Delhi

StateCommission

CC/65/2015

MS. SHALINI NATH WALIA & ANR. - Complainant(s)

Versus

PARSVNATH DEVELOPERS LTD. - Opp.Party(s)

09 Jan 2019

ORDER

IN THE STATE COMMISSION: DELHI

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

 

                                                                                           Dated: 09.01.2019

Complaint Case No. 65/2015

 

In the matter of:

 

1. Ms. Shalini Nath Walia

D/o Sh. Mahendra Nath

R/o 105, West Pleasant Lake Rd.,

North Oaks, St. Paul

Minnesota, USA-55127

 

Through Power of Attorney Holder

Sh. Subhash Arora

S/o Late Sh. Kali Das

R/o A-458, Defence Colony

New Delhi-110024

 

2. Deepak Nath

S/o Sh. Mahendra Nath

 

Through Power of Attorney Holder

Sh. Subhash Arora

 

3. Sh. Mahendra Nath

S/o Sh. Chetan Dass

 

Through Power of Attorney Holder

Sh. Subhash Arora

 

(All the complainants have the same residential address)  …….Complainants

 

Versus

 

M/s Parsvnath Developers.         

(through its Managing Director)

Regd. Office:

Parsvnath Metro Tower

Near Shahdara Metro Station

Shahdara, Delhi-110032                                             .........Opposite Party

                                                                  

BEFORE:

 

 

SALMA NOOR                                    -                       MEMBER

 

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

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

 

 

Salma Noor, Member

 

1.     This is a complaint filed under section 17 of Consumer Protection Act 1986 by the complainants stating therein that they purchased a residential flat in resale being flat number 901, Tower No. T11 measuring 1855 sq. ft. consisting of 3 bedrooms, 3 toilets, drawing/dining, kitchen with utility, balconies, servant room with toilet in the complex known as ‘Parsvnath Privilege’ to be developed and constructed by the OP on Plot No. 11, Sector-Pi (Chorosia Estate), Greater Noida.
2.     A flat buyer agreement dated 02.06.2007 was entered between the opposite party and original allottee was transferred/endorsed in the name of the complainants on 29.03.2008 pursuant to which it was agreed by the OP that the construction of the flat was to be completed within a period of 36 months from the date of commencement of construction as per clause 10 (a) of the flat buyers agreement.
3.     That the complainants opted for the payment plan B i.e. the construction linked plan. The construction with respect to the flat in question started in March 2008 and was therefore to be completed within 36 months i.e. up to February 2011 as per clause 10 (a) of the flat buyers agreement. However, the construction was stopped immediately for the reasons best known to the OP.
4.     That payments were made to the OP from time to time and on demand by the OP in accordance with the payment plan, Plan-B, construction linked payment plan. Total payment made by the complainants to the OP is Rs. 18,98,593/-.
5.     The grievance of the complainants are that the OP has caused inordinate delays in initiating and constructing the flat of the complainants and the complainant no. 3 himself made personal visits at the site whenever he visited India to check the status of the flat and was shocked to see that there were no workman at the site and that no construction was going on as claimed by the OP and that the construction had been completely stalled. The complainants have repeatedly requested the OP to provide information of the construction of the project and their flat and about the expected date of possession and also raised their concerns on the enormous delay in construction of the flat which was booked by the complainants by depositing their hard earned money and with a hope to live in their own flat in his old age.
6.     The OP avoided any plausible reply and kept on delaying the matter on one pretext or the other. Though, the OP vide its e-mail dated 28.06.2012 to the complainants offered the complainants to shift their flat in some another tower to which the complainants refused. During her last visit to India in December 2014 complainant no. 1 discovered that there was no construction at the site. Hence being aggrieved by the status of the project and seeing no. possibility to get their flat in near future even after waiting for more than 7 years from the date of booking complainants wrote a letter dated 09.12.2014 to the OP and demanded refund of their money alongwith interest and other damages which the OP never replied. Hence, the complainants have filed the present complaint with the following prayer:
   1. Grant a sum of Rs. 45,93,736/- (towards principal amount of Rs. 18,98,598/- alongwith interest of Rs. 26,95,143/-) at the rate of 18% per annum or at the same rate of 24% as claimed by OP alongwith pendent lite and future interest at the rate of 18% or at 24% compounded per annum till the date of actual realization of the payment.
   2. Grant a sum of Rs. 10 lacs towards exemplary damages detailed above in the complaint.
   3. Grant cost of litigation to the complainants.”

 

7.     The complaint was admitted. Notices were issued to the OP in response to which the OP has filed written statement. The complainants have filed rejoinder and evidence by way of affidavit and thereafter on the joint request of the parties the matter was referred to Delhi Govt. Mediation and Conciliation Centre for exploring possibility of settlement between the parties. Parties failed to reach at a settlement. Subsequently, the OP filed evidence by way of affidavit and the parties have also filed their written arguments.
8.     The parties were heard and evidence produced by the parties were perused.
9.     In its written statement the OP has further contended that the subsequent purchaser cannot be compared to cases of original allottee. The subsequent purchaser are aware that the time for performance was not stipulated as the essence of the contract and the original allottees had accepted the delay. This contention of the OP has also no force in view of the agreement signed by the OP wherein nowhere it is mentioned that complainant to have accept the inordinate delay in completing the project.
10. The fact of the case is that the complainants made payment of Rs. 18,98,593/- (Rs. 10,00,000/- vide receipt no. PY000190 dated 01.05.2006 + Rs. 3,21,687.50/- vide receipt no. S0052812 dated 19.06.2007 + Rs. 48,230 vide receipt no. S0070945 dated 29.03.2008 + Rs/ 5,28,675/- vide receipt no. S0070944 dated 29.03.2008) and copies of the receipts related to the payments have been attached and the same has not been denied by the OP in his written statement. It is also an admitted position that flat no. 901 Tower No. T11 was allotted to the complainants in the project, ‘Parsvnath Privilage’.
11.  The delay in delivery of possession of the flat has been accepted by the OP to which the OP has taken the plea that the delay has been caused due to global recession in the real estate sector. In this regard, the issue has been settled by the Hon’ble National Commission in the case of Puneet Malhotra v. Parsvnath Developers Ltd., II (2015) CPJ 18 (NC) observed as under:-

“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.”

 

12. Hon’ble National Commission in the case of Swarn Talwar and Ors. v. UnitechLtd. (consumer case No. 347 of 2014 decided on 14.08.2015) dealt with the plea of recession in the economy and 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 slowed 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,  and 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.”

 

13.  In view of the legal position laid down by the Hon’ble National Commission the plea of ‘global recession’ is of no avail to the OP.
14. Further OP has relied upon clause 10 (c) of the ‘flat buyers agreement’ in support of his contention that the complainant can be compensated for the period of delay in completion of the project @ 5/- per sq. ft. of the super area of the flat. Hon’ble National Commission in the case of Puneet Malhotra (supra) dealt with the proposition and observed as under :

 

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.

 

15.  Hon’ble National Commission also had the occasion to deal with the plea of compensation @ Rs. 5 per sq. ft. of the super area in the case of Swarn Talwar (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”.

 

16.  In view of the above it is established that hard earned money of the house buyers is being used by the OP for expanding its business by way of investing in other projects. It was for these reasons that the legislature had to enact Real Estate (Regulations and Development) Act 2016. Dream of the complainant to have her own house is shattered. In the circumstances OP is directed to pay to the complainant as under:-

1. refund the amount of Rs. 18,98,593/-  alongwith interest @ 12% p.a. from the date of its deposit till the date of its realization.
2. to pay compensation to the tune of Rs.2,00,000/- to the complainant for harassment inconvenience, frustration, sadness, anguish and mental agony caused to her.
3. to pay litigation charges to the tune of Rs.25,000/-

 

All the abovesaid payments shall be made by the OP to the complainant within a period of 90 days failing which the aforesaid amounts shall carry interest @ 18% p.a.

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

 

 

(Salma Noor)

MEMBER

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