DISTRICT CONSUMER DISPUTES REDRESSAL FORUM-I, U.T. CHANDIGARH

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Ajay Kumar Dabra s/o Shri Raj Kumar r/o H.No.48, Pradhan Marg, Mauzi Colony, Malviya Nagar, Jaipur, Rajasthan 302017 through Raj Kumar being GPA.

…..Complainant

                 V E R S U S

1]  Parsvanath Developers Limited, through its Director, SCO No.1, First Floor, Madhya Marg, Sector 26, Chandigarh-160026.

2]  The Director, Parsvanath Developers Limited, Regd. & Corporate Office, 6th Floor, Arunachal Building, 19 Barakhamba Road, New Delhi 110001

3]  The Chairman, Chandigarh Housing Board, 8 Jan Marg, Sector 9, Chandigarh.

                      ……Opposite Parties

CORAM:   SH.P.D.GOEL                    PRESIDENT

         SH.RAJINDER SINGH GILL           MEMBER

DR.(MRS.) MADANJIT KAUR SAHOTA        MEMBER

Argued by: Sh.Kapil Kumar Bhardwaj, Counsel for complainant

           Sh.Aftab Khera, Proxy Counsel for

           Sh.Ashwani Talwar, Counsel for OPs No.1 & 2.

           Sh.Aman Dhir, Proxy Counsel for

           Sh.Abhinav Kansal, Counsel for OP No.3.       

PER P.D. GOEL, PRESIDENT

         The complainant has filed the present complaint under section 12 of the Consumer Protection Act (as amended upto date) “hereinafter referred to as the Act”. Briefly stated, the complainant applied for three bedroom residential flat with OPs No.1 & 2 and deposited a sum of Rs.10,42,000/- as earnest money along with the application form.  The balance amount was to be deposited in installments, per construction linked payment plan. The complainant on becoming successful in the draw of lots conducted by OP No.3 was allotted 3 bedroom flat on Third Floor, Type-1, Pent House, Bearing No.3 in Block No.C-4 measuring 3000 sq. ft. vide allotment letter  dated 28.09.2007 in the project of OP No.1 & 2 i.e. Parsvnath Prideasia at Rajiv Gandhi Chandigarh Technology Park, Chandigarh. The complainant averred that on his request, the OP-1 changed the earlier allotted flat Unit C4-PH3 Category C Type-I with Flat Unit No.C-17-PH4 of Category C Type-I and confirmed the same through letter dated 23.11.2007. Again on the request of the complainant, OP No.1 changed the earlier allotted Flat Unit No.C-17-PH4 of Category C Type-I with two bedrooms flat unit NO.D-5-503 of Category D and confirmed the same through letter dated 06.03.2008. Thereafter, the complainant applied for sanction of loan from HDFC Ltd., Chandigarh and OP-1 gave permission to mortgage the said Flat and also issued No Objection for the grant of loan. Accordingly a quadripartite agreement dated 12.04.2008 was executed between the OPs and the complainant for sanction of loan. The complainant paid Rs.1,09,618/- towards process fee for sanction of loan to the HDFC Bank but later on refused to avail the loan on account of non-construction of the flats by OPs due to which, Bank deducted Rs.27500/- and refunded Rs.82000/- only. 

         It is averred that as per the flat buyer agreement dated 02.07.2008 executed between the OPs No.1 & 3, the construction of the flats was to be completed by OPs No.1 & 2 within 36 months from 6.10.2006.  However, the OPs No.1 & 2 failed to make any development at the site as was agreed vide agreement dated 6.10.2006.  Therefore, the complainant being dissatisfied with the act & conduct of OPs, sought cancellation of allotment and refund of the amount of Rs.10,42,000/- along with upto date interest and Rs.27500/- deducted by the HDFC Bank but to no effect.  Ultimately, a legal notice dated 15.03.2011 was served upon the Ops but to no effect, hence this complaint.

2]       OPs No.1 and 2 filed written statement and took some preliminary objections. On merits, the averments of the complainant with regard to the allotment of the three bed room flat and subsequent its to two bedrooms flat in question and deposit of Rs.10.42 lacs have been admitted. On merits, it has been pleaded that the Chandigarh Administration was desirous of developing residential, commercial and other related infrastructure facilities as an integrated project at Rajiv Gandhi Chandigarh Technological Park in Chandigarh. It invited bids/proposals from private parties. OPs No.1 and 2 had submitted its proposal with the Chandigarh Administration which was accepted vide their letter of acceptance dated 09.06.2006. Thereafter an agreement was signed between OPs No.1 and 2 and OP-3 which is known as the “Developers Agreement”. The relevant terms and conditions of the said agreement are as under:-

“2.2.1       The "Development Period" shall be a total period of 36 Months (including 24 Months of construction period) starting from the Agreement Date. The Development Period includes (a) the period of 12 Months starting from Agreement Date within which the developer shall obtain all requisite Approvals     including    environmental clearance/s for the Project and (b) construction period of 24 Months starting from the said 12 Months period set out at (a) above within which the Project are to be completed by the Developer.

2.2.2        Provided further that in the event of any delay attributable to the CHB in handing over possession of the CHB's Asset to the Developer, the said period of 36 Months shall commence from the date the CHB's Asset are actually handed over to the Developer. For the avoidance of doubts, the Developer shall be obliged to procure from CHB a letter recording the date on which such hand over of assets would have been, effectuated by CHB, which date shall be the "start" date for calculation of the said period) of 36 Months."                   

                   The case of the OPs No.1 and 2 is that soon after taking possession of the land measuring 123.79 acres, the answering OPs No.1 and 2 started erection of fencing around the said land. However, the Government of Haryana claimed ownership over a portion of the said land. OPs No.1 and 2 were thus stopped from carrying out its activities. Despite the fact that OPs No.1 and 2 had taken up the matter with Chandigarh Administration a number of times and a number of meetings were held between OPs No.1 and 2, OP No.3 and the State of Haryana; the matter regarding the ownership of the land allotted to OPs No.1 and 2 still remains unsettled.  In these circumstances according to OPs No.1 and 2, the construction work could not be started, and the possession of the flat could not be delivered to the complainant within the stipulated period of 12 months. The said period of 36 months, according to OPs No.1 and 2, shall commence from the date of delivery of the possession of the total land to it by OP-3 as per agreement clause 2.2.2. In these circumstances, the delay in construction of the flats and delivery of the possession is not because of the fault of OPs No.1 and 2. It has further been pleaded that if the complainant wants refund he has to apply for cancellation of the allotment and in that eventuality 5% of the basic price of the flat i.e. Rs.5,90,750/- shall be forfeited and balance amount of Rs.4,51,250/- out of Rs.10,42,500/- is payable as per the clause 5(a) of the Flat Buyers Agreement. In these circumstances, according to OPs No.1 and 2, there is no deficiency in service or unfair trade practice on its part and the complaint qua it deserves dismissal.

3]       OP No.3 filed reply. It has been admitted that Complainant applied for three bedroom flat. After allotment of the three bedroom flat, thereafter, deposited Rs.10.42 lacs as earnest money. Further, OP No.3 pleaded that there is no deficiency on its part. It is clearly enunciated in the clause (f) of the preamble of the agreement that the Developer shall be responsible for quality parameters, timely delivery of the residential units and all claims/ liabilities and compensation towards defects/ delays. These terms also reiterated in Section 9(c) of the Buyers Agreement. Therefore, OP No. 3 is not liable for deficiency in service. Further, there was no intention to cheat the Complainants. Answering OP further submitted that he is not entitled to refund the amount of Rs.27,500/- as the Contract was between HDFC Bank and the Complainant and the answering OP has no role to play. The OP No.3 is willing to refund the amount being paid from the Escrow Account. As per Escrow Agreement, on refund by the buyers, the liability of Chandigarh Housing Board is to the extent of 30% only and as the revenues received from the sale of residential units have been appropriated by the Parsvnath Developers Limited and Chandigarh Housing Board in the ratio of 70:30, so CHB is willing to pay their share and is making all possible efforts to resolve the dispute and refund the amount as early as possible. All other allegations of the Complainant has been denied and a prayer has been made to dismiss the same.

4]       Parties led evidence in support of their contentions.

5]       We have heard the learned counsel for the parties and have also perused the record. 

6]       Admittedly, the Complainant applied for 3BR flat by depositing a sum of Rs.10.42 lacs vide receipt Annexure C-2 and the balance amount was to be deposited in installments on the basis of construction linked plan. On having been successful in draw of lots, was allotted flat on Third Floor, Type-I Pent House, Bearing No.3, in Block No.C4, having super area of 3000 sq. ft. approx. Vide allotment letter Annexure C-3, the flat was later on, changed on the specific request of the Complainant and the same was confirmed vide letter dated 23.11.2006 qua Annexure C-6.

7]       A close scrutiny of the clause 9(a) of the Flat Buyer Agreement dated 02.07.2008 (Annexure C-11), makes it amply clear that the construction of the residential units was to be completed within a period of 36 months of the signing of the Development Agreement dated 06.10.2006.  This being so, the construction of the flat should have been completed by 05.10.2009, but not even a foundation is said to have been laid there so far.  Finally, the present complaint was filed by the complainant on 06.05.2011 after waiting for more than 36 months. The period of 36 months could be extended due to certain reasons as mentioned in sub clause (a) of the Flat Buyer Agreement, but neither it is the case of the OPs to extend the same nor have any of the grounds been made out for extending the period beyond the said date. There was, therefore, definitely deficiency in service on the part of the OPs.

8]       Now, it is established that the construction could not be started due to a dispute about the ownership of the land over which the construction was to be raised.  The OP-3 has raised a defence that they delivered the possession of the site in question to OPs 1 & 2 and according to OPs 1 & 2, the State of Haryana claimed a portion of the said land as its ownership. Ultimately, the allotment was cancelled by the OP-3 and the matter went into dispute. 

9]       As such, it can be legitimately, be concluded without any hesitation that there is unfair trade practice adopted by the OPs 1 & 2, in as much as, they not only collected the amount, but even allotted the flats to the buyers, even without laying down the foundation at the site.  The OPs were first required to obtain clearance certificate from several authorities, before starting the construction, which they did not. It is an unfair trade practice on the part of OPs 1 & 2 to collect the money from the intending purchasers without even having a right to raise construction over the land so allotted to it.

10]      The ld. Counsel for the OPs 1 & 2 has argued that in view of clause 5(a) of the Flat Buyer’s Agreement, they were entitled to deduct 5% of the basic price and to refund the remaining amount to the complainant.  Clause 5(a) reads as follows:-

“5(a)    Timely payment of the instalments/amounts due shall be of the essence of this Agreement.  If payment is not made within the period stipulated and/or the Buyer commits breach of any of the terms and conditions of this Agreement, then this Agreement shall be liable to be cancelled.  In the eventuality of cancellation, earnest money being 5% of the basic price would be forfeited and the balance, if any, would be refundable without interest.  However, the Sellers may allow the revival of the allotment of the unit (subject to its availability) in the name of the Buyer on payment of revival charges amounting to 10% of the earnest money.”

11]      The plain reading of clause 5(a) extracted above, clearly goes to show that in case of cancellation of allotment, 5% of the basic price is to be forfeited. In the opening line of the sub clause, it is provided as to under what circumstances the cancellation of the agreement would take place.  It proceeds to record that timely payment of instalments/ amounts due shall be of the essence of this agreement and it will be cancelled firstly if payment is not made within the period stipulated and secondly if the buyer itself breached any of the terms and conditions of the agreement. 

12]      It is not the case of the OPs that         the timely payment was not made by the Complainant. There is no plea with regard to any breach of the terms and conditions of the agreement. 

13]      In fact, the refund was asked by the complainant on the ground that even after expiry of three years (36 months), not even a single brick had been laid at the spot. He, therefore, asked for the refund of the amount.  It was, therefore, not a case where the agreement was being cancelled to which the forfeiture clause could be applicable. 

14]      As such, the provisions of clause 5(a), referred to above, relating to the deduction of 5% amount of the basic price, could not be invoked. The OPs were, thus, not entitled to forfeit any amount of the earnest money under any of the clauses of the agreement. The action taken by OPs 1 & 2 in forfeiting the said amount is, therefore, contrary to the terms and conditions of the agreement and cannot sustain. Reliance placed on M/s Parsvnath Developers Limited Versus Sandeep Chanana & Anr., in Appeal Case No. 187 of 2010, decided on 20.07.2011 by our own Hon’ble State Commission.

15]      It is a classic case where a consumer is being duped from all angles. The OPs had been enjoying the benefit of the amount deposited by the complainant; they are not paying him any interest on the said amount; they are not raising construction over the site; they are not in a position to hand over possession of the flat to him and when he asked for the refund of the amount, they are deducting half of the amount and paying the remaining half to him.  The entire episode took place due to the unfair trade practice adopted by the OPs in collecting the money, without getting any clearance from the authorities and without ascertaining the title to the land. The OPs, therefore, cannot be permitted to take benefit of their own wrongs and get richer at the expense of the buyers.

16]      Since the OPs are at fault, they cannot forfeit the amount deposited by the complainant.  The complainant is, therefore, entitled to the full amount of Rs.10,42,000/-. Since the OPs had been using this amount and may be earning interest thereon, the complainant, who is deprived of the said amount, would have been earning interest on the said amount if it was not deposited with the OPs, the complainant would be, therefore, not only entitled to the refund of the full amount but also to the interest as damages to compensate him for the loss caused to him due to the wrong policies of the OPs.

17]      Further, sub clause (b) of clause 5 provides that in case of delay in the payment, the buyer is liable to pay interest @ 24% per annum on the amount due for the period of default. When the OPs are charging interest @ 24% per annum on the delayed payments, they should also pay interest at this rate to the complainant whose payment is being delayed.  The complainant had taken loan from the HDFC Bank for paying the amount and is liable to pay interest thereon. However, due to non-development/ construction of flats by the OPs, the Complainant did not avail the sanctioned loan, for which the HDFC Bank deducted a sum of Rs.27,500/-.

18]      Admittedly, the HDFC Bank is not a party to the lis, so neither any relief, nor any direction can be issued to HDFC Bank. Further, the Complainant failed to avail the loan sanctioned by the HDFC Bank, for which the said Bank deducted a sum of Rs.27,500/-. As such, OPs No.1 & 2 are also not liable to pay the amount of Rs.27,500/-. However, the Complainant requires to be compensated by the OPs.  As such, we are of the opinion that the OPs should pay interest @ 15% per annum on the amount deposited from the date of deposit till the payment is made to the complainant.

19]      The contention of OP-3 is that it is only OPs 1 & 2 who are liable to refund the amount and pay all claims, liabilities and compensation towards defects/delay to the buyers.  The OP-3, therefore, has no liability for payment of compensation or refund of the amount and interest with respect to the Flat Buyer Agreement which is a tripartite agreement between the complainant, OP-1 and OP-3.  So, in view of clause 9(e) of the agreement, the liability would be that of OPs 1 & 2 alone.

20]      As a result of the above discussion, this complaint is accepted and the OPs 1 & 2 are directed to refund the entire amount of Rs.10,42,000/- to the complainant, along with interest @ 15% per annum from the date of deposit, till the date of payment to the complainant, alongwith Rs.25,000/- towards costs of litigation, within one month from the date of receipt of the certified copy.

21]      The certified copies of this order be sent to the parties free of charge. The file be consigned.