NCDRC Penalises Builder for Delay

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NATIONAL CONSUMER DISPUTES REDRESSAL COMMISSION

NEW DELHI

CONSUMER CASE NO. 13 OF 2015

WITHIA/9115/2015

1. SUMEET SINGH

R/o. Tower 9 Flat No. 403, Sushant Estate,

Gurgaon,

Haryana ...........Complainant(s)

Versus

1. M/S. UNITECH LIMITED & ANR.

Through Its Managing Director, Signature Towers,Ground Floor, NH-8, South City -1,

Gurgaon

2. M/s. Pioneer Urban Land & Infrastructure Ltd.,

Through Its Managing Director, Registered Office - A-22,3rd Floor, Green Park, Aurobindo Marg,

New Delhi - 110 016. ...........Opp.Party(s)


WITH

IA/9115/2015

1. RAJNISH KUMAR ROHATGI & ANR.Through Shri Ravi Jain, S/o. Late Shri. J.K. Jain R/o. 70,Rashi Apartments Sector 7, Plot No. 3, Dwarka,

New Delhi ...........Complainant(s)

Versus


Through Its Managing Director, Signature Towers,Ground Floor, NH-8, South City-I,

Gurgaon.


Through Its Managing Director, Registered Office- A-22,3rd Floor, Green Park, Aurobindo Marg,



WITH

IA/9115/2015

1. ABHINAV BHAGRA & ANR.

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Flat No. 902, Pharaohs Tower, Omaxe Nile,Uppalsouthend, Sohna Road, Sec-49,

Gurgaon


Versus

1. M/S. UNITECH LIMITED & ANR.Through Its Managing Director, Signature Towers,Ground Floor, NH-8, South City -I,

Gurgaon


Through Its Managing Director, A-2, 3rd Floor, GreenPark, Aurobindo Marg,



WITHIA/9115/2015

1. DINESH KUMAR YADAV

Through Ms. Lavanya Yadav D/o. Shri Dinesh KumarYadav, R/o. Flat No. 23, HEWO Apartments, Sector 31,

Gurgaon,


Versus


6, Community Center, Saket

New Delhi -17 ...........Opp.Party(s)

BEFORE:

HON'BLE MR. JUSTICE V.K. JAIN, PRESIDING MEMBER

HON'BLE DR. B.C. GUPTA, MEMBER

For the Complainant : Mr. Sushil Kaushik, Advocate

Ms. Himanshi Singh, Advocate

For the Opp.Party : Mr. Chandra Shekhar Yadav, Advocate

Ms. Ritu Jain, AR of company

Dated : 18 Jan 2016

ORDER

HONBLE MR. JUSTICE V.K. JAIN, PRESIDING MEMBER (ORAL)

CC No. 487/2014

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(1) The complainants, who are husband and wife, booked an apartment measuring 1560 sq. feetof super area in a project namely Vistas which the opposite party is developing in Sector-70 ofGurgaon. The parties entered into a Buyers Agreement dated 15.03.2010 in this regard. As perclause 4 (a) of the said agreement, the opposite party was required to deliver possession of the flatto the complainants within 36 months from the date of the agreement i.e. by 15.03.2013. Thecomplainants made payment of Rs. 47,62,416/- to the opposite party as against the agreed total

consideration of Rs. 52,09,200/-, constituting 91% of the total sale consideration. The grievanceof the complainants is that despite they having made 91% of the payment, the opposite party hasnot even offered possession of the flat to them. The complainants therefore, are before thisCommission seeking possession of the flat booked by them or a flat of identical size in a similarlocality or a sum of Rs. 1,71,60,000, that being the current market value of such flats. They havealso claimed a sum of Rs. 24,157/- per month towards rental expenses, Rs. 15,87,274/- as interestcalculated @ 18% per annum from the committed date of possession till October 2014 and Rs.1,32,600/- being the compensation as stated in the Buyers Agreement.

CC No. 13/2015

(2) The complainant in C.C. No.13 of 2015 is a subsequent purchaser, who purchased Flat

No.1001 measuring about 1629 sq. ft. of super area in the project FRESCO which the oppositeparty is developing in Sector 50 of Gurgaon, from the original allottee Ms.Kaushal andMr.Mukesh Kumar by way of an agreement dated 24.01.2013. The booking by the originalallottee was made on 01.11.2006 and they entered into an agreement dated 12.12.2006 with theopposite party. Under the Buyers Agreement, the opposite party was required to deliver thepossession of the apartment to the purchasers by March 2009. The transfer in favour of thecomplainants was allowed by the opposite party vide its letter dated 24.01.2013. The grievance ofthe complainant is that the possession of the flat has not been offered to him despite more than 9years have expired from the date of execution of the Buyers Agreement and about 3 years haveexpired from the date he purchased the apartment from the original allottee. The aforesaidcomplainant is therefore, before this Commission seeking possession of the flat booked by him

alongwith compensation etc.

CC No. 14/2015

(3) The complainants in CC/14/2015 booked an apartment measuring 1815 sq. ft. of super areain the project FRESCO which the opposite party is developing in Sector 50 of Gurgaon andparties entered into a buyers agreement dated 16.06.2008 whereby the opposite party was requiredto deliver possession of the apartment to the complainants within 27 months i.e. by 15.09.2010.The grievance of the complainants is that the possession has not been offered to them thoughmore than 5 years have already expired from the date stipulated for delivering possession of theapartment to them. Being fed up with such abnormal delay in offering possession of theapartment to them, the complainants are seeking refund of the amount which they have paid to theopposite party along with compensation in the form of interest @ 18% p.a. Though they havealso sought damages for the loss of rental income and payment of contractual compensationbesides a lump sum compensation for physical and mental torture, the prayer is now confined to aconsolidated compensation in the form of simple interest from the computed date of possessiontill the date the amount to the complainants is refunded.

CC No. 15/2015

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(4) The complainants in CC/15/2015 are the subsequent purchasers who purchased theapartment no.0103 having super area of 1662 sq. ft. in the project FRESCO in Sector 50 ofGurgaon from the original allottee of the said apartment on 15.12.2011. The allotment to theoriginal allottee was made vide Buyers Agreement dated 2.8.2011 and as per clause 4 (a) of thesaid agreement, the possession was to be delivered within 9 months from the date of theagreement i.e. by 2.5.2012. However, the possession is yet to be offered to the complainants. The

aforesaid complainant is therefore, before this Commission seeking possession of the flat bookedby him alongwith compensation etc.

CC No. 16/2015

(5) The complainant in CC No. 16/2015 alongwith his wife booked a residential apartmentbearing no. 0302 measuring 1560 sq. feet of super area in the same complex i.e. Vistas inSector-70 of Gurgaon for a total consideration of Rs. 5349504/-. Later, the name of the wife of thecomplainant was deleted from the said agreement. The complainant made payment of Rs.4938886/- to the opposite party. As per the Buyers Agreement executed between the parties on12.03.2010, the possession was to be delivered within 36 months from the date of the agreementi.e. by 12.03.2013. The possession however, has not been delivered. The complainant therefore, is

before this Commission seeking possession of the flat, with compensation etc.

(6) The complaints have been resisted by the opposite party on several grounds which were alsotaken in a number of consumer complaints filed against the said party before this Commission andwere rejected. It is however, not in dispute that the opposite party is not in a position to hand overpossession of the flats to the complainants and though construction of the super structure is statedto be complete, even occupancy certificate has not been applied.

(7) The learned counsel for the complainants has pointed out that a number of complaints filedby the allottees of the project Vistas in Sector-70 of Gurgaon were allowed by this Commissionvide order dated 08.06.2015. In CC No. 427/2014, Satish Kumar Pandey & Anr. Vs. M/s. Unitech

Ltd. and connected matters. The order passed in the Satish Kumar Pandey & Anr. (supra) to theextent it is relevant, reads as under:

Neither any new legislation was enacted nor an existing rule, regulation or order wasamended stopping suspending or delaying the construction of the complex in whichapartments were agreed to be sold to the complainants. There is no allegation of anylock-out or strike by the labour at the site of the project. There is no allegation of anyslow-down having been resorted to by the labourers of the opposite party or thecontractors 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 thecompletion of the project within the time stipulated in the Buyers Agreement. It wascontended by the counsel for the OP that the expression slow down would includeeconomic slow-down or recession in the Real Estate sector. I, however, find no merit inthis contention. The word slow down having been used alongwith the words lock-outand strike, I has to be read ejusdem generis with the words lock-out and strike andtherefore, can mean only a slow down if resorted by the labourers engaged in constructionof the project.

As regards, alleged shortage of labour, I find that no material has been placed on recordby the OP that despite trying, it could not be get labourers to complete the construction of

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the project within the time stipulated in the Buyers Agreement. It was submitted by thelearned counsel for the complainants that ordinarily big builders such as the OP in thesecases, are contracting/sub-contracting the construction work to the contractors engagedby them, instead of employing their own labourers on a regular basis, the purpose being toensure that they are not saddled with the wage bill of those regular labourers, in case theopposite 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 executingthe work at the site of those projects and no contractor/ sub-contractor having comeforward to execute the project on the ground that adequate labour was not available in themarket. Therefore, it cannot be accepted that the opposite party could not have arrangedadequate labour, either directly or through contractors/sub-contractors, for timelycompletion of the project. As regards the alleged shortage of water, bricks and sand in themarket, I find that there is no evidence filed by the OP, to prove that it was unable toprocure water, sand and brick in adequate quantity. This is also their case that thenotification of the Government, being relied upon by the opposite party, is an oldnotification, which was in force even at the time the opposite party promised possession in36 months. There is no evidence of the opposite party having invited tenders for supply ofbricks 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 evenwater will be arranged by the contractor/sub-contractor and not by the opposite party. Asnoted earlier, there is no evidence of the opposite party having invited tenders afterawarding the work of project in question to the contractors/sub-contractors and therebeing no response to such tenders. Therefore, I find no merit in the plea that thecompletion of the project was delayed due to non-availability of water, sand and bricks inadequate quantity.

It is an undisputed proposition of law that ordinarily the parties are bound by the termsand conditions of the contract voluntarily agreed by them and it is not for a ConsumerForum or even a Court to revise the said terms.

However, a term of a contract, in my view will not be final and binding if it is shown thatthe consent to the said term was not really voluntary but was given under a sort ofcompulsion on account of the person giving consent being left with no other choice or ifthe said term amounts to an unfair trade practice. It was submitted by the learned counselfor the complainants that the term providing for payment of a nominal compensation suchas Rs.5/- per square foot of the super area having become the order of the day in thecontracts designed by big builders, a person seeking to buy an apartment is left with nooption but to sign on the dotted lines since the rejection of such term by him would meancancellation of the allotment. He further submitted that a person seeking to acquire abuilt up flat instead of purchasing a plot and then raising construction on it, therefore, isnot in a position to protest resist the inclusion of such a term in the Buyers Agreement,and has to rely upon the reputation of the builder, particularly if he is a big builder suchas Unitech Ltd. He also submitted that the format of the Buyers Agreement is nevershown to the purchasers at the time of booking the apartment and if he refuses to sign theBuyers Agreement on the format provided by the builder, not only will he lose thebooking, even the booking amount/earnest money paid by him will be forfeited by thebuilder. I find merit in the above referred submissions of the learned counsel. A personwho, for one reason or the other, either cannot or does not want to buy a plot and raiseconstruction of his own, has to necessarily go in for purchase of the built up flat. It is onlynatural and logical for him to look for an apartment in a project being developed by a big

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builder such as the opposite party in these complaints. Since the contracts of all the bigbuilders contain a term for payment of a specified sum as compensation in the event ofdefault on the part of the builder in handing over possession of the flat to the buyer andthe flat compensation offered by all big builders is almost a nominal compensation beingless than 25% of the estimated cost of construction per month, the flat buyer is left with nooption but to sign the Buyers Agreement in the format provided by the builder. No

sensible person will volunteer to accept compensation constituting about 2-3% of hisinvestment in case of delay on the part of the contractor, when he is made to pay 18%compound interest if there is delay on his part in making payment.

It can hardly be disputed that a term of this nature is wholly one sided, unfair andunreasonable. The builder charges compound interest @ 18% per annum in the event ofthe 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 bydefaulting in giving timely possession of the flat to the buyer. Such a term in the BuyersAgreement also encourages the builder to divert the funds collected by him for oneproject, to another project being undertaken by him. He thus, is able to finance a newproject 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 topay the interest which the Banks and Financial Institutions charge on term loan or cashcredit facilities etc. The interest being charged by the Banks and Financial Institutions forfinancing projects of the builders is many times more than the nominal compensationwhich the builder would pay to the flat buyers in the form of flat compensation. In fact,the opposite party has not even claimed that the entire amount recovered by it from the flatbuyers was spent on this very project. This gives credence to the allegation of thecomplainants that their money has been used elsewhere. Such a practice, in my view,constitutes unfair trade practice within the meaning of Section 2(r) of the ConsumerProtection Act, 1986 since it adopts unfair methods or practice for the purpose of sellingthe product of the builder. Though, such a practice does not specifically fall under any of

the Clauses of Section 2(r) (1) of the Act that would be immaterial considering that theunfair trades, methods and practices enumerated in Section 2(r) (1) of the Act areinclusive and not exhaustive, as would be evident from the use of word including beforethe words any of the following practices.

(8) In Suman Nandi & Anr. Vs. Unitech Limited & Anr., CC No.277/2013 decided on, a Co-ordinate Bench of this Commission rejected the identical pleas taken by the17.12.2015

opposite parties-Unitech and Pioneer Urban Land & Infrastructure Ltd. The aforesaid judgmentto the extent it is relevant reads as under:-

8. On careful perusal of the evidence, we find that opposite parties have not led anyevidence to show any new legislation, regulation or order suspending, stopping ordelaying the construction of complex in which the subject apartments were agreed to besold to the complainants. Neither there is an allegation of strike, slow-down, civilcommotion, war, enemy action, terrorist action etc. or any other act of god which mighthave caused delay in completion of project within time stipulated in the BuyersAgreement nor evidence in this regard has been adduced. Learned counsel for theopposite parties have tried to get out of the situation by arguing that expressionslow-down in clause 9.b. of the Buyers Agreement would also include economicslowdown or recession in real estate sector. We do not find merit in this contention. The

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economic constraints ordinarily cannot be taken as a defence for non- compliance of thecontract. The term slow down in clause 9.b. has been used alongwith word strikeand it has to be read ejusdem generis with the aforesaid words and can only mean a slowdown resorted by the labourers engaged in the construction of the project in support oftheir demands.

9. As regards shortage of labour, but for the bald plea of the opposite parties in theirwritten statement and the affidavits which are more or less reproduction of the writtenstatement, there is no material or convincing evidence on record that despite of makingefforts, the opposite parties could not get labours to complete the construction of projectwithin the stipulated time. Therefore, it cannot be accepted that opposite party because ofmarket conditions could not manage to arrange adequate labour for timely completion ofproject. As regards the alleged shortage of water, bricks and sand in the market, nocogent evidence has been produced by the opposite party to establish that it was unable toprocure water, sand and bricks in adequate quantity. No evidence has been adduced toestablish that from the date of signing of Buyers Agreement from 2006-2010, there wasshortage of those materials in the market. The opposite parties have also taken a plea thatthere was a notification of government imposing restriction on the production of bricks by

brick klins. The aforesaid argument is without any force because the notification reliedupon by the opposite party was in force even at the time the opposite party promisedpossession of the apartments within 30 -36 months. The opposite parties having enteredinto an agreement knowing the aforesaid constraints because of government notificationnow cannot get rid of its obligation to justify the delay in construction. As regards thescarcity of water, plea of the opposite party is without any basis because the order of HighCourt stopping use of ground water for construction activity came much later. If theopposite parties actually intended to complete the construction within the stipulated time,they would have completed the super structure which does not take much time withininitial 24 months of the date of Buyers Agreement.

10. As regards the plea of shortage of labour etc. due to common wealth game isconcerned, that plea is also not acceptable for the reason that Buyers Agreement are ofthe year 2006 to 2010 and if the opposite parties intended to comply with the terms ofagreement, they would have raised substantial construction before common wealth games.Had there been truth in the defence taken by the opposite party, the opposite party afterthe completion of construction activities pertaining to commonwealth games would havecompleted the project within the period of five years since the common wealth gameswere held. Till date, the possession of the apartments have not been handed over to thecomplainants which clearly indicate the deliberate delay and negligence on the part of theopposite party and opposite party cannot be permitted to hide behind a bogus plea of forcemajeure or exceptions provided in clause 9.b of the Buyers Agreement.

18. On reading of clause 2 (r) (i) (ii) & (vi), it is clear that if a service provider in orderto increase his business makes a false representation regarding the standard and qualityof the proposed service or its usefulness, it would amount to the unfair trade practice. Oncareful reading of the Buyers Agreement it is clear that in the said agreement, theopposite party service provider has extended a clear promise/representation to thecomplainants that in the event of their paying consideration amount, they would be givenpossession of the booked apartments complete in all respect within 30-36 months orreasonable period thereof. However, in the above-noted case, the stipulated period hasexpired way back and even almost five years have gone by but the possession of the

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i.

ii.

iii.

apartments have not been delivered. There is no evidence from the side of the oppositeparty as to how and where the money paid by the complainants and the other buyers ofapartments in the project has been utilised. From this can be safely inferred that theopposite party has diverted the funds and instead of utilising the funds paid by thecomplainants/buyers for completing the project within the promised period. Therefore, inour considered view, this is a case of soliciting business by the opposite party service

provider by making false representation. Therefore, in our view, this is a clear case ofunfair trade practice. The opposite party, thus, cannot take shelter of clause 4.a of thecontract to avoid its liability to pay reasonable compensation for the delay caused due toits intentional act in not making sincere efforts to complete the construction within areasonable period.

19. In view of the above, since the opposite party has utilised the money paid by thecomplainants against consideration amount, the complainants are entitled to interest onthe payment made by them for the period of delay as compensation instead of meagrecompensation computed on the basis of clause 4.c. of the Buyers Agreement, which ishighly unfair. Looking into overall facts and circumstances of the case, we are of theopinion that 12% interest p.a. from the date of default in delivery of the subject apartments

would meet the interest of justice.

(9) In a recent decision in CC No. 368/2014, Shweta Kapoor & Anr. Vs. M/s. Unitech Ltd.

, decided on 14.01.2016, the complainants had agreed to purchase a residential flat from& Anr.the opposite party Unitech Ltd. in a project which it was developing in Sector-50 of Gurgaon andhad made payment of Rs. 95.5% of the total sale consideration. The Buyers Agreement executedbetween the parties in that case stipulated delivery of possession by September 30, 2009. Sincethe possession was not delivered by the stipulated date, the complainants approached thisCommission by way of a complaint. The grounds on which the aforesaid complaint was resistedwere summarized as under:

A preliminary objection has been taken that as per the terms and conditions of the agreementbetween the parties, in case of delay on the part of the opposite party in delivering possession, thecomplainants are entitled only to compensation @ 5 per square feet per month of the super area,for the period the possession is delayed and in case the developers are not in a position to offer theproperty, they may offer an alternative property or refund the amount received from the flatbuyers with interest @ 10% per annum. On merits, the opposite parties have admitted theagreement with the complainants as well as the receipt of the amount alleged by them. The delayin offering possession is sought to be justified on the following grounds:-

Common Wealth Games during April, 2010 to March, 2011 the Common Wealth Gameswere organized in the NCR region which resulted into an extreme shortage of labours in theregion as most of the labour force was employed and / or was engaged by the Governmentto expedite the completion of the pending projects required for the Common Wealth Games.Active implementation of social schemes like NREGA and JNNURM In addition to theabove due to active implementation of alluring and promising schemes floated by theCentral and State Government, there was a sudden shortage of labour / workforceespecially in the real estate market. The workforce / labour forces were tempted to returnto their respective states due to the guaranteed employment.Order dated 16.7.2012 passed by the Honble High Court of Punjab & Haryana

(hereinafter referred to as the The above mentioned Order strictly restrained theOrder

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i.

ii.

iii.

iv.

usage of ground water and directed to use only treated water from available Sewerage

Treatment Plants (hereinafter referred to as ). As the availability of STP, basicSTPinfrastructure and availability of water from STP, was very limited in comparison to therequirement of water in the ongoing constructions activities in NCR region.

This scarcity of an essential commodity for construction purposes made it difficult for the

Opposite Parties to cope up with the pre-decided schedules as the availability of treated waterbecame very limited and against the total requirement of water. It is to be highlighted here thatonly approx. 10-15% of required quantity was available at construction sites to continue with theplanned construction activities.

In addition to the above, the Opposite Parties were later completely banned to use undergroundwater for construction purposes and were vehemently directed to use recycled water only.

Notification dated 14.9.1999 published by Ministry of Environment and Forest TheNotification dated 14.09.1999 barred the excavation of top soil for the manufacture ofbricks and further directed that no manufacturing of clay bricks or tiles or blocks be donewithin a radius of 50 (fifty) kilometres from coal and lignite based thermal power plants

without mixing atleast 25% of ash with soil. As a consequence of this Notification dated14.09.1999 various brick kiln were shut creating shortage of essential commodity bricks forconstruction purposes.Further, another raw material i.e. the sand which is used as mixture along with cement wasalso not available in the vicinity of the Complex due to restrictions from MiningDepartment imposed in the entire Aravali region and the same had to be procured fromneighbouring State of Rajasthan.Later in a completely unforeseeable ruling by the Honble Supreme Court of India dated08.05.2009 the Honble Court suspended all the mining operations in the Aravalli Hillrange falling in State of Haryana within the area of approx.. 448 sq. kms. In the district ofFaridabad and Gurgaon including Mewat which directly affected the construction

schedules and activities of the Respondents herein.Notification dated 14.09.2006 published by the office of Director, Town and CountryPlanning, Haryana This Notification dated 14.09.2006 imposed certain restrictions andprohibitions on new projects or activities, or on the expansion or modernization of existingprojects or activities based on their potential environmental impact being undertaken in anypart of India unless prior environmental clearances are obtained. Therefore, due to thesaid Notification dated 14.09.2006, the procedure of obtaining approvals and sanctions bythe opposite parties led to the delay in the present construction schedule.

Recession in the economy That since the real estate industry is a cyclical industry that isaffected by both local and national economic conditions. While macroeconomic conditions affectthe overall state of the real estate industry, local supply and demand conditions are by far moreimportant factors affecting the real estate markets as a result of which the availability of essentialresources namely the labour and various raw materials became scarce.

(10) Rejecting all the pleas taken by the opposite party and allowing the complaint, thisCommission inter-alia observed and held as under:

4. We find that the pleas taken in the reply filed by the opposite party are same whichthis Commission has already rejected in a number of complaints filed against the said

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opposite party. In Swarn Talwar & Ors. vs. Unitech Ltd., C.C. No.347 of 2014 decidedwherein the opposite party had failed to construct flats in a project knownon 14.08.2015

as Unitech Habitat in Greater Noida, this Commission while directing the opposite partyto refund of the amount deposited by the flat buyers along with interest on that amount @18% per annum inter-alia held as under:-

8. As regards the plea that in terms of Clause (c) of the allotment letter the oppositeparty 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 contentionwas expressly rejected by us in Puneet Malhotra (supra) holding that such clause appliesonly in a case where construction of the flat is delayed but despite delay the buyer acceptsthe possession of the flat from the seller and consequently the accounts have to be settledbetween the parties. We observed in this regard that the buyer would have to pay theagreed holding charges to the seller and the seller to pay the agreed compensation onaccount of delaying the construction of the flat. The said clause, however, does not applyto a case where the buyer on account of delay on the part of the seller in constructing theflat 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 anunfair trade practice since it gives an unfair advantage to the seller over the buyer. Wealso noted in this regard that enumeration of the unfair trade practices in Section 2(r) ofthe Act is inclusive and not exhaustive.

This plea was also negatived by us in a batch of complaints CC No.427 of 2014,Satish Kumar Pandey & Anr. Vs. Unitech Ltd. and connected matter, decided on08-06-2015. All those complaints were filed against none other than the opposite party inthese matters, namely, Unitech Ltd.

9. Coming to the pleas that there was recession in the economy and a disruption due to

agitation by farmers and acute shortage of labour, etc., the following view taken by us InSatish Kumar Pandey (Supra) is relevant.

It would also be pertinent to note here that as pointed out by the complainants theagitation of the farmers was on account of acquisition of land in Noida Extension and noton account of acquisition of land on which the project in which the flats were to beconstructed for the complainants. As regards the alleged delay in obtaining environmentalclearances there is no material on record to show when the opposite party applied forsuch clearances, where they submitted all the requisite documents etc. while applying forsuch clearances and how much was the time taken by the concerned authorities ingranting the said clearances. In the absence of such particulars, it would be difficult for usto accept that development of the project was delayed on account of any notificationimposing restrictions on new projects. In any case, the opposite party has failed toproduce before us any notification imposing restriction or prohibition on development ofthe project in which the flats were to be constructed for the complainants.

(11) This Commission further observed and held as under in :Shweta Kapoor & Anr. (Supra)

6. In the case before us, there is no evidence of the opposite parties having beenprevented from completing the construction due to an Act of God or reasons beyond their

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control. There is no evidence of any Tribunal or Authority having restrained them goingahead with construction of this particular project, which could not be completed even aftermore than 6 years after the date stipulated for this purpose in buyers agreement. Theaverments made in the reply are vague and general in nature, without even specifyingwhen, by which order and for how much period a Tribunal or Authority had stopped theopposite parties from completing the construction. The opposite parties ought to have

obtained all the requisite approvals and clearances before coming in the market foraccepting booking of the flats. If some building material or water was not available inGurgaon (though there is no evidence of the opposite parties having been unable to getbuilding material and water in Gurgaon) it was for them to arrange building material andwater from alternative sources, wherever it could be available. The shortage of labour,building material or the water required for construction cannot be said to be Acts of Godor reasons beyond the control of the opposite parties. This is not the case of the oppositeparties that no construction came up in Gurgaon in last 7-8 years. If others couldconstruct buildings during this period, the opposite parties also could have done so, if theyso intended. This is not the case of the opposite parties that the entire money collected bythem from the flats buyers in this project was used only for this project. Hence, thereseems to be truth in the contention of the complainants that the opposite parties have

diverted the money collected from them to other projects or for other purpose, therebyfinancing their other business activities at the cost of the flat buyers in this project. Inthese circumstances, the aforesaid pleas are accordingly rejected.

(12) In Swarn Talwar & Ors. vs. Unitech Ltd., C.C. No.347 of 2014 and connected matters

, the complainants had booked residential apartment in project known asdecided on 14.08.2015Unitech Habitat, which the opposite party was to develop on plot no.9, Sector PI-II (AlistoniaEstate) in Greater Noida. The opposite party however failed to deliver possession of the flats tothe complainants within the time agreed between the parties and consequently the complainantsought refund along with interest @ 18% p.a. besides damages and cost of litigation.

The complaints were resisted on the grounds identical to those on which the presentcomplaint has been opposed. Rejecting all the grounds taken by the opposite party and also interalia relying upon the decision of the Honble Supreme Court in K.A. Nagmani Vs. HousingCommissioner, Karnataka Housing Board, C.A. No.6730-6731, decided on 19.09.2012, thisCommission directed the opposite party to refund the amount paid to it by the complainants, alongwith compensation in the form of simple interest on that amount @ 18% per annum from the dateof deposit till the date the said amount was paid to the flat buyers. The payment was directed tomake within six weeks.

Being aggrieved from the order passed by this Commission, the opposite party preferred anappeal before the Honble Supreme Court being Civil Appeal (Diary No. 35562 of 2015). Videsigned order dated 11.12.2015, the Honble Supreme Court dismissed the said appeal. The orderpassed by the Honble Supreme Court reads as under:-

We have heard learned counsel for the appellant and perused the record. We do notsee any cogent reason to entertain the appeal. The judgment does not warrant anyinterference.

The Civil Appeal is dismissed.

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(13) The learned counsel for the opposite party submits that since the apartment in questionwas purchased for less than Rs.1 Crore, this Commission lacks pecuniary jurisdiction toentertain this complaint and the complainants should be relegated to the concerned StateCommission for the redressal of their grievance. We however find no merit in this contention.

This issue was raised by the opposite party in and was rejected. TheSwarn Talwar (Supra)aforesaid decision to the extent relevant to this plea reads as under:-

5. The first question which arises for our consideration in these cases is as towhether this Commission possesses the requisite pecuniary jurisdiction to entertainthese complaints. Section 11(1) of the Consumer Protection Act read with Section 21of the Consumer Protection Act to the extent it is relevant provides that thisCommission shall have jurisdiction to entertain complaints where the value of thegoods or services and compensation if any claimed exceeds Rs.1,00,00,000/-. Thecontention of the learned counsel for the opposite party is that interest claimed by thecomplainants cannot be termed as compensation and if the interest component isexcluded, the pecuniary value of the complaint does not exceed Rs.1,00,00,000/-except in one case. The learned counsel for the complainants on the other handcontended that the interest which they have claimed along with refund of the principal

sum even if not so described specifically, is by way of compensation only, since theopposite party has been deficient in rendering services to the complainants by notdelivering possession of the flats on or before the time agreed in this regard.

6. In our view, the interest claimed by the flat buyers in such a case does notrepresent only the interest on the capital borrowed or contributed by them but alsoincludes compensation on account of appreciation in the land value and increase inthe 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 hasbeen steep appreciation in the market value of the land and cost of construction of theresidential 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 theopposite party had agreed to charge from them. In fact it would be difficult to get asimilar accommodation, even at the agreed price plus simple interest thereon at therate of 18% per annum. Therefore, the payment of interest to the flat buyers in such acase is not only on account of loss of income by way of interest but also on account ofloss of the opportunity which the complainants had to acquire a residential flat at aparticular price.

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

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

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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 forharassment/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 caseswhere possession is being directed to be delivered and cases where only monies aredirected to be returned. In cases where possession is being directed to be deliveredthe compensation for harassment will necessarily have to be less because in a waythat 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 lossinasmuch as he had deposited the money in the hope of getting a flat/plot. He is beingdeprived of that flat/plot. He has been deprived of the benefit of escalation of the priceof that flat/plot. Therefore the compensation in such cases would necessarily have tobe higher.

It would, thus, be seen that the Honble Supreme Court recognized that theinterest 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 itshould not be taken into consideration for the purpose of deciding the pecuniaryjurisdiction of this Commission. If this is done, the aggregate amount claimed in eachof the complaints exceeds Rs.1,00,00,000/- and, therefore, this Commission doespossess the requisite pecuniary jurisdiction.

In the cases where the complainant does not want refund and is seeking possession,alongwith compensation for the delayed possession, this Commission would have jurisdiction to

entertain the complaint, if the aggregate of the value of the flat, on the date of filing of thecomplaint and the compensation claimed for the delay in delivering possession, exceeds Rs. 1Crore. In terms of Section 21(a) of the Consumer Protection Act, this Commission can entertaincomplaints where the value of the goods or services and compensation exceeds Rs. 1 Crore. Sincethe buyer is seeking possession of the flat booked by him, the value of the service, in such a casein our opinion, in terms of Section 21(a) of the Consumer Protection Act means the value of theflat as on the date of filing of the complaint and not the value on the date the flats were booked.

(14) In some of the complainants before this Commission wereSatish Kumar Pandey (Supra)subsequent purchasers who had purchased the apartment from the original allottee of the oppositeparty. The possession in those cases was offered to be delivered within three years. It wasdirected by this Commission that those who had purchased the apartment after more than one yearfrom the initial allotment should be paid compensation in the form of simple interest @ 12% perannum w.e.f. three years from the date of repurchase till the date the possession is delivered tothem, no compensation shall be payable to them from first three years from the initial allotmentand for the period between three years from the date of initial agreement/allotment and three yearsfrom the date of repurchase by them compensation shall be paid to them @ Rs.5/- per sq. ft. of thesuper area in terms of the clause 4 (c) of the buyers agreement. Lesser compensation to the

subsequent purchaser was awarded considering the decision of the Honble Supreme Court in

Haryana Urban Development Authority vs. Raje Ram, AIR 2009 SC 2030.

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(15) The persons who had purchased flats within one year from the date of the agreementwith/allotment to the original allottee were treated by this Commission at par with the originalallottee in Satish Kumar Pandey (Supra) and therefore such complainants would be entitled tosame compensation for the period the possession is delayed, as has been awarded to the originalallottees.

(16) During the pendency of this complaint, the opposite party sent a letter to the allottees inFRESCO project conveying a revised completion schedule and offer of possession of apartmentfor various towers. A higher penalty clause was also proposed by the opposite party in the saidletter dated 26.05.2015. As per the said letter dated 26.05.2015, possession in Tower-4 wherebythe apartment purchased by the complainant in CC No. 13/2015 is situated, was to be offered by31.10.2015 and in case of delay penalty @ Rs.17 per sq. ft. per month w.e.f. 1.11.2015 till thedate of actual offer of possession. Admittedly, the possession has not been offered by 31.10.2015.

(17) In view of the forgoing discussion, the complaints are disposed of with the followingdirections:

(a) In CC No. 14/2015, the opposite parties are directed to refund the amount paid to themby the complainants alongwith compensation in form of simple interest @ 18% per annum,calculated from the date of each payment till the date on which the said amount is refunded tothem.

(b) The opposite parties shall pay a sum of Rs. 5,000/- as the cost of litigation in eachcomplaint.

(c) The opposite parties shall deliver possession of the flats booked in the project Vistas inSector-70 of Gurgaon, by the complainants in CC No. 487/2014 & 16/2015 to them within oneyear from today.

(d) The opposite parties shall pay to the complainants in CC No. 14/2015, CC No. 15/2015and CC No. 487/2014, compensation in the form of simple interest @ 12% per annum witheffect from the expiry of the period stipulated in the Buyers Agreement/Allotment Letter foroffering possession to them till the possession of the flats is actually delivered to them. Thecompensation in the form of interest till 29.02.2016 shall be paid by 31.03.2016. Thereafter,compensation in the form of interest in terms of this order shall be paid on monthly basis by the

10 of each succeeding month.th

(e) In CC No. 13/2015, where the agreement with the original allottee is dated 12.12.2006 andthe committed date of possession was March 2009, the opposite parties shall pay compensationby way of simple interest @ 12% per annum with effect from 27 months from the date of

purchase of the flat by them till the possession is delivered to them. They will also be paidcontractual compensation @ Rs. 5 per sq. feet of the super area of their flat for the periodbetween 01.04.2009 and 27 months from the date of re-purchase of the flats by them.

(f) If the opposite parties fail to deliver possession of the flats to the complainants within thetime stipulated in this order, they shall pay higher compensation to them in the form of interest@ 18% per annum for each day of delay beyond the time stipulated in this order for deliveringpossession of the flat to them. We however, hope that a situation attracting the aforesaid highercompensation will not arise.

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......................J

V.K. JAIN

PRESIDING MEMBER

......................

DR. B.C. GUPTA

MEMBER

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