PER MR SUBHASH CHANDRA

1.     This First Appeal under section 19 of the Consumer Protection Act, 1986 (in short, the ‘Act’) challenges order dated 13.12.2007 of the State Consumer Disputes Redressal Commission, Delhi (in short, the ‘State Commission’) in Complaint No. C-152/99 partly allowing the complaint and seeks the setting aside of this order. This order will also dispose of FA 118 of 2008 which pertains to the same parties and has the same issues emanating from order of the State Commission in consumer complaint no. C-153/99 which was disposed by the common order dated 13.12.2007. As the facts and details of the order are similar in both matters, for reasons of convenience, the facts are taken from FA 117 of 2008.

2.     The relevant facts according to the appellant/respondent, are that respondent/appellant had booked a residential apartment No. F 092 with parking space PRF-38 in ‘DLF Richmond Park’, Multistoried Complex, Qutab Enclave Phase-IV, DLF City, Gurgaon, Haryana a project developed and executed by the appellant/respondent on the basis of advertisements and sale brochures on 01.08.1995. An agreement was executed on 10.10.1995 for a sale consideration Rs 33,88,006/- as per a 7 year payment plan. The respondent paid Rs 12,04,816/- by July 1997 . However, he failed to make any payments by instalments after 12.08.1997 after paying the initial instalments. Vide letter dated 23.07.1998 respondent requested for cancellation of the agreement for personal reasons and sought refund of the entire amount deposited. Appellant turned down the request vide letter dated 08.02.1999 and also further requests for refund dated 27.11.1998 and 27.01.1999. On 03.03.1999 the appellant cancelled the allotment for default in payment as per demand raised. The respondent/complainant made a total payment of Rs 12,04,816/-. Appellant/respondent avers that allotment was cancelled due to default in timely payments and that the contention of the respondent/complainant being contractual in nature, the dispute is civil in nature and the appropriate jurisdiction is a Civil Court which has erroneously been disregarded by the State Commission in its impugned order. The appellant is before us praying to:  

(i)     set aside the impugned order of the State Commission dated 13.12.2007 in Complaint Case No. 153 of 1999; and

(ii)    pass any other order deemed fit in the facts and circumstances of the case

3.     We have heard the rival contentions of the learned counsel for the parties and carefully considered the material on record.

4.     The facts of the case with regard to the booking of the apartment and default in payments are not disputed by the parties. Both the learned counsel agree that the only issues in the matter are (i) the quantum of earnest money that the appellant is justified in deducting and (ii) the rate of interest to be awarded towards compensation.  

5.     The order of the State Commission reads as follows:

“(i)   OP shall refund the amount received by it after   deducting 10% of the basic sale price as earnest money and the interest on the amount of delayed payment of instalments upto 23.07.98 i.e. the date when the request for cancellation of the flat was made.

(ii)    OP shall also pay interest @ 15% on the balance amount w.e.f. 23.07.98 for illegally withholding the amount under the guise of taking the decision on the request of the cancellation of the flat.

(iii)   OP shall also pay Rs 10,000/- charged as processing fees.

Payment shall be made within one month from the date of receipt of this order.”

6.     Learned counsel for the appellant submitted that the allotment of the apartment in question was done on account of admitted defaults in payment of instalments by the respondent who had only deposited approximately 25% of the total sale price. Appellant had refunded a balance of Rs.4,24,401/- after deducting 10% of the sale price as earnest money and other amounts as per the Apartment Buyer’s Agreement (ABA) which the respondent was contesting. According to the appellant, the State Commission had worked out the permissible deduction as per respondent’s interpretation and directed refund of additional amounts after holding the earnest money to be 10% of the basic sale price and interest payable @ 15%. It is argued that the State Commission erred in (a) construing the basis for calculating earnest money to be on the basis of basic sale price rather than the sale price which is the sum of all the payable amounts and (b) determining the rate of interest on the refundable amount to be 15% contrary to recent judgments of the Hon’ble Supreme Court. It was argued that as per the payment plan in Annexures I and II of the ABA the sale price was Rs 50,44,391/- and including the parking charges of Rs 1,00,000/- the total sale price was Rs 51,44,391. The respondent had admittedly made a payment of Rs 12,04,816/- against this sale price which had been received by the respondent whereafter the complaint was filed.

7.     It is the appellant’s case that as per Clause 7 of the ABA earnest money is 10% of the “Sale Price” and parking space and that the impugned order considered the “Basic Sale Price” instead. It is contended that the basic sale price is Rs 33,88,006/- which is a component of the sale price that includes other components of EDC, PLC, Contingency Security Deposit, Interest, Maintenance Security and parking charges as per Annexures I and II of the ABA. The respondent/complainant had argued per Clause 5 of the ABA wherein Rs 3,80,000/- was stated to be approximately equivalent to 10% of the sale price and the State Commission’s acceptance of this argument was stated to be ex facie erroneous since the ABA clearly mentioned both sale price and basic sale price. As per the appellant, the deduction of Rs 5,14,439.10  as earnest money of 10% was valid and justifiable on the basis of sale price as per Clause 7.

8.     Insofar as the 15% rate of interest directed by the State Commission on the amount to be refunded, appellant contends that since the refund is being ordered for the reason that the respondent/complainant cancelled the allotment for personal reasons and there is no finding of deficiency on part of the appellant, burdening it with interest @ 15% was a travesty of justice. It was submitted that in a catena of cases the Hon’ble Supreme Court had awarded 6 to 8% even in cases of failure in handing over of possession and that 6% was a reasonable rate, if at all.  

9.     Learned counsel for respondent/complainant submitted that the initial booking amount of Rs 4,00,000/- paid by it on 23.06.1995 comprised of Rs 3,29,179/- towards basic sale price, parking charges of Rs 20,000/- and processing fee of Rs 50,821/-. The calculation of the earnest money by the appellant is stated to be arbitrary on the ground that processing fee, EDC, PLC, Licence Fee and interest for delayed payment @ 20% has been added without any basis. It was contended that there was deficiency in service on part of the appellant since despite payment of approximately 35% of sale consideration by mid-1996, even the construction plan had not been approved till late 1997. Reliance is placed on Clause 7 which states that:

“That the company and the apartment allottee hereby agree that the amounts paid on registration to the extent of the sale price of the said premises and parking space shall be treated as the earnest money.”

It is accordingly argued that earnest money could not exceed Rs 3,29,179/- plus Rs 10,000/- towards parking charges. In respect of the rate of interest awarded, counsel for the respondent contended that 15% was fair since the appellant had itself charged 20% p.a. and this Commission had awarded interest @ 18%. Reliance was placed on this Commission’s judgment in Kushal K. Rana Vs. M/s DLF Commercial Complexes Ltd., in CC No. 88 of 2012 dated 09.09.2014 which involved similar set of facts. It was therefore contended that the appeal be dismissed.

10.   From the ABA it is seen that Clause 17 reads as under:

In case the allotment is got cancelled by the Allottee himself, he shall be entitled to the refund of the amount of the balance paid by him, after deducting the Earnest money, but without payment of any interest on the balance amount, paid by him.

It is evident that the Agreement executed between the parties itself provides for refund of the instalments deposited by the allottee towards the apartment subject to deduction of Earnest money and without payment of interest on the balance amount paid. In the instant case, the State Commission has held that the Earnest money deposited be deducted @ 10% which is not disputed. The only issue in dispute is whether this deduction should apply on the basic sale price or the sale price. 

11.    The ABA is a document prepared by the appellant which was signed without any changes by the respondent. The contention of the appellant is that in view of the fact that it mentions both basic sale price and sale price it should be read to interpret the price to be sale price and not basic sale price. It is apparent that the terms ‘basic sale price’ and ‘sale price’ have neither been defined in the ABA nor has the document specified whether the other components are to be considered to be part of the sale price. The relevant clauses in the ABA read as follows:

5.     That the Apartment Allottee has already paid a sum of Rs. 3,29,612/- being approximately 10% of the sale price of the premises and a sum of Rs 20,000/-being the booking amount for parking space(s) Nos. TR 1638 at the time of booking registration for the purchase of the said premises, and parking space(s) the receipt of which the Company hereby acknowledges and the Apartment Allottee agrees to pay the remaining sale price of the premises and parking space(s) and all other charges as described in the schedule of payments (Annexure II) attached with this Agreement and in the manner indicated therein. The Apartment Allottee has agreed that the Company is under no obligation to send demands/reminders for payments.

7.       That the company and the Apartment allottee hereby agree that the amounts paid on registration to the extent of 10% of the sale price of the said premises and on allotment or in instalments as the case may be will collectively constitute the earnest money. Nonfulfillment by the Apartment Allottee of the terms and conditions of application for allotment, terms and conditions of sale and those of this Agreement by Apartment Allottee within the time allowed may entail the forfeiture of the earnest money.

However, there is no definition of sale price. The State Commission has held that on receipt of cancellation of booking by the respondent, the appellant had no option but “to act in accordance with Clause 17 and raise or deduct the amount which was due from the complainant on account of interest by way of delayed payment in terms of Clause 9 and the earnest money which was 10% of the sale price and nothing beyond that.”

12.    In view of the fact that the ABA was a contract document that was prepared by the appellant, the same cannot be read to the detriment of the respondent/complainant. The submission of the appellant with regard to interpreting ‘sale price’ to imply the total sale consideration cannot be accepted since it was neither specified in the agreement nor mentioned specifically in the document itself. The interpretation of the State Commission cannot be disagreed with. Accordingly, the State Commission’s understanding of the price to mean basic sale price cannot be found fault with. Similarly, the deduction of processing fee of Rs 50,821/- by the appellant cannot be considered justifiable since Clause 17 refers only to deduction of earnest money and not to any other deduction. This finding of the State Commission is therefore also found to be well considered. 

13.   As for the issue of repayment of the balance amount with compensation @ 15% is concerned, it is an admitted fact that the refund was sought by the respondent for personal reasons. While Clause 17 is explicit that in such a circumstance, the refund shall be done without payment of any interest on the balance amount, in the instant case, the rate of interest has been kept @15% on the ground that the funds were withheld illegally since 23.07.1998 without taking a decision on the request for cancellation. There is no specific finding of any deficiency of service or unfair trade practice. There is merit in the contention of the appellant that the Supreme Court has held in a catena of cases that interest in the range of 6 to 8% be charged. As laid down by the Hon’ble Supreme Court in Experion Developers Pvt. Ltd. Vs. Sushma Ashok Shiroor, CA No. 6044 of 2019 decided on 07.04.2022 and in DLF Homes Panchkula Pvt. Ltd. Vs. D.S. Dhanda, CA Nos. 4910-4941 of 2019 decided on 10.05.2019 interest should be compensatory and restitutionary. Considering that the appellant had paid instalments totaling to less than 50% of the basic sale price, has not brought on record any evidence of any loan from a bank and had sought refund for personal reasons, a rate of interest of 7.5% is considered to be fair.

14.   For the foregoing reasons, the appeal is partly allowed and the orders of the State Commission in the impugned order are modified with the following directions:

(i)     the appellant shall refund the amount received by it after deducting 10% of the basic sale price and the amount paid towards the parking as Earnest money without deducting any amount towards any other head, including towards processing fee;

(ii)    appellant shall pay interest @ 7.50% on the balance amount from 23.07.1998 till the date of realization;  

(iii)   this order shall be complied with within 8 weeks failing which the applicable rate of interest will be 9%;

(iv)   appellant shall pay Rs 25,000/- to the respondent towards litigation expenses.

15.   FA 118 of 2008 is also disposed of in the above terms.

16.   Pending IAs, if any, stand disposed of with this order.