Chandigarh

StateCommission

A/334/2023

M/S MANOHAR INFRASTRUCTURE & CONSTRUCTION PRIVATE LIMITED & OTHERS - Complainant(s)

Versus

RAKESH BAJAJ - Opp.Party(s)

SIMRANJIT SINGH SIDHU

21 Aug 2024

ORDER

STATE CONSUMER DISPUTES REDRESSAL COMMISSION,

U.T., CHANDIGARH

 

 

Appeal No.	:	334 of 2023
Date of Institution	:	15.12.2023
Date of Decision	:	21.08.2024

 

 

 

 

 

 

1]      Manohar Infrastructure and Constructions Pvt. Ltd., Corporate Office: SCO 139-141, Sector 17-C, Chandigarh – 160017 through its Director/Manager.

2]      Sh. Tarninder Singh, Managing Director, Manohar Infrastructure and Constructions Pvt. Ltd., Registered Office: SCO 139-141, Sector   17-C, Chandigarh – 160017.

3]      Sh. Narinderbir Singh, Director, Manohar Infrastructure and Constructions Pvt. Ltd., Registered Office: SCO 139-141, Sector   17-C, Chandigarh – 160017.

 

….Appellants/Opposite Parties.

Versus

Sh. Rakesh Bajaj S/o Sh. Raj Kumar Bajaj R/o H.No.951, Sector 79, Mohali.

...Respondent/Complainant.

 

BEFORE:   MR. RAJESH  K. ARYA, PRESIDING MEMBER.

                MR. PREETINDER SINGH, MEMBER.

 

ARGUED BY :-  

Ms. Garima Pandey, Advocate for the appellants.

Sh. Sanjeev Gupta, Advocate and Sh. Ripudaan Singh, Advocate for the respondent.

 

PER  RAJESH  K. ARYA, PRESIDING MEMBER

                    This appeal has been filed by the opposite parties – M/s Maonhar Infrastructure and Construction Pvt. Ltd. (appellants herein) against order dated 08.08.2023 passed by District Consumer Disputes Redressal Commission-I, U.T., Chandigarh (in short ‘District Commission), vide which, consumer complaint No.406 of 2021 filed by the complainant – Sh. Rakesh Bajaj (respondent herein) has been partly accepted by directing the appellants, in Para 26 of its order, as under:-

“26.        For the reasons recorded above, this complaint is partly accepted with costs and the opposite parties, jointly and severally, are directed as under:-

1. To issue allotment letter and execute plot buyer’s agreement in respect of a plot measuring 250 square yards (PLOT No. 1092), in the project in question, as per booking made vide expression of interest dated 2.3.2011, Annexure C-1 and deliver actual physical possession thereof to the complainant,  after providing all the basic amenities,  on receipt of balance sale consideration, EDC, and also govt. taxes as applicable, from the complainant. It is also made clear that the opposite parties are not entitled to charge IDC from the complainant, as there is no document on record to prove that the complainant agreed to pay the same.
2. Not to charge PLC as the location of the complaint plot is not a  preferential location as is evident from payment plan Annexure C-2
3. To pay compensation by way interest @9% p.a. on the entire deposited amount, to the complainant, starting 1.3.2014 till the date of passing the order.
4. To pay cost of litigation to the tune of Rs.50,000/-.

21.    This order be complied with by the OPs within 45 days from the date of receipt of its certified copy, failing which, they shall make the payment of the amounts mentioned at Sr.No.(iii)) above, with interest @ 12% per annum from the date of this order, till realization, apart from compliance of direction at Sr.No.(i)(ii)and (iv) above.”

2]             Briefly stated the facts as narrated in the impugned order passed by the District Commission reads thus:-

“1.     Briefly stated, the complainant booked a plot measuring 250Sq. yards @18000/- per sq. yards in the project of OPs ie. Palm Springs at Mullanpur Mohali. The complainant was assured by the OPs that possession of the said plot would be handed over within 2 years as the project has got most of the approval and sanctions except the lay out plan approval. The total sale consideration of the plot was Rs.45,00,000/-. The complainant paid Rs.13,50,000/- at the time of booking i.e. 30% of the sale consideration. EDC and PLC charges were to be paid extra apart from the basic sale price of Rs.18000/- per sq. yards. It is alleged that after booking of plot in 2011 the complainant visited the OPs numerous time to execute the agreement and issue allotment letter but they did not do so.  They kept demanding money from the complainant but did not start development work at the site. The OPs instead of issuing allotment letter issued acknowledgement of booking application on 19.1.2015 wherein the Ops arbitrarily incorporated the condition of paying the government levies  and internal development charges whereas at the time of booking it was agreed that EDC and PLC charges would be levied. The said charges were protested by the complainant. The OPs also demanded Rs.5,00,000/- as total development charges which were paid by the complainant in order to get plot number. Subsequently the Ops allotted plot No.1092 to the complainant which was far away from the  main entrance. The OPs had given a draft of agreement to the complainant which was  having one sided terms and conditions the same was protested by the complainant but the OPs did not remove the arbitrary condition in the agreement.  It is alleged that despite paying Rs.34,25,000/- out of the total sale consideration of the plot in question the OPs have failed to deliver the possession of the plot. IT is alleged that the OPs. It is alleged that the OPs have collected money from the complainant by representing that it had all the approval but as per knowledge of the complainant they did not have necessary approvals at the time of booking of plot in question. Alleging the aforesaid act of Opposite Parties deficiency in service and unfair trade practice on their part, this complaint has been filed.

2.      The Opposite Parties in their reply stated that the complainant was duly informed regarding the project approval and issuance of CLU in favour of OPs. The complainant continued interest in the plot and never raised any objection nor raised an immediate demand for refund. It is averred that the correspondence placed on record fully establish the fact that the complainant was duly informed regarding the status of the project at the time of expression of interest and thereafter, as and when necessary approvals such as sanction of project, CLU and sanction of the lay out plans etc.  was granted by the competent authority.  The competent authority granted completion period till 13.6.2018 towards the project of the OPs which was thereafter extended upto 31.12.2022 and it is for the complainant to come forward to execute the plot Buyer’s Agreement and comply with the terms and conditions. It is averred that no prejudice could be caused to the complainant if at the initial stage the OPs were not having permission from the competent authority since valid title can be transferred in the name of the complainant after allotment of the plot as all the permissions have been granted to the MEGA project of the OPs.  The OPs even got extension regarding completion of the project upto 31.12.2022. It is averred that the possession of the plots is being handed over to the applicants who have executed the plot Buyer’s Agreement as per the terms and conditions. It is alleged that the complainant is himself a defaulter and it was the duty of the complainant to pay the remaining amount as per the schedule and further to enter into an agreement to sell with the answering OPs but the complainant himself had never approached the Ops despite repeated request to execute agreement to sell and further pay remaining amount. It is averred that there is no deficiency on the part of the OPs.  All other allegations made in the complaint have been denied being wrong.”

3]             After hearing the contesting parties and going through the material available on record, the District Commission partly accepted the complaint against the appellants, as stated above.

4]                The order of the District Commission has been assailed on the ground that the respondent/complainant is not authentic buyer and rather he is only speculative buyer, who made the booking for investment purposes and is not a consumer; that time bound possession was never promised by the appellants since no Buyer’s Agreement was executed between the parties; allotment was to be made only after payments by the respondent, which he did not pay nor protested to such demands, which the District Commission has failed to appreciate. It has further been stated that the respondent wrongly and falsely alleged that promise of delivery of possession within two years was made whereas the expression of interest itself was very much clear that the project was an ongoing project. It has further been stated that the District Commission ought to have noted that the respondent had misled the Commission into believing that there had been a delay in granting the possession. It has further been stated that time was not the essence in offering or delivering possession. It has further been stated that it was only when the respondent realized that the project has gained exemption under Punjab Apartment and Property Regulation Act, 1995, he filed frivolous complaint to avoid paying any amount before the District Commission. It has further been stated that the District Commission erred in ignoring the submission of the appellant that after issuance of notification dated 25.01.2017 exempting applicability of many provisions of PAPRA qua Mega Housing Project, the alleged irregularities committed qua sale of plots in the year 2011 etc. stood rectified automatically. It has further been stated that the respondent is also liable to pay IDC and PLC. It has further been stated that interest @9% p.a. and compensation awarded by the District Commission is on a very much higher side. Lastly prayer for setting aside of the impugned order by allowing the appeal has been made by the appellants. 

5]                On the other hand, it has been argued on behalf of the respondent/complainant that the District Commission has rightly partly allowed the consumer complaint on the basis of documentary evidence on record and it (District Commission) has dealt with each and every aspect of the matter. It has been prayed that the appeal be dismissed as such.

6]                After hearing the Counsel for the parties and going through the documentary evidence/material available on record and the impugned order very carefully, we do not find any merit in the appeal, which deserves to be dismissed for the reasons to be recorded hereinafter. The first contention of the appellants is that the respondent/complainant is not authentic buyer and rather he is only speculative buyer, who made the booking for investment purposes and is not a consumer. In this regard, it may be stated here that there is nothing on the record that the respondent/complainant is a property dealer and deal in the sale and purchase of property, on regular basis and the plot, in question, was booked by him by way of investment with a view to resell the same as and when there was escalation in the prices thereof. On the other hand, the complainant in Para 2 of his complaint had specifically stated that he had availed the services of the opposite parties for booking of a plot for residential purpose. Thus, in the absence of any cogent evidence, in support of the objection raised by the opposite parties, mere bald assertion to that effect, cannot be taken into consideration. Since the opposite parties have levelled allegations against the complainants, the onus lay upon them, to place on record, documentary evidence in that regard, which they failed to do so. Otherwise also, in a case titled as Kavita Ahuja Vs. Shipra Estate Ltd. and Jai Krishna Estate Developer Pvt. Ltd. 2016 (1) CPJ 31, decided by the National Consumer Disputes Redressal Commission, New Delhi, it was held that the buyer(s) of the residential unit(s), would be termed as consumer(s), unless it is proved that he or she had booked the same for commercial purpose. Similar view was reiterated by the Hon’ble National Commission, in DLF Universal Limited Vs Nirmala Devi Gupta,  2016 (2) CPJ 316. Not only as above, under similar circumstances, in  a case titled as Aashish Oberai Vs. Emaar MGF Land Limited, Consumer Case No. 70 of 2015, decided on 14 Sep 2016, the Hon’ble National Commission, while rejecting similar plea raised by the builder, observed as under:-

“ In the case of the purchase of the houses which a builder undertakes to construct for the buyer, the purchase can be said to be for a commercial purpose where it is shown, by producing evidence, that the buyer is engaged in the business of a buying and selling of houses and or plots as a trading activity, with a view to make profits by sale of such houses or plots.  A person cannot be said to have purchased a house for a commercial purpose only by proving that he owns or had purchased more than one houses or plots.  In a given case, separate houses may be purchased by a person for the individual use of his family members.  A person owning a house in a city A may also purchase a house in city B for the purpose of staying in that house during short visits to that city.  A person may buy two or three houses if the requirement of his family cannot be met in one house.  Therefore, it would not be correct to say that in every case where a person owns more than one house, the acquisition of the house is for a commercial purpose.  In fact, this was also the view taken by this Commission in Rajesh Malhotra &Ors. Vs. Acron Developers Pvt. Ltd. &Ors. First Appeal No. 1287 of 2014 decided on 05.11.2015.”

The principle of law laid down in the aforesaid cases is fully applicable to the present case. The respondent/complainant, thus, falls within the definition of a ‘consumer’, as defined under the Act. Such an objection taken by the appellants/opposite parties being devoid of merit stands rejected. 

7]                Now coming to contentions raised by the appellants that promise of delivery of possession within two years was never made whereas the expression of interest itself was very much clear that the project was an ongoing project and further time was not the essence in offering or delivering possession and that after issuance of notification dated 25.01.2017 exempting applicability of many provisions of PAPRA qua Mega Housing Project, the alleged irregularities committed qua sale of plots in the year 2011 etc. stood rectified automatically, it may be stated here that when examined the documents, Annexure C-18 and C-19 colly., which the appellants never challenged with any contrary evidence, it becomes evident that the application for setting up the residential project was submitted by the appellants to the competent Authority, Punjab Urban Planning and Development Authority (PUDA), and Greater Mohali Area Development Authority (GMADA) for the first time on 12.09.2011. The screening committee considered the project on 21.02.2013 and the Government finally approved the project on 25.04.2013. However, the plot in question, was sold to the respondent earlier on 2.3.2011. Notably, the Letter of Intent (LOI) dated 06.05.2013 explicitly prohibited the project from being advertised, launched or having any money collected from the general public for allotment of land, plots etc., without the approval of layout and zoning plans and an exemption under Section 44 of the PAPRA Act issued by the State Government. It further revealed from these documents that the Change of Land Use (CLU) was only approved by the Department of Town and Country Planning, Punjab on 31.03.2014 and the layout plan was approved on 06.10.2015. The LOI, in condition no.6, also clarified that it did not confer any right to the Promoter/Developer to sell or transfer the property or execute any transactions without obtaining the necessary approvals and the requisite notification/order under Section 44 of the PAPRA Act, 1995, from the Department of Housing & Urban Development. The conditions outlined in the LOI clearly prohibited the appellants from advertising or launching the project and collecting money from the general public for the allotment of land or plots without the necessary approvals, including the layout and zoning plans (approved on 24.11.2015) and the exemption under section 44 of the PAPRA Act (issued on 25.01.2017). Additionally, it was proved before the District Commission that the permissions related to solid waste water, sewage storm and water disposal were granted on 06.07.2015, the NOC from the Punjab Pollution Control Board was obtained on 01.12.2015, construction permission was granted on 18.01.2016 and environmental clearance was obtained on 03.06.2016. These documents confirmed that none of the required permissions were obtained in 2011, when the project was launched and plots were sold to the respondent and other buyers. Even the Certificate of Registration as a Promoter, necessary for obtaining a license under the PAPRA Act, was only obtained on 27.06.2014, more than two and a half years after selling the plot to the complainant. Selling the project and collecting money from prospective buyers without obtaining the required permissions and sanctions constituted an unfair trade practice by the project proponent, as held by Hon’ble National Commission in the case of M/s Ittina Properties Pvt. Ltd. & 3 Ors. Vs. Vidya Raghupathi & Anr., III (2018) CPJ 12 (NC), where it was held that it is an unfair trade practice for a builder to collect money from prospective buyers without obtaining the required permissions and that it is the duty of the builder to first secure these permissions before collecting consideration money from purchasers.

8]                Surprisingly, despite being aware that the project was launched and plots/units were sold to the public starting from 2011 without necessary approvals, the Government of Punjab, Department of Housing and Urban Development (Housing II Branch) granted an exemption to the project on 25.01.2017 from the provisions of the PAPRA Act without hearing the aggrieved consumers. This action by the competent Authorities violated the principles of natural justice and fair play and was not binding on the respondent. The competent Authorities’ failure to take action under relevant Rules and Regulations against the company cannot benefit the appellants for deficiency in service, negligence, and unfair trade practices. The project was launched in complete violation of relevant rules and regulations, with the appellants collecting money from the respondent with fraudulent intent. The appellants violated the conditions of the LOI and agreement with impunity. Therefore, launching and selling the project before 25.01.2017, when the exemption from the PAPRA Act provisions was granted and before obtaining the necessary permissions and approvals, constituted an unfair trade practice, as rightly held by the District Commission. Furthermore, after receiving a substantial amount of Rs.13,50,000/- (30% of the total sale consideration) from the respondent, the appellants were required to execute an agreement under the law within a reasonable period, typically two to three months. However, instead of doing so, they only raised demands from the respondent. The act of raising demands and receiving substantial amounts without executing the agreement, especially in the absence of development work at the project site, was unfair and illegal, contravening Section 6 (1) of the PAPRA Act, which mandated the execution of the sale agreement after obtaining a maximum of 25% of the sale consideration. The appellants were legally bound to execute and register the agreement under the Registration Act, 1908, after receiving 25% of the sale consideration but this provision was violated. They could not take refuge under the exemption certificate from the PAPRA Act, issued on 25.01.2017, long after the booking of the plot in question. It was nowhere proved on record that this exemption had a retrospective effect and in our opinion, it applied prospectively. The appellants, thus, were deficient in service and engaged in unfair trade practices.

9]                Regarding the possession of the plot in question, the Counsel for the appellants could not justify, why construction and development activities at the project site were not completed and possession was not delivered to the respondent. The District Commission rightly observed that the onus to prove the stage and status of construction and development works and that all necessary permissions and approvals had been obtained, rested with the builder/developer, as this principle was affirmed by the Hon’ble National Commission in Emaar MGF Land Limited and another Vs. Krishan Chander Chandna, First Appeal No.873 of 2013, decided on 29.09.2014. However, in the present case, there was a strong reason with the District Commission to believe that the appellants were still not ready to deliver possession of the plot, as admitted in para no.15 of their preliminary objections, where they stated that development work is ongoing and that basic amenities are near completion. The photographs submitted also revealed that a lot of work is still pending. Thus, it was proved on record that the project was launched without necessary approvals, no development was occurring at the site, and the opposite parties had grossly violated the provisions of Section 6 of the PAPRA Act by not executing the agreement within a reasonable period after receiving 25% of the total sale consideration.

10]              It may also be stated here that as per settled principle of law laid down by the Hon’ble Supreme Court of India where no agreement has been executed by the builder after booking of the plot/unit, then the reasonable period of two to three years has to be taken into account for completion of the construction and development activities and delivery of possession to the allottees/buyers thereof. Similar was the position in the instant case before the District Commission. No agreement had been executed between the parties, as such, possession of the plot in question should have been delivered to the respondent by the appellants, within a maximum period of three years from the respective dates of booking thereof, which the District Commission has rightly held so. In appeal, the appellants failed to convince this Commission that they actually encountered force majeure circumstances, as a result whereof, delay in handing over possession of the plot occurred. It is also noteworthy that the agreement had not been executed by the appellants, an act which has been deemed as an unfair trade practice. The failure to formalize the agreement has significant legal implications, particularly in situations where the rights and obligations of the parties involved are in question. In the absence of a specific date of delivery of possession within any of the documents submitted for the record, it would be unjustifiable to compel the respondent to endure an indefinite wait. The respondent/complainant's right to timely possession must be protected, and therefore, a reasonable period was required to be established for the completion of the project and the delivery of possession, which the District Commission has rightly done so in view of established principles of law as articulated by the Hon’ble Supreme Court of India in the case of Fortune Infrastructure Versus Trevor D’ Lima & Ors. (2018) 5 SCC 442. The Hon’ble Apex Court held that in situations where no specific delivery period is stipulated in the agreement, a reasonable time frame should be considered. In this context, the Hon’ble Supreme Court affirmed that a period of three years can be considered reasonable for the completion of contractual obligations. Thus, applying this principle to the present case, the District Commission deemed it fair to assume a reasonable period of three years for delivery of possession of the plot in question.

11]              As regards the plea that the respondent did not make payments of the due amounts and was a defaulter, it may be stated here that as held by the District Commission, the respondent’s decision to withhold the remaining payment is justified by several critical factors. Upon coming to know that the project had been launched without obtaining the necessary approvals and sanctions from the competent authorities and observing that there was no development at the project site, the respondent was rightly concerned about the legitimacy and progress of the project. Moreover, the appellants were in clear violation of Section 6 of the Punjab Apartment and Property Regulation Act (PAPR Act), as they failed to execute the agreement within a reasonable period after receiving an amount equal to 25% of the total sale consideration. This gross oversight on the part of the appellants further justified the respondent’s decision to halt payments. Thus, his actions find strong support in the principle of law established by the Hon’ble Supreme Court of India in the case of Haryana Urban Development Authority Vs. Mrs. Raj Mehta, Appeal (Civil) 5882 of 2002 decided on 24.09.2004. In this landmark case, the Hon’ble Supreme Court held that if a builder fails to deliver possession of the units or plots by the stipulated date or within a reasonable period in the absence of an agreement, it cannot expect the allottees to continue making installment payments. This legal principle underscores the responsibility of builders to adhere to timelines and obtain necessary approvals before demanding payments from buyers. When these obligations are not met, as in the present case, the respondent was within his rights to withhold further payments until the issues are resolved. A similar viewpoint was echoed by the Hon’ble National Consumer Disputes Redressal Commission, New Delhi in the case of Prasad Homes Private Limited Vs. E. Mahender Reddy and Ors., 1 (2009) CPJ 136 (NC). In this case, the Hon’ble National Commission ruled that when the development work at the project site had not been carried out, the purchaser was justified in stopping the payment of further installments. This precedent aligns with the circumstances of the present case where the lack of progress and failure to secure necessary approvals by the appellants validated the respondent’s decision to withhold payments. Given these legal precedents, the plea advanced by the appellants, challenging the respondent’s decision to withhold payment stands rejected. In our views, the actions of the respondent were legally sound and supported by established judicial principles, which prioritize the protection of the buyer's interests when the builder fails to fulfill their contractual and statutory obligations.

12]              Thus, in our considered view and as rightly held by the District Commission, since the agreement was not executed by the appellants, the demand for additional payment was unjustified. The appellants could not retain the respondent’s deposited amount and were obligated to return it with interest. As there was no proper execution of the agreement, the argument about clauses within an agreement that was never executed does not hold. Given the findings above, the respondent has been rightly held by the District Commission entitled to full refund of the amount paid along with interest as per prevailing legal standards due to the appellant’s deficiency in service, negligence, and engagement in unfair trade practices.

13]              As regards the next contention that the respondent is also liable to pay IDC and PLC, it is pertinent to highlight that the respondent, through the expression of interest dated 2.3.2011 (Annexure C-1), had agreed to pay only the EDC charges, in addition to applicable taxes and the PLC but only if the plot in question was preferentially located. Since the plot in question does not fall under the category of a preferentially located plot, the appellants were not justified in imposing charges for IDC and PLC arbitrarily. Therefore, the plea put forward by the appellants, asserting that the respondent is also liable to pay these additional charges, has been rightly rejected by the District Commission.

14]              As regards the contention raised that interest @9% p.a. and compensation awarded by the District Commission is on a very much higher side, it may be stated here that we do not find any wrong with the District Commission in awarding such interest and compensation keeping in view the deficiency in rendering service and unfair trade practice on the part of the appellants. Thus, in our considered view, the District Commission vide the impugned order has rightly partly allowed the complaint after appreciating the facts and documentary evidence on record, which is just and legal and as such, no interference by this Commission in the said order.

15]              For the reasons recorded above, the appeal being devoid of any merit is dismissed with no orders as to costs.

16]              Certified copy of this order be sent to the parties free of charge.

Pronounced.

21.08.2024.

(RAJESH  K. ARYA)

PRESIDING MEMBER

 

 

 

 

(PREETINDER SINGH)

MEMBER

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