of the opposite party; that the construction could not be completed due to any restriction from any Court/Authority or due to non-availability of building material.  If some of the allottees had not made timely payment, it was for the opposite party to arrange the requisite finance either by taking loan or from its own resources or by liquidating Inventory at a lower price.  Therefore, the delay in completion of the projects cannot be justified.

7.     Since the opposite party could not compete the projects in which the residential flats were booked by the complainants, either within the agreed time of thirty-six months or even within a reasonable time thereafter, and even today the projects are nowhere near completion, the complainants are entirely justified in seeking refund of the amount, which they had paid to the opposite party.  In fact, during the course of hearing, the only contention on behalf of the opposite party was that the complainants are not entitled to interest at the rate claimed by them nor are they entitled to the compensation claimed by them and they can be awarded only the refund of the amount paid by them, along with compensation in terms of Clause-10(c) of the Flat-Buyer Agreement.

8.     The Clause on which the reliance is placed by the opposite party, reads as under:

        “In case of delay in construction of the Flat beyond the period as stipulated subject to force majeure and other circumstances as aforesaid under Clause 10 (a), the Developer shall pay to the Buyer compensation @ Rs.53.82/- (Rupees Fifty three and paise eighty two only) per sq. meter or @ Rs.5/- (Rupees Five only) per sq. ft. of the super area of the Flat per month for the period of delay.  Likewise, if the Buyer fails to settle the final account of the Flat within thirty days from the date of issue of the final call notice, the buyer shall be liable to pay to the Developer holding charges @  Rs.53.82/- (Rupees Fifty three and paise eighty two only) per sq. meter or @ Rs.5/- (Rupees Five only) per sq. ft. of the super area of the Flat per month on expiry of thirty days’ notice.  Further, in the event of his failure to take possession for any reason whatsoever, the Buyer shall be deemed to have taken possession of the Flat on expiry of thirty days of offer of possession for all intents and purpose under this Clause/Agreement including for liability to payment of maintenance and any other charges, levies in respect of the Flat”.

9.     In our opinion, the aforesaid Clause applies only in a case where construction of the flat is delayed but despite delay, the buyer accepts possession of the said flat from the seller, and consequently, accounts have to be settled between the parties.  At that stage, the buyer would pay the agreed holding charges to the seller, who will pay the agreed compensation on account of delaying the construction of the flat.  The aforesaid Clause, in our opinion would not apply to a case where the buyer, on account of the delay on the part of the seller in constructing the flat, is no more interested in the flat subject matter of the agreement and wants to take refund of the amount, which he had paid to the seller. In any case, such a clause, where the seller, in case of default on the part of the buyer, seeks to recover interest from him at the rate of 24% per annum will amount to an unfair trade practice since it gives an unfair advantage to the seller over the buyer.  We may note here that the enumeration of the unfair trade practices in Section 2(r) of the Act is inclusive, not exhaustive.”

7.      A clause similar to clause 10(c) of the Buyers Agreement providing for payment of compensation @ 5/- per sq.ft. of super area per month in the event of delay, came up for consideration of the Hon’ble Supreme  Court recently in  Civil Appeal No. 12238 of 2018 - Pioneer Urban Land & Infrastructure Ltd. Vs. Govindan Raghavan decided on 2.4.2019 and following was the view taken by the Hon’ble Supreme Court:-

6.3. The National Commission in the Impugned Order dated 23.10.2018 held that the Clauses relied upon by the Builder were wholly one-sided, unfair and unreasonable, and could not be relied upon.

The Law Commission of India in its 199th  Report, addressed the issue of ‘Unfair (Procedural & Substantive) Terms in Contract’. The Law Commission inter-alia recommended that a legislation be enacted to counter such unfair terms in contracts. In the draft legislation provided in the Report, it was stated that :

“A contract or a term thereof is substantively unfair if such contract or the term thereof is in itself harsh, oppressive or unconscionable to one of the parties.”

6.4. A perusal of the Apartment Buyer’s Agreement dated 08.05.2012 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 installments 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 installment 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 installment 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.  

6.5. 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 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.

6.6. Section 2 (r) of the Consumer Protection Act, 1986 defines ‘unfair trade practices’ in the following words :

 “‘unfair trade practice’ means a trade practice which, for the purpose of promoting the sale, use or supply of any goods or for the provision of any service, adopts any unfair method or unfair or deceptive practice …”, and includes any of the practices enumerated therein. The provision is illustrative, and not exhaustive.

In Central Inland Water Transport Corporation Limited and Ors. v. Brojo Nath Ganguly and Ors.,4 this Court held that :

 “89. … Our judges are bound by their oath to ‘uphold the Constitution and the laws’. The Constitution was enacted to secure to all the citizens of this country social and economic justice. Article 14 of the Constitution guarantees to all persons equality before the law and equal protection of the laws. This principle is that the courts will not enforce and will, when called upon to do so, strike down an unfair and unreasonable contract, or an unfair and unreasonable clause in a contract, entered into between parties who are not equal in bargaining power. It is difficult to give an exhaustive list of all bargains of this type. No court can visualize the different situations which can arise in the affairs of men. One can only attempt to give some illustrations. For instance, the above principle will apply where the inequality of bargaining power is the result of the great disparity in the economic strength of the contracting parties. It will apply where the inequality is the result of circumstances, whether of the creation of the parties or not. It will apply to situations in which the weaker party is in a position in which he can obtain goods or services or means of livelihood only upon the terms imposed by the stronger party or go without them. It will also apply where a man has no choice, or rather no meaningful choice, but to give his assent to a contract or to sign on the dotted line in a prescribed or standard form or to accept a set of rules as part of the contract, however unfair, unreasonable and unconscionable a clause in that contract or form or rules may be. This principle, however, will not apply where the bargaining power of the contracting parties is equal or almost equal. This principle may not apply where both parties are businessmen and the contract is a commercial transaction. …

… These cases can neither be enumerated nor fully illustrated. The court must judge each case on its own facts and circumstances.”

(emphasis supplied)

6.7. 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 08.05.2012 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 (r) of the Consumer Protection Act, 1986 since it adopts unfair methods or practices for the purpose of selling the flats by the Builder.

7. In view of the above discussion, we have no hesitation in holding that the terms of the Apartment Buyer’s Agreement dated 08.05.2012 were wholly one-sided and unfair to the Respondent – Flat Purchaser. The Appellant – Builder could not seek to bind the Respondent with such one-sided contractual terms.”

8.      As far as the preliminary objection that the complainant is not a consumer is concerned though the complainant has made multiple bookings, he is not pressing C.C. No.581 of 2017 whereby refund of the amount paid by him in respect of a flat in Parsvnath Exotica  was sought  and wants to pursue his remedy before some other forum. The residential apartment in the project Parsvnath Privilege  according to the complainant was booked by him for his personal residence. Though initially he booked two residential flats, the said bookings were converted into one booking on 1.1.2010 thereby leaving him with only one apartment in the project Parsvnath Privilege. The affidavit filed by the complainant in terms of the order passed by this Commission on 14.2.2019 would show that he did not own any other house either at the time the bookings were made or even at the time the two bookings in the project Parsvnath Privilege  were converted into one booking on 1.1.2010. The complainant inherited a one bedroom admeasuring about 55 sq.mtr. from his late mother only by way of a Gift Deed on 19.3.2013. Therefore, it would be difficult to say that he was not a consumer of the opposite party as far as the lone flat in the project Parsvnath Privilege  is concerned, on 1.1.2010, when the 2^nd booking in the said project was cancelled and the consideration paid against the said booking was transferred to the booking eventually retained by him. In any case, one bedroom flat admeasuring 55 sq.mtr which the complainant received as a gift from his mother  in the year 2013 could not be sufficient to meet his requirement.

9.      Admittedly, the construction of the flat allotted to the complainant in the project Parsvnath Privilege  is not complete even today . Having taken instruction, the learned counsel for the opposite party states that they are not in a position to offer even an alternative flat in the project Parsvnath Privilege to the complainant.

10.    The learned counsel for the complainant states on instructions from the complainant who is present in the Court that he is restricting his claim to the refund of the principal amount paid by him to the opposite party alongwith compensation in the form of simple interest @ 10% p.a. from the date of each payment till the date of refund. The Consumer Complaint No.1503 of 2016 is, therefore, disposed of with the following directions:-

1. The opposite party shall refund the entire principal amount of Rs.5814271/- to the complainant along with compensation in theform of simple interest on that amount @ 10% p.a. from the date of each payment till the date of refund.

2. The opposite party shall pay a sum of Rs.25,000/- as the cost of litigation to the complainant.

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

11.    The C.C. No.581 of 2017 is dismissed as withdrawn with liberty to the complainant to avail such remedy other than a consumer complaint as may be open to him in law for the redressal of his grievances.

12.    The unpaid cost, if any, shall also be paid to the complainant within one month from today.