The case of Rajinder Sharma v. Aeropolis Infrastructure Pvt. Ltd. & Ors. heard by the State Consumer Disputes Redressal Commission on June 8, 2021, addresses critical issues surrounding unfair contract terms in real estate allotment agreements. The complainant, Rajinder Sharma, a retired serviceman, alleged that the allotment letter dated October 13, 2011, issued by Aeropolis Infrastructure Pvt. Ltd. (OPs No.1 to 4), contained unilateral and unfair clauses that disadvantaged him as a consumer. The case delves into the definitions under the Consumer Protection Act, 2019 (CPA), the jurisdiction of the State Commission, and the enforceability of contract terms under real estate regulations.

The State Consumer Disputes Redressal Commission adjudicated that the allotment letter, including the payment schedule, was laden with unfair and unilateral terms favoring the developers. Key findings include:

• The commissary determined that Rajinder Sharma qualifies as a consumer under Section 2(7) of the CPA, as his investment was for self-employment purposes, not commercial resale.
• The Commission held that it possessed both pecuniary and territorial jurisdiction to hear the case, notwithstanding the initial argument by the developers regarding the value of the transaction.
• The allotment letter was declared null and void due to its unfair terms, which included disproportionate penalties and non-refundable charges.
• Developers were directed to refund the full deposited amount along with compensation for financial loss and mental agony.
• Additional orders prevented the developers from revising the project layout without consumer consent.

Precedents Cited

The judgment references several pivotal cases that shaped its outcome:

• Narne Construction P. Ltd. etc. v. Union of India & Ors. AIR 2012 SC 2369: Affirmed that housing construction falls under defined consumer services.
• Meghna Singh Khera and Ors. v. Unitech Ltd., 1 (2020) CPJ 93 (NC): Highlighted the authority of consumer fora to deem contractual terms unfair.
• Ireo Grace Realtech Pvt. Ltd. v. Abhishek Khanna and Ors. Civil Appeal No.5785 of 2019: Upheld consumer commissions' power to declare contracts null and void.
• Wg. Cdr. Arifur Rahman Khan & Ors. v. DLF Southern Homes Ltd. 2020 SCC Online SC 667: Emphasized the significance of fair contractual terms in real estate agreements.

These precedents collectively underscore the judiciary's stance on protecting consumer rights against unilateral and oppressive contractual terms in the real estate sector.

Legal Reasoning

The Court's legal reasoning revolves around several key aspects:

• Definition of Consumer: Sharma's purchase was deemed non-commercial, fitting within the consumer definition, especially as his intent was personal investment for livelihood purposes.
• Jurisdiction: Despite arguments on pecuniary limits, the Court found that under Section 47(1)(ii) read with Section 49(2) of the CPA, the State Commission could entertain the complaint due to the nature of the dispute concerning unfair contract terms.
• Unfair Contract Clauses: The allotment letter contained multiple clauses that were one-sided, such as excessive penal interest, unilateral cancellation rights without proportional remedies, non-refundable maintenance fees, and mandatory club memberships, all of which were deemed unfair under Section 2(46) of the CPA.
• Non-Execution of Buyers Agreement: The absence of a duly executed Buyers Agreement before accepting significant payment violated Section 6(1) of PAPRA, reinforcing the unfairness of the contract terms.
• Completion and Occupation Certificates: The developers failed to provide necessary certificates, indicating a deficiency in service, thereby justifying the complaint's merits.
• RERA and CPA Jurisdiction: The Court clarified that RERA's provisions do not preclude the application of CPA, reinforcing concurrent remedies available to consumers.

The Court meticulously dissected each contractual clause, aligning them with statutory definitions and judicial precedents to validate the complainant's claims of unfairness.

Impact

This judgment sets a significant precedent in the real estate sector by:

• Empowering consumers to challenge unfair contractual terms, even in high-value transactions.
• Clarifying the State Commission's jurisdiction in matters of unfair contracts under CPA, irrespective of the transaction's pecuniary value.
• Reinforcing the necessity for developers to adhere to fair practices, including the execution of Buyers Agreements before accepting substantial payments.
• Highlighting the judiciary's commitment to uphold consumer rights against unilateral and oppressive clauses in standard form contracts.
• Encouraging transparency and fairness in real estate transactions, potentially leading to more balanced agreements in the future.

Developers and real estate companies must reevaluate their contractual terms to ensure compliance with consumer protection norms, thereby fostering a more equitable market environment.

Unfair Contract

An unfair contract refers to an agreement that imposes disproportionate clamosities or obligations on one party, often to the detriment of the other. Under Section 2(46) of the CPA, contracts that significantly alter consumer rights without reasonable cause are deemed unfair.

Pecuniary Jurisdiction

Pecuniary jurisdiction refers to the authority of a court or commission to hear cases based on the monetary value involved. In this case, the State Commission exercised its jurisdiction by interpreting the CPA's provisions, which do not strictly impose a minimum value threshold for unfair contract complaints.

Deficiency in Service

Deficiency in service denotes a failure to meet the standards or obligations promised in a service agreement. Here, Aeropolis Infrastructure Pvt. Ltd. failed to develop the plot and deliver possession, constituting a deficiency in service under the CPA.

Real Estate Regulatory Authority (RERA)

RERA is a regulatory body established to protect consumer interests in the real estate sector. This judgment clarifies that RERA's regulatory framework does not impede the application of CPA, allowing consumers to seek redressal under both statutes concurrently.

Buyers Agreement

A Buyers Agreement is a formal contract between the property buyer and the developer outlining the terms of purchase, payment schedules, and obligations of both parties. The absence of a duly executed Buyers Agreement before accepting payments was a critical factor in deeming the contract unfair.

The judgment in Rajinder Sharma v. Aeropolis Infrastructure Pvt. Ltd. & Ors. serves as a landmark decision reinforcing consumer protection in the real estate sector. By declaring the allotment contract null and void due to its unfair terms, the State Commission not only safeguarded the complainant's rights but also sent a clear message to developers about the necessity of fair contractual practices.

The decision underscores the judiciary's role in interpreting and enforcing consumer protection laws to ensure balanced and equitable transactions. It highlights the importance of transparency, fairness, and adherence to regulatory norms in real estate dealings, ultimately promoting a more trustworthy and consumer-friendly market environment.