1.       These two (02) appeals under section 19 of the Act 1986 have been filed apropos the same Order dated 25.09.2018 of the State Commission in complaint no. 314 of 2018.

2.       We have heard the learned counsel for Bathinda Development Authority (the “development authority”) and for Mr. Sunish Gupta (the “complainant”). We have also perused the record including inter alia the State Commission’s Order of 25.09.2018 and the two (02) memoranda of appeal. 

3.  Relevant facts, as material for appreciating the issues germane, may first be recapitulated.

The complainant applied for allotment of a residential plot with the development authority on 30.10.2010. The tentative total price of the plot was Rs. 44 lakh. 10% thereof i.e. Rs. 4.40 lakh was to be paid as earnest money. The complainant paid the same with his application. He was successful in the draw of lots held on 18.03.2011.

Letter of Intent (LoI) dated 09.05.2011 was issued by the development authority to the complainant. Clause 5 of the LoI stipulated that 15% of the total price of the plot will be payable within 30 days. The said clause is reproduced below for reference:

5.         A sum of Rs. 660000/-, being 15% of total price of the plot shall be payable within 30 days from the date of issue of this Letter of Intent.

The complainant paid the amount of Rs. 6.60 lakh on 07.06.2011.

Two schemes apropos further payment were provided for in clause 6 of the LoI. The said clause is reproduced below for reference:

6.         As per your payment plan (Option-A) you are required to deposit the amount given against each option as under:

Option-A

A sum of Rs.2772000, being 70% of total price of the plot after giving 10% rebate on balance principle amount to be deposited within 60 days from the date of issue of this letter of intent i.e. on or before 07-Jul-2011.

Option-B

Balance 70% of the total price of the plot is to be deposited in 7 half yearly instalments along with interest @ 12% per annum as under:-

As such under Option ‘A’ 70% of the total price was payable within 60 days of issue of the LoI with rebate of 10% on the balance principal amount payable. Under Option ‘B’ 70% of the total price was payable with interest at the rate of 12% per annum in 07 half-yearly instalments from the date of issue of the LoI i.e. on 09.11.2011, 09.05.2012, 09.11.2012, 09.05.2013, 09.11.2013, 09.05.2014 and 09.11.2014.

The complainant opted for Plan ‘B’. The first instalment of Rs. 6.248 lakh was due on 09.11.2011. The complainant paid the same on 04.11.2011.

The complainant paid a total amount of Rs. 4.40 lakh (earnest money with his application) plus Rs. 6.60 lakh (within 30 days of issue of the LoI) plus Rs. 6.248 lakh (first instalment under Option ‘B’) equal to Rs. 17,24,800/- in all.

The LoI provided for payment of 10% of the total price as earnest money, then 15% of the total price within 30 days of issue of the LoI under clause 5, and then 70% of the total price under Option ‘A’ or Option ‘B’ under clause 6 i.e. total 95%. It did not give the timeline for depositing the balance 5% of the total price.

After depositing the first instalment of Rs. 6.248 lakh on 04.11.2011 the complainant did not make any further instalment(s).

The development authority issued notice apropos default to the complainant on 11.07.2012, 28.08.2012, 23.10.2012 and 20.03.2013.

Meanwhile an allotment letter dated 16.04.2014 was issued.  Clause 3 of the allotment letter gave the timeline for paying the balance 5% of the price of the plot. The said clause is reproduced below for reference:

3. A sum equivalent to 5% (Rs.220000/-) of Price of plot i.e. total of Rs. 220000/- is to be made within 30 days from the date of issue of this letter.

Notice regarding default was again issued on 27.10.2014 and then on 17.04.2015.

Clause 15 of the LoI provided that the plot will be handed over after completion of developmental works within a period of 1.5 years from the date of issuance of the LoI else the allottee had the right to withdraw and in such contingency the entire amount deposited by him will be refunded with interest at the rate of 10% per annum. The said clause is reproduced below for reference:

15. The possession of the said plot shall be handed over to the allottee after completion of development works at site within a period 1.5 years from the date of issuance of this letter of intent. In case for any reason, B.D.A. is unable to deliver the possession of plot within this stipulated period, you will have a right to withdraw from the scheme by moving an application to the Estate Officer and in such case, B.D.A. shall refund the entire amount deposited by the applicant along with 10% simple interest. Apart from this there shall be no other liability of the Authority.

The plot was not developed and offer of possession was not made in the committed period of 1.5 years or even within a considerable period beyond.

The complainant wrote a request letter dated 06.06.2017 to the development authority for refund of his entire deposited amount along with interest. No refund was made.

The complainant went before the State Commission on 23.04.2018. The State Commission in its impugned Order dated 25.09.2018 referred to clause 14 of the LoI. The said clause is reproduced below for reference:

14. In case of refusal of this offer, such refusal should be conveyed in writing through a registered post within 30 days from the date of issuance of the letter of intent. In such an event 10% of earnest money deposited shall be forfeited. However in case such refusal is received after a period of 30 days from the issue of letter of intent, the entire earnest money deposited shall be forfeited.

Principally basing its decision on the said clause it observed that the earnest money could be forfeited from the total amount deposited by him. As such it ordered that the residual amount of Rs. 12.848 lakh i.e. Rs. 17.248 lakh (total deposited) minus Rs. 4.40 lakh (earnest money to be forfeited) shall be refunded by the development authority along with interest at the rate of 10% per annum from the date of the complainant’s request letter of 06.06.2017 along with compensation of Rs. 15 thousand for mental agony and harassment and litigation cost of Rs. 5 thousand.

The development authority in its appeal has asked for setting aside the State Commission’s Order. The complainant in his appeal has asked for refund of his total deposited amount with interest.

4.  In the afore factual backdrop, learned counsel for the development authority submits that after making payment of only Rs. 17.248 lakh the complainant did not make any further payment towards the total price of Rs. 44 lakh. Repeated notices regarding default were issued. But still the complainant did not make payment. LoI dated 09.05.2011 was followed by an allotment letter dated 16.04.2014. After an allotment letter is issued, the terms and conditions contained therein prevail. As such, since the complainant was a defaulter, 10% of the total amount of consideration with interest and other fees payable were to be forfeited in accordance with clause 27 of the allotment letter. The said clause is reproduced below for reference:

27. In case of breach of any condition(s) of Letter of Intent / allotment  or regulations or non-payment of any amount due together with the penalty, the plot or building as the case may be, shall be liable to be resumed and in that case an amount not exceeding 10% of the total amount of consideration money, interest and other fees payable in respect of plot shall be forfeited as per the provision of section 45(3) of the Punjab Regional and Town Planning & Development Act, 1995.

Learned counsel argues that the State Commission has inadvertently erred in overlooking that since the allotment letter had already been issued the conditions contained therein were to prevail and not the conditions mentioned in the earlier LoI. Submission is that 10% of the total consideration along with interest and other fees payable were to be deducted under clause 27 of the allotment letter and the State Commission has erred by ordering for deducting only the earnest money i.e. only 10% of the tentative total price but not the interest and other fees payable by wrongly banking on clause 14 of the LoI which was not applicable.

5.      On the other hand, learned counsel for the complainant submits that as the area was not duly developed and the development authority was not in a position to hand over possession within the committed period of 1.5 years from the date of issue of the LoI or even within any reasonable period in the near future, the complainant watched his interests and so did not make the further payment(s). He submits that the total amount deposited ought to be refunded with interest at the rate of 10% per annum in accordance with clause 15 of the LoI since the site was not developed nor possession of plot offered within 1.5 years. Submission is that the State Commission has inadvertently erred by overlooking that clause 15 of the LoI was applicable and has erroneously ordered for deduction of the earnest money by wrongly applying clause 14.

6.       In rejoinder learned counsel for the development authority submits that this was a self-financing scheme. The development authority is a government organisation and works for public good. The LoI was issued on 09.05.2011. The 1.5 year period provided for in clause 15 expired on 08.11.2012. However the complainant defaulted in making even the second and third payments under Option ‘B’ which were due on 09.05.2012 and 09.11.2012 within the commitment period itself. The first notice issued on 11.07.2012 and the second and third notices issued on 28.08.2012 and 23.10.2012 were again within the commitment period itself. Submission is that this is an open-and-shut case of wilful default. She emphasises that the deduction is required to be made in accordance with clause 27 of the allotment letter.

7.       In response learned counsel for the complainant submits that the development authority has been unjustly and inequitably retaining his money. It cannot retain his money indefinitely and then make partial refund most belatedly without any interest as and when it may whimsically deem fit. Submission is that since absolutely no meaningful work was going on at the site the complainant being prudent did not pay any further amount lest the same may also get dumped. He emphasises that refund ought to be made in accordance with clause 15 of the LoI.

8.       We may first observe that as has already been mentioned in para 3 above the LoI gave the timelines for payment of total 95% of the price. It was silent on the timeline for payment of the residual 5%. Though this was taken care of in the subsequent allotment letter, but it was required and expected of the development authority to get its basic essential arithmetic correct in the initial LoI itself.

Though this does not have a bearing on the facts of this present case, since the stage of the payment of the residual 5% was never reached, but the development authority shall be better advised to provide the timelines for payment of the entire 100% in the LoI itself.

We note that in clause 3 of the allotment letter the timeline of making payment of the balance 5% was within 30 days of its issue. That being so, at the very least the tentative period within which the allotment letter would be issued ought to have been given in the LoI and it also ought to have been made explicit therein that the balance 5% will be payable within 30 days of the issuance of the allotment letter.

Whatever be the mechanics the development authority may wish to adopt, the objective is that the timelines for payment of the entire 100% price ought to be clear ab initio in the LoI itself.

9.       We agree with the argument made by the learned counsel for the development authority that once an allotment letter is made its conditions prevail over the conditions mentioned in the earlier LoI. This is a general principle. But in this regard we would like to observe that, firstly, there ought to be, to the extent feasible and desirable, consistency between the conditions mentioned in the initial LoI and those mentioned in the subsequent allotment letter, and, secondly, as a matter of diligent responsible functioning, it ought to be made explicit in the LoI itself that when the allotment letter is issued subsequently the conditions contained therein will prevail. If the tentative period of making the allotment letter is given in the LoI and it is also made clear that subsequently the conditions mentioned in the allotment letter will prevail, it will enable the allottees to have an informed choice in order to exercise their discretion to act on the conditions of the LoI if they so wish within the foreseeable period available with them. The development authority shall be well advised to examine and remove the ambiguity and unfairness in this regard.

10.     Though we agree in principle with the learned counsel for the complainant that in case satisfactory development is not going on at the site then the allottee is well within his rights to watch his interests and not make further payment(s), but in the facts of the instant case at hand it is admitted that the complainant did not make payments of even the second and third instalments which were due within the 1.5 year committed period itself and he was also given notice within the said period itself. That being so, it is not logical to accept that in the present case the complainant was not a defaulter, more so when it was a self-financing scheme of a government development authority functioning for public good.

The State Commission in para 14 of its Order, for reasons given, has concluded that “- - - the complainant was reluctant to accept the plot and became a wilful defaulter”. We find no good reason to take a different view of the facts and evidence.

11.     We may see that the chronology of notices issued to the complainant was: LoI on 09.05.2011; then notices on 11.07.2012, 28.08.2012 and 23.10.2012; then expiry of commitment period of 1.5 years on 08.11.2012; then notice on 20.03.2013; then allotment letter on 16.04.2014; then notices on 27.10.2014 and 17.04.2015.

As many as 04 notices were issued even before the allotment letter. In the notice dated 28.08.2012 it was mentioned that “This amount should be deposited within 30 days including penalty if it is not done the process of cancellation of plot or forfeit of deposited amount will be done. In that case under Puda Act rules deposited amount of the Plot/cancellation of the allotment will be done”. As such the complainant had been explicitly put to notice for cancellation of his allotment. At that time the LoI was prevailing and the allotment letter was not even in existence. Had the development authority acted within a reasonable timeframe on its own notice it would have cancelled the allotment and could have forfeited the earnest money in accordance with clause 14 of the LoI. However it only kept on sending repeated notices but took no further tangible action for a considerable period of time. To put it differently, had the development authority been efficient enough to act on its notice(s) it would have disposed of the complainant’s case while the LoI was still applicable. By delaying the matter, dallying it till the allotment letter was made, it cannot plead that the stringent condition in the allotment letter will now come into force. The allottee cannot be the victim of the erratic or whimsical level of efficiency or inefficiency of the development authority. Hypothetically, after notice, if in one such case it shows efficiency enough and disposes the case within reasonable period and before the allotment letter is made, and in another case it shows scarce efficiency and procrastinates the case till the allotment letter is made, to argue that in the latter case the stringent condition of the allotment letter will be applicable is untenable and unacceptable.

Thus, in the conspicuous circumstances of the present case, clearly, the condition in the LoI i.e. clause 14 ought to and will be applicable since the notice had been issued for “cancellation of allotment” when the LoI was well in place and the allotment letter was not even made and the case was not disposed of within any reasonable period.

This also calls for introspection by the development authority for removing unpredictable anomaly as also the capricious unfairness in decision-making so that similarly situate cases are similarly treated and the one or the other is not dependent on the case-to-case level of efficiency or inefficiency of its concerned functionaries. So advised.

In the present case, though our reasoning is different, we agree with the State Commission that the deduction ought to be made in accordance with clause 14 of the LoI.

12.     In the light of the above examination, we find no good reason to interfere with the principle per se of the award of the State Commission, that after deduction of the earnest money the complainant’s deposited amount be refunded with interest at the rate of 10% per annum. The deduction is in accordance with clause 14 of the LoI. The rate of interest is the same as is given in clause 15 and appears to be a good yardstick to adopt for the instant purpose. However, we do not agree with the State Commission that the interest ought to be from the date of the request letter dated 06.06.2017 of the complainant. Disconcertingly enough, no refund at all has been made by the development authority to the complainant till date. Even its own case argued today is that refund ought to be made after making deduction as per clause 27 of the allotment letter. Howsoever right or wrong its stand may be, even the refund due by its own calculations, tenable or untenable, has not been made. Another disturbing aspect is that the complainant was first issued notice on 11.07.2012. But no action was taken to decide the case. Repeated further notices were sent, self-evidently in rote. As such, taking full 01 year as a most liberal period for taking decision and making the refund on its own, the refund ought to have been made by 10.07.2013. We feel that in the present case equity requires that the interest be paid from this date i.e. 10.07.2013, making it admissible from the most belated request letter of 06.06.2017 might be something less than justice. It bears emphasis that if action for cancellation of allotment is undertaken, in the normal wont, as per the rules, the refund admissible after the deduction is not dependent on the allottee’s request, while the development authority is well within its rights to make the (rightful) deduction as may be due but it has the concomitant responsibility too of making the balance refund within reasonable period.

13.     Sequel to the above, the award made by the State Commission is modified to the effect that the development authority shall make refund of an amount of Rs. 12.848 lakh to the complainant with interest at the rate of 10% per annum from 10.07.2013 till actual realisation along with compensation of Rs. 15 thousand and cost of litigation of Rs. 5 thousand.

The awarded amount shall be made good within eight weeks from today, failing which the State Commission shall undertake execution, for ‘enforcement’ and for ‘penalty’, as per the law.

We may add that we have not per se added to or subtracted from any of the conditions or rules of the development authority. The advice given in paras 8, 9 and 11 above is essentially for inculcating systemic improvements for future for the (rightful) benefit of consumers at large.

So disposed.

14.     The Registry is requested to send a copy each of this Order to the parties in the appeal and to their learned counsel as well as to the State Commission immediately. The stenographer is requested to upload this Order on the website of this Commission immediately.  

‘Dasti’, in addition, to facilitate timely compliance.