JUSTICE V.K. JAIN (ORAL)

The complainants in CC No.65 of 2015, namely, Amit Arora and his wife Nidhi Arora booked a residential flat in the project, namely, Unitech Habitat which the opposite party was to develop on plot No.9 in Sector Pi-II (Alistonia Estate), Greater Noida. The booking was made in the year 2006 and allotment to them was made on 25.8.2006. Flat No.1203 in Tower 3 of the aforesaid project was allotted to them for a total consideration of Rs.70,98,576/-. The possession was to be delivered within 3 years of the allotment, i.e., by 25.8.2009. The possession, however, was not delivered despite the complainants having paid a sum of Rs.67,80,269/- to the OP. Being aggrieved, the complainants are before this Commission seeking refund of Rs.1,61,75,173/- constituting Rs.67,80,269/- towards the principal amount paid by them and Rs.93,94,904/- as interest @ 18% p.a. They have also sought Rs.15 lakhs towards damages, besides cost of litigation.

2.      The complainants in CC No.132 of 2015, namely, Kamini Singh and Gaurav Tripathi also booked a residential flat in the aforesaid project and flat No.801 in Tower 3 of the said project was allotted to them, for a total consideration of Rs.67,27,000/-. An allotment letter dated 25.9.2006 was issued to them in this regard. The possession was to be delivered to them within 36 months from the allotment, i.e., by 25.9.2009. They also claimed to have paid a sum of Rs.60,65,026/- to the OP but since possession was not offered to them, they are also before this Commission seeking refund a sum of Rs.1,52,62,426/- comprising Rs.60,65,026/- towards principal amount and Rs.91,97,400/- towards interest @ 18% p.a. They are also seeking a sum of Rs.15 lakhs as damages besides the cost of litigation.

3.      In CC No.259 of 2015, the daughter and son-in-law of the complainant booked a residential flat with the OP and flat No.904 in Tower 1 of the said project was allotted to them. The allotment letter dated 6.11.2006 was then issued to the daughter and son-in-law of the complainant incorporating the contractual obligations of the parties. As per the said allotment letter, the possession was to be delivered within 36 months of the said allotment, i.e., by 6.11.2009. The complainant purchased the aforesaid allotment/booking from his daughter and son-in-law in the year 2013 and the allotment was endorsed by the OP in his name on 24.10.2013. The total sale consideration in this case was agreed at Rs.66,90,110/- and according to the complainant, a sum of Rs.60,25,369/- has already been paid to the opposite party. Since possession was not offered to him, the complainant is before this Commission  seeking a sum of Rs.1,51,62,502/- comprising principal amount of Rs.60,25,369/- and interest @ 18% p.a. quantified at Rs.91,37,133/-. He is also claiming  Rs.15 lakhs as damages besides the cost of litigation.

4.      The complainants in CC No.260 of 2015, namely, Siddharth Dixit and his wife Navneet Shergill, booked a residential flat with the OP  and flat No.1004 in Tower 1 was allotted to them on 26.10.2006 for a total consideration of Rs.66,90,110/-. They also claim to have paid a total sum of Rs.60,25,369/- to the opposite party. The possession was to be delivered to them within 36 months from the allotment, i.e., by 26.10.2009. Since possession has not been offered to them, they are before this Commission seeking payment of Rs.1,51,62,653/- comprising Rs.60,25,369/- as the principal amount and Rs.91,37,284/- as interest @ 18% p.a.  They are also claiming Rs.15 lakhs as damages besides the cost of litigation.

5.      The complaint has been resisted by the opposite party on several grounds. These are the grounds which the OPs had also taken in        CC No.347 of 2014 – Swarn Talwar & Ors. Vs. Unitech Ltd. and connected matters decided by this Commission on 14.8.2015. The complainants in Swarn Talwar & Ors. (supra) and connected matters also had booked residential apartments with the OP in this very project, i.e., Unitech Habitat which the opposite party was to develop on plot No.9 in Sector Pi-II (Alistonia Estate), Greater Noida. The complainants in the above-referred matters, felt aggrieved on account of the failure of the opposite party to honour its contractual obligation and offer possession of the flats booked by them. Therefore, they approached this Commission by way of separate consumer complaints seeking refund of the amount paid by them along with interest @ 18% p.a. They also sought damages and cost of litigation besides rent for the period the possession was delayed. The complaints were resisted by the OP primarily on the grounds that (i) the amount paid by the complainants being less than Rs.1,00,00,000/- in each case, this Commission lacked pecuniary jurisdiction to entertain the complaints, (ii) as per clause 4(c) of the allotment letter the opposite party is required to pay only the holding charges calculated at Rs.5/- per sq. ft. per month of the super area for the period of delay in offering delivery of the flat beyond the agreed period, (iii) the delay was attributable to a recession in the economy, affecting the availability of the resources such as labour and raw materials, (iv) there was major disruption in the construction activity of the opposite party due to massive agitation and strikes by farmers whose lands were acquired by NOIDA, which resulted in slackening and availability of supply of raw material, (v) there was acute shortage of labour, underground water and raw material besides delayed approval from Greater Noida Authority and (vi) In terms of clause 4(e) of the allotment letter the opposite party is entitled either to offer an alternative property or refund the amount paid by the complainant with simple interest at the rate of 10% per annum without damages or other compensation. It was also alleged that a notification dated 14-09-2006 issued by Government of India imposed restrictions and prohibitions on new projects or activities or on the extension or modernization of the existing projects without prior environmental clearances and the procedure for obtaining such clearances led to delay in construction schedule. It was also claimed that the Dharna by farmers who were agitated on account of acquisition of their land, in front of the projects of various builders also had halted the construction work and there was default in payment of installments by several flat buyers, dues against whom amounted to nearly Rs.57,00,00,000/-.

6.      Rejecting all the contentions advanced by the opposite party, this Commission directed it to refund the amount paid to it by the complainants along with compensation in the form of simple interest on that amount @ 18% p.a. from the date of deposit till the date of payment. The payment was directed to be made within six weeks.

          The following was the view taken by this Commission, while allowing the aforesaid complaints:-

In our view, the interest claimed by the flat buyers in such a case does not represent only the interest on the capital borrowed or contributed by them but also includes compensation on account of appreciation in the land value and increase in the cost of construction in the meanwhile. As noted by us in CC No.232 of 2014, Puneet Malhotra Vs. Parsvnath Developers Ltd. decided on 29-01-2015, there has been steep appreciation in the market value of the land and cost of construction of the residential flats in Greater Noida in last about 7-10 years and consequently the complainants cannot hope to get a comparable flat at the same price which the opposite party had agreed to charge from them. In fact it would be difficult to get a similar accommodation, even at the agreed price plus simple interest thereon at the rate of 18% per annum. Therefore, the payment of interest to the flat buyers in such a case is not only on account of loss of income by way of interest but also on account of loss of the opportunity which the complainants had to acquire a residential flat at a particular price.

          In Ghaziabad Development Authority Vs. Balbir Singh (2004) 5 SCC 65, the Hon’ble Supreme Court inter alia observed and held as under:

        “However, the power to and duty to award compensation does not mean that irrespective of facts of the case compensation can be awarded in all matters at a uniform rate of 18% per annum. As seen above what is being awarded is compensation i.e. a recompense for the loss or injury. It therefore necessarily has to be based on a finding of loss or injury and has to correlate with the amount of loss or injury. Thus the Forum or the Commission must determine that there has been deficiency in service and/or misfeasance in public office which has resulted in loss or injury. No hard and fast rule can be laid down, however a few examples would be where an allotment is made, price is

received/paid but possession is not given within the period set out in the brochure...

…Along with recompensing the loss the Commission/Forum may also compensate for harassment/injury both

mental and physical. Similarly, compensation can be given if after allotment is made there has been cancellation of scheme without any justifiable cause.

That compensation cannot be uniform and can best of illustrated by considering cases where possession is being directed to be delivered and cases where only monies are directed to be returned. In cases where possession is being directed to be delivered the compensation for harassment will necessarily have to be less because in a way that party is being compensated by increase in the value of the property he is getting. But in cases where monies are being simply returned then the party is suffering a loss inasmuch as he had deposited the money in the hope of getting a flat/plot. He is being deprived of that flat/plot. He has been deprived of the benefit of escalation of the price of that flat/plot. Therefore the compensation in such cases would necessarily have to be higher.

          It would, thus, be seen that the Hon’ble Supreme Court recognized that the interest to the flat buyers in such cases is paid by way of compensation. Therefore, there is no reason why the interest claimed by the complainants or at least part of it should not be taken into consideration for the purpose of deciding the pecuniary jurisdiction of this Commission. If this is done, the aggregate amount claimed in each of the complaints exceeds Rs.1,00,00,000/- and, therefore, this Commission does possess the requisite pecuniary jurisdiction.

          As regards the plea that in terms of Clause (c) of the allotment letter the opposite party is required to pay only the holding charges calculated at the rate of Rs.5/- per sq.ft. per month of the super area for the period the possession is delayed, such a contention was expressly rejected by us in Puneet Malhotra (supra) holding that such clause applies only in a case where construction of the flat is delayed but despite delay the buyer accepts the possession of the flat from the seller and consequently the accounts have to be settled between the parties. We observed in this regard that the buyer would have to pay the agreed holding charges to the seller and the seller to pay the agreed compensation on account of delaying the construction of the flat. The said clause, however, does not apply to a case where the buyer on account of delay on the part of the seller in constructing the flat is left with no option but to seek refund of the amount which he had paid to the seller. We further held that 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. We also noted in this regard that enumeration of the unfair trade practices in Section 2(r) of the Act is inclusive and not exhaustive.

“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 slow-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 has 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 labourers, 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 labour, 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 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, sand and even water will be arranged by the contractor/sub-contractor 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 contractors/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.

It can hardly be disputed that a term 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 the buyer in making payment to him but seeks to pay less than 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.

As regards the alleged delay in obtaining environmental clearances there is no material on record to show when the opposite party applied for such clearances, where they submitted all the requisite documents etc. while applying for such clearances and how much was the time taken by the concerned authorities in granting the said clearances. In the absence of such particulars, it would be difficult for us to accept that development of the project was delayed on account of any notification imposing restrictions on new projects. In any case, the opposite party has failed to produce before us any notification imposing restriction or prohibition on development of the project in which the flats were to be constructed for the complainants.

7.      Being aggrieved from the order passed by this Commission, the opposite party approached the Hon’ble Supreme Court by way of an appeal. The said Appeal being Civil Appeal D.No.35562/2015 was dismissed by the Hon’ble Supreme Court vide its order dated 11.12.2015 which reads as under:-

“We have heard learned counsel for the appellant and perused the record. We do not see any cogent reason to entertain the appeal. The judgement impugned does not warrant any interference.

The Civil Appeal is dismissed.”

8.      The learned counsel for the opposite party submits that they had not diverted the funds collected from the flat buyers for any other purpose and had spent the entire amount only on development of this very project. He also submits that the OP had taken loan from HDFC Bank Ltd. for the development of eight projects including this project. He further states that the total amount already been spent by them towards construction and development of this project is more than Rs.521 crores though they had collected only about Rs.470 crores from the flat buyers. According to him, they had opened two accounts with Canara Bank in respect of this project. One was termed as Sales Account and the other was termed as Escrow Account. The Escrow Account was opened after a loan had been taken from the HDFC Bank. However, since the loan taken from HDFC Bank was for as many as eight projects, it is not possible for them to say how much out of that was spent on this project.

          The learned counsel for the complainant on the other hand submits that the very fact possession of the flat was not offered even 8 years from the date of the allotment, clearly shows that either the OP was seeking to construct more areas than it had sold which amounts to financing the excess construction at the cost of the flat buyers, for making gains in future by selling that excess area or there was diversion  of funds. He further submits that considering the decision of this Commission in Swarn Talwar & Ors. (supra) which has been upheld by the Hon’ble Supreme Court, it will not be open to this Commission to revisit the issue and on the principal of parity alone, the complainants are entitled to the same relief which the other flat buyers were granted by this Commission in Swarn Talwar & Ors. (supra).

9.      I am in agreement with the learned counsel for the complainants that on the principal of parity alone, the complainants who had booked apartments at the same time and in the same project in which the complainants in Swarn Talwar & Ors.(supra) and connected matters had booked are entitled to an identical relief. This is more so when the order passed by this Commission has been upheld by the Hon’ble Supreme Court by dismissing a regular appeal filed by the opposite party against that order and thereby the order of this Commission merged into the order of the Hon’ble Supreme Court. Therefore, the complaints are disposed of with the following directions:-

(i)      The opposite party shall refund the entire principal amount received from the complainants along with compensation to them in the form of simple interest @ 18% per annum from the date of the deposit till the date of payment.

(ii)      The payment in terms of this order shall be made within eight weeks from today.