Delhi

StateCommission

CC/11/170

AKSHAY VERMA - Complainant(s)

Versus

PARSVNATH DEVELOPERS LTD. - Opp.Party(s)

21 Nov 2017

ORDER

IN THE STATE COMMISSION: DELHI

(Constituted under Section 9 of the Consumer Protection Act, 1986)

 

                                                             Date of Decision: 21.11.2017

 

Complaint Case No. 170/2011

 

In the matter of:

 

Sh. AkshayVerma

S/o Sh. KishanLalVerma

R/o 1704/1, 2^nd floor

Bhagirath Palace, Delhi-06                                ........Complainant

Versus

 

M/s Parsvnath Developers Ltd.

6.  

Barakhamba Road

New Delhi-110001                                   ........Opposite Party

 

                                                                  

CORAM

 

N P KAUSHIK                        -                  Member (Judicial)

 

1.         Whether reporters of local newspaper be allowed to see the judgment?                   Yes

2.         To be referred to the reporter or not?                                                                  Yes

 

 

N P KAUSHIK – MEMBER (JUDICIAL)

 

JUDGMENT

 

1.     The case of the complainant is that the complainant was allotted a residential flat no. T17-702 with a super area of the 1855 sq. ft. in one of the projects of M/sParsvnath Developers Ltd. (in short the OP) known as ‘Parsvnath Privilege’ in Greater Noida. Complainant paid a total amount of Rs. 28,12,832/- to the OP starting from 02.05.2006 uptil 01.10.2008. A flat buyer’s agreement dated 13.09.2007 was executed between the OP and the joint buyers named Sh. AkshayVerma and one Sh. Sanjay Soni. Complainant Sh. AkshayVerma is authorized by said Sh. Sanjay Soni to file the present complaint. Total sale consideration of the flat was Rs. 52,86,750/-.In terms of flat buyers’ agreement, OP had agreed to handover the possession of the flat to the complainant within a period of thirty six months from the date of booking i.e. w.e.f. 29.04.2006.
2.     Grievance of the complainant is that uptil May 2011, no construction work had been carried out. Complainant was left with no option but to seek refund of the amount deposited. Defence raised by the OP was that on account of ‘global recession’ which hit the economy all over the world, the pace of construction slowed down. Various other projects undertaken by the OP have also been delayed. Next submission of the OP is that the matters involves complicated question of facts and law which requires oral as well as documentary evidence. Matter, therefore, is required to be examined by an appropriate court of law. OP relied upon the case of Sinko Industriesv. State Bank of Bikaner and Jaipur and Ors.,AIR 2002 SC 568.
3.     Next submission made by the OP is that as per flat buyers agreement, complainant is entitled to compensation @ Rs. 5/- per sq. ft. of the super area for the period of delay. Right of the complainant is well protected by way of the aforesaid proposition.
4.     Complainant filed rejoinder reiterating the averments made in the complaint. Parties filed affidavits towards evidence. Written arguments have also been placed on record.
5.     I have heard at length the arguments addressed by the counsels for the parties.
6.     Admittedly the parties entered into a flat buyers’ agreement dated 13.09.2007. Complainant admittedly deposited an amount of Rs. 28,12,832/-. It is also not in dispute that the possession of the flat was to be handed over on or before 29.04.2009. Written arguments have been filed by the OP on 23.04.2014. It was not the case of the OP even at that juncture that the flat in question was ready for being handed over to the complainant. Defence raised by the OP was that there was an economic slow-down in the world economy.
7.     Defence raised by the OP in its written arguments is that the ‘economic slowdown’ hit the world economy. On the contrary, plea taken by the OP in its reply to the legal notice is that there were restraint orders from the courts/authorities besides non-availability of building materials and disputes with the contractors. No plea of the economic slow-down worldwide has been taken in the reply to the legal notice. On the contrary in its written version OP has not raised any pleas of restraints from courts/authorities, non-availability of building materials and disputes with the contractors. Clearly the OP is taking different pleas at different places. Sole defence thus raised by the OP is not worthy of credit. Be that as it may, the Hon’ble National Commission in the case of PuneetMalhotra v. Parsvnath Developers Ltd., II (2015) CPJ 18 (NC) had the occasion to deal with the defence of ‘global recession’ as raised by the present OP in the said case. Relevant portion of the judgment is reproduced below:
   • 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.”

 

Defence relating to the global recession and non-availability of building materials was also dealt with by the Hon’ble National Commission in the case of SwarnTalwar and twoOrs.v. Unitech Ltd. (consumer case No. 347 of 2014 decided on 14.08.2015) National Commission noticed the case of Satish Kumar Pandey&Anr.v. Unitech Ltd. (decided on 8.6.15 in CC No.427/14). The relevant portion of the judgment is reproduced below:- 

        “Neither any new legislation was enacted nor an existing rule, regulation or order was amended stopping suspending or delaying the construction  of the  complex in which apartments were agreed to be sold to the complainants. There is no allegation of any lock out or strike by the labour at the site of the project. There is no allegation of any slow down having been resorted to by the labourers of the opposite party or the contractors engaged by it at the site of the project. There was no civil commotion, war, enemy action, terrorist action, earthquake or any act of God which could have delayed the completion of the project within the time stipulated in  the Buyers Agreement. It was contended by the Counsel for the OP that the expression ‘slow down’ would include economic slow down or recession in the Real Estate sector. I, however, find no merit in this contention. The word ‘slow down’ having been used alongwith the words lock-out and strike, I have to be read ejusdem generis with the words lock-out and strike and therefore, can mean only a slow down if resorted by the labourers engaged in construction of the project.

          As regards, alleged shortage of labour, I find that no material has been placed on record by the OP that despite trying, it could not be get labourers to complete the construction of the project within the time stipulated in the Buyers Agreement. It was submitted by the learned counsel for the complainants that ordinarily big builders such as the OP in these cases, are contracting/sub contracting the construction work to the contractors engaged by them, instead of employing their own labourers on a regular basis, the purpose being to ensure that they are not saddled with the wage bill of those regular laboures, in case the opposite party does not have adequate work for them. There is no evidence of the OP having been invited tenders for appointment of contractors/sub contractors for executing the work at the site of those projects and no contractor/sub contractor having come forward to execute the project on the ground that adequate labour was not available in the market. Therefore, it cannot be accepted that the opposite party could not have arranged adequate labor, either directly or through contractors/sub-contractors, for timely completion of the project. As regards the alleged shortage of water, bricks and sand in  the market, I find that there is no evidence filed by the OP, to prove that it was unable to procure water, sand and brick in adequate quantity. This is also their case that the notification of the Government, being relied upon by the opposite party, is an old notification, which was in force even at the time of the opposite party promised possession in 36 months. There is no evidence of the opposite party  having invited tenders for supply of bricks and water and there being no response to such tenders. In fact, if the work is to be executed through contractors/sub-contractors, the material such as bricks,  andand even  water will be arranged by the contractors/sub-contractors and not by the opposite party. As noted earlier, there is no evidence of the opposite party having invited tenders after awarding the work of project in question to the contracts/sub-contractors and there being no response to such tenders. Therefore, I find no merit in the plea that the completion of the project was delayed due to non availability of water, sand and bricks in adequate quantity.”

 

        Hon’ble National Commission also had the occasion to deal with the plea of compensation @ Rs. 5 per sq. ft. per month of the super area in the case of SwarnTalwar (supra). Relevant portion of the judgment is given below:

          “It is an undisputed proposition of law that ordinarily the parties are bound by the terms and conditions of the contract voluntarily agreed by them and it is not for a Consumer Forum or even a Court to revise the said terms.

          However, a term of a contract, in my view will not be final and binding if it is shown that the consent to the said term was not really voluntary but was given under a sort of compulsion on account of the person giving consent being left with no other choice or if the said term amounts to an unfair trade practice. It was submitted that the learned Counsel for the complainants that the terms providing for payment of a nominal compensation such as Rs.5/- per square foot of the super area having become the order of the day in the contracts designed by big builders a person seeking to buy an apartment is left with no option but to sign on the dotted lines since the rejection of such term by him would mean cancellation of the allotment. He further submitted that a person seeking to acquire a built up flat instead of purchasing a plot and then raising construction on it, therefore, is not in a position to protest resist the inclusion of such a  term in the Buyer’s Agreement, and has to rely upon the reputation of the builder, particularly if he is a big builder such as Unitech Ltd. He also submitted that the format of the Buyer’s Agreement is never shown to the purchasers at the time of booking the apartment and if he refuses to sign the Buyer’s Agreement on the format provided by the builder, not only will he lose the booking, even the booking amount/earnest money paid by him will be forfeited by the builder. I find merit in the above referred submission of the learned counsel. A person who, for one reason on the other, either cannot or does not want to buy a plot and raise construction of his own, has to necessarily go in for purchase of built up flat. It is only natural and logical for him to look for an apartment in a project being developed by a big builder such as the opposite party in these complaints. Since the contracts of all the big builders contain a term for payment of a specified sum as compensation in the event of default on the part of the builder in handing over possession  of the flat to the buyer and the flat compensation offered by all big builders is almost a nominal compensation  being less than .25% of the estimated cost of construction  er month, the flat buyer is left with no option but to sign the Buyer’s Agreement in the format provided by the builder. No sensible person will volunteer to accept compensation constituting about 2-3% of his investment in case of delay on the part of the contractor, when he is made to pay 18% compound interest if there is delay on his part in making payment.

 

          It can hardly be disputed that a terms of this nature is wholly one sided, unfair and unreasonable. The builder charges compound interest @ 18% per annum in the event of the delay on the part of buyer in making payment to him but seeks to pay less that 3% per annum of the capital investment, in case he does not honour his part of the contract by defaulting in giving timely possession of the flat to the buyer. Such a term in the Buyer’s Agreement also encourages the builder to divert the funds collected by him for one project, to another project being undertaken by him. He thus, is able to finance a new project at the cost of the buyers of the existing project and that too at a very low cost of finance. If the builder is to take loan from Banks or Financial Institutions, it will have to pay the interest which the Banks and Financial Institutions charge on term loan or cash credit facilities etc. The interest being charged by the Banks and Financial Institutions for financing projects of the builders is many times more than the nominal compensation which the builder would pay to the flat buyers in the form of flat compensation. In fact, the opposite party has not even claimed that the entire amount recovered by it from the flat buyers was spent on this very project. This gives credence to the allegation of the complainants that their money has been used elsewhere. Such a practice, in my view, constitutes unfair trade practice within the meaning of Section 2 ® of the Consumer Protection  Act, 1986 since it adopts unfair methods or practice for the purpose of selling the Clauses of Section 2 ® (1) of the Act that would be immaterial considering that the unfair trades, methods and practices enumerated in Section 2 9r) (1) of the Act are inclusive and not exhaustive, as would be evident from the use of word “including” before the words “any of the following practices”.

 

8.     OP also took a plea that the matter involves complicated question of law and facts. Pleadings of the parties have been discussed above. There is no dispute in relation to the facts.Even on law as discussed above, legal propositions stand settled.  In the judgment delivered by the Hon’ble National Commission and the Supreme Court, the case of Sinko Industries (supra), therefore, is of no avail to the OP.
9.     In view of the reasons given above, the complaint is allowed. OP is directed to pay to the complainant as under:

1. OP to refund the amount of Rs. 28,12,832/- alongwith interest @ 18% p.a. from the date of its deposit till the date of its realization.
2. OP is directed to pay compensation to the tune of Rs. 3,00,000/- to the complainant for causing inconvenience, harassment, sadness, frustration and mental agony.
3. OP to pay litigation charges to the tune of Rs. 1,00,000/-.

The abovesaid payment shall be made by the OP to the complainant within a period of thirty days from today failing which the amounts shall carry interest @ 24% p.a. Complaint is accordingly disposed of.

10. Copy of the orders be made available to the parties free of costs as per rules and thereafter the file be sent to Records.

 

 

(N P KAUSHIK)
MEMBER (JUDICIAL)