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Judicial Opinion Summary — Justice J.M. Malik (Common Judgment)

Factual and Procedural Background

The common judgment concerns revision petitions arising from complaints filed by allottees of flats in an Army Welfare Housing Organisation (AWHO) housing project. The court first took facts from the case of Sh. S.K. Chauhan (referred to in the opinion as the complainant). The complainant was allotted a luxury apartment (Flat No. B-802) by AWHO under a registration dated 09.08.2006. The tentative price of the apartment was stated in the record (assessed at 30.24 lakhs in the opinion), and the allocated price underwent multiple increases (from 32.40 lakhs to 32.60 lakhs, and later to 36.28 lakhs). The complainant paid all instalments except the last one, paid escalation charges over time, deposited a total of Rs. 44,74,980/-, and applied for additional parking spaces.

The core grievance was non-delivery of possession and non-allotment of parking spaces within the expected timeframe; complaints were filed before the District Forum in 2013. The District Forum allowed the complaint and ordered the OPs (AWHO and its functionaries) to complete the project, deliver possession, pay interest @ 9% p.a. on deposits from the date of filing the complaint until the offer of possession, and pay Rs.3,000 as compensation for deficiency in service and litigation costs. The State Commission allowed appeals by the OPs, set aside the District Forum order, and dismissed the complaints. The matter then proceeded by way of revision petitions to the forum issuing this common judgment.

Legal Issues Presented

  1. Whether the allottees were entitled to relief (interest and compensation) for the delay in handing over possession of the dwelling units when the agreement had clauses specifying tentative price and clauses excluding compensation for delay beyond the control of AWHO.
  2. Whether the increases in the price of the dwelling units were permissible under the terms of the booking/allotment agreement and whether the OPs had to justify the escalations with documentary proof (audit documents, project accounts, contracts).
  3. Whether the reasons relied upon by the OPs for delay — change of design, a ban on mining, and non-provision of electricity by HUDA — justified the entire period of delay claimed by the OPs.
  4. What period of delay (if any) should be attributed to the OPs and what relief (rate and period of interest) should be awarded to the complainants for amounts deposited?

Arguments of the Parties

Complainants' Arguments

  • The OPs increased the flat prices without giving reasons and in an arbitrary manner; complainants eventually paid escalations amounting to approximately 61% over the tentative advertised cost due to delay, mismanagement, and negligence.
  • The OPs failed to produce substantial documentary proof to justify the escalations (no audit documents, financial statements, project accounts, or contract deed with the construction company were produced).
  • The OPs' plea of operating on a "No profit - No loss" basis and denial of liability for compensation for delay was not credible.
  • Complainants cited authority: Lt.Col. B.L. Gupta Vs. MD, AWHO, 1994 (3) CPJ (NC) 40 (as submitted by one of the complainants).

OPs' (Respondents') Arguments

  • The allotment letters and agreement made clear the tentative nature of the price and that completion dates were estimates subject to revision; the project completion date was a probable estimate which was revised (for example, possession date revised to June 2011).
  • HUDA demanded an additional Rs.18.58 crores towards enhanced compensation for land acquisition, necessitating an increase in flat prices; this was communicated to allottees in January 2012.
  • Delay in completion was attributable to change of design (requiring approval), a ban/curtailment of mining activity, and HUDA's delay/non-provision of the electricity connection as per agreement; clause 74 of the agreement excludes compensation where delay is due to reasons beyond AWHO's control.
  • The OPs contended that they kept the allottees informed about project status and cost increases.

Table of Precedents Cited

Precedent Rule or Principle Cited For Application by the Court
Lt.Col. B.L. Gupta Vs. MD, AWHO, 1994 (3) CPJ (NC) 40 Cited by a complainant in support of his position (specific rule relied upon in argument is not elaborated in the opinion). The opinion records that the complainant cited this authority but does not indicate that the court relied upon it or applied any principle from it in its reasoning.
Civil Misc. No. 10545 of 2011 in CWP No. 4758 of 2008 (High Court of Punjab & Haryana) — order dated 05.08.2011 (as quoted) Referenced on whether there was a broad mining ban starting from 2008 and whether mining activities were permitted in the interregnum; the quoted paragraph explains extension of time and conditions for short-term mining. The court used the High Court order (and its quoted paragraph) to determine that mining activities were allowed in the interregnum on conditions and that it could not be held that a mining ban existed from 2008 onwards.
Deepak Kumar vs. State of Haryana, SLP (C) No. — reported decision dated 27.02.2012 (as referred) Referred to show the period when a mining ban operated (the opinion states the Apex Court revealed the ban was from 2010 to 2012 only). The court relied on this authority to conclude that the mining ban covered the period March 2010 to mid-2012, and therefore the OPs could only claim benefit for about two years of delay attributable to the mining ban, not the earlier period.

Court's Reasoning and Analysis

The court's analysis proceeded by examining (i) the contract terms, (ii) the OPs' pleaded reasons for delay, and (iii) documentary evidence about project progress and intervening events.

Contract terms and price escalation: The court observed that the agreement/bookings explicitly described the price as "tentative" (Booking Letter clause 3 and clauses 38–40 reproduced in the opinion). Clauses 38–40 provided for variation in final cost because of market trends, escalation, area differentials and changes in payment schedule. On that basis, the court held that the contractual structure permitted price adjustments and that the allottees had been apprised of increases. The court noted that allottees could have withdrawn from the project if unwilling to accept increased costs, but they did not do so. Consequently, the court rejected the contention that price increases, per se, rendered the OPs liable — finding no illegality in adjustments made under the contractual terms. The court also observed that the OPs asserted HUDA had demanded additional compensation of Rs.18.58 crores and that allottees had been informed.

On the evidence (or absence thereof) of justification for escalation, the court remarked that the OPs had not produced certain financial/audit documents that the complainants alleged were missing; however, the court concluded that the agreement itself allowed variation, and the fact that land and construction prices rose in the relevant years offered further contextual explanation for escalation.

Delay and causation: The court treated the delay in possession as the central legal question. It considered the three causes advanced by the OPs: (1) change of design, (2) ban on mining, and (3) non-provision of electricity by HUDA.

1. Change of design: The court accepted that design sanction was relevant (citing a letter dated 18.03.2008 approving structural design for certain blocks). But the court was critical of the OPs for not explaining why a change of design was necessary and for failing to show that allottees consented; the court found that the OPs took two years to approve the design and did not satisfactorily explain day-to-day delays. The court characterized that two-year lapse as unjustified, arbitrary and amounting to maladministration by the OPs.

2. Mining ban: The court analyzed the High Court order (Civil Misc. No.10545/2011) and the referenced Apex Court decision in Deepak Kumar to conclude that a mining ban effectively impacted construction primarily from about March 2010 to mid-2012. The court rejected any argument that a mining ban had been in effect beginning in 2008. Given project progress documents, the court noted construction as of 03.04.2010 was about 27% completed while allottees had paid 78% of tentative cost. The court held that if earlier construction had been adequately progressed, lack of mining material later would not have prevented completion; thus, it attributed only about two years' delay to the mining ban.

3. Electricity by HUDA: The court reviewed the agreement dated 18.07.2006 between HUDA and the organization which placed certain responsibilities regarding supply lines and transformers. HUDA's refusal (letter dated 07.10.2011) to provide electricity and requirement that OPs arrange their own supply was noted; electricity reportedly started becoming available from 08.12.2011 and possession was given in July 2013. The court found that there was an additional delay of about one-and-a-half years attributable to electricity-connection issues.

Quantification of delay and relief reasoning: Aggregating the timelines, the booking letter indicated a proposed completion period of three years. The court calculated an overall seven-year delay in handing over possession (possession given July 2013 versus expected in 2008). It adjusted the delay by excluding the agreed three-year period and allowing two years attributable to the mining ban. That left a net delay of approximately two years. The court then exercised discretion to give a six-month grace period, concluding the OPs were responsible for about one-and-a-half years of culpable delay in construction and delivery.

Consequent remedy: Given the culpable delay of one-and-a-half years, the court awarded monetary relief rather than ordering cancellation or other remedies: interest at 15% p.a. on the amounts deposited by the complainants for a period of one-and-a-half years, calculated from the dates of respective deposits. The court conditioned timely payment (within 90 days), and provided that failure to pay within 90 days would increase the interest rate to 18% p.a. from the expiry of that period until realization. The court also condoned short delays in filing the revision petitions (two days delay in multiple petitions) and allowed the revision petitions in part.

Holding and Implications

Holding: The court partly allowed the revision petitions filed by the complainants, set aside the order of the State Commission (which had dismissed the complaints), and granted monetary relief to the complainants.

The specific operative directions were:

  • The OPs are to pay interest at 15% per annum on the amounts deposited by the complainants for a period of one-and-a-half years from the date(s) of respective deposit(s).
  • The interest is payable within 90 days from receipt of a copy of the order; failure to pay within 90 days will cause the interest rate to increase to 18% per annum from the expiry of the 90 days until realization.
  • The revision petitions stand disposed of.
  • The court also condoned the delay in filing several revision petitions (delays of two days each) and allowed applications for condonation of delay accordingly.

Implications: The immediate consequence is a monetary liability on the OPs to pay enhanced interest for the quantified period of culpable delay. The court did not purport to set out a broad new precedent in this opinion; it applied contract clauses and contemporaneous judicial orders (High Court and Apex Court material) to apportion responsibility for delay and calculate an appropriate monetary remedy. The decision primarily affects the parties by reinstating relief to the complainants that the State Commission had overturned, and it clarifies the court's approach to apportioning delay between causes beyond the developer's control and those for which the developer is responsible.

Disposition: Revision petitions partly allowed; State Commission's order set aside; interest awarded as described; revision petitions disposed.

End of summary based exclusively on the provided opinion text.

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    Lt. Col. Ajmer Singh (Retd) v. Adjutant General

    JUSTICE J.M. MALIK

    1. This common judgment shall decide the above mentioned revision petitions which have similar facts and question of law. We take up the facts from the case of Sh. S.K. Chauhan, the complainant.

    2. The complainant was allotted luxury apartment vide Registration dated 09.08.2006 in the Housing Project of Army Welfare Housing Organisation and its functionaries, which have been arrayed in this case as OP Nos. 1 & 2, respectively. The tentative price of the apartment situated in Sector-27 was assessed at 30.24 lakhs. At the time of allotment of flat No. B-802 (Luxury Flat), the OPs enhanced the cost of the said flat from 32.40 lakhs to 32.60 lakhs. Clause 3 of the Booking letter, stipulated that the possession of the flat was proposed to be delivered in the year 2008.

    3. Thereafter, the cost of the flat was further increased from 32.60 lakhs to 36.28 lakhs. The complainant deposited all the installments except the last and final installment. The said last and final installment was to be deposited on receipt of the directions from the OPs. The OPs also charged some more amount from the complainant from time to time on account of escalation of costs. The complainant deposited a total sum of 44,74,980/-. He applied for three more parking spaces.

    4. The grouse of the complainant is that the OPs failed to deliver possession to all the allottees. Even after the lapse of three years, from the date of allotment, the parking spaces were not allotted. Consequently, all the complainants detailed above, filed complaints before the District Forum, in the year 2013.

    5. The OPs admitted that the complainant was allotted Dwelling Unit-802 and parking space No. CPS-1 in Block B of Army Welfare Housing Organisation (AWHO) Group Housing Scheme. It was further contended that the date of completion of the project was probable year based on assessments which were subject to revision. The tentative price was informed to the allottees. Vide letter dated 14.01.2010, all the allottees were apprised of the fact that the date of handing over the possession of the flats was revised to June, 2011, i.e., it means that from 2008, the date was extended to further three years without consulting the complainant, about the date. This extension of time was made unilaterally. It is further submitted that vide letter dated 02.12.2011, the Haryana Urban Development Authority (HUDA) demanded an additional amount of 18.58 crores, approximately, on account of enhanced compensation towards the land acquisition, thereby implying increase in the cost of flats by 2.00 lakhs to 5.6 lakhs depending on the super area of Dwelling Unit. The allottees were also informed about the same vide letter dated 17.01.2012.

    6. It is further submitted that the delay was caused because as per agreement with HUDA, it was to arrange supply of power, electricity in the AWHO complex. However, the same was not approved by the Electricity Department up to December, 2011, on the ground that the demanded load could be fed only through 33KV / 66KV system or two independent 11 KV feeders. This fact was made known to the allottees. The car parking allotment was to be made as per the agreement.

    7. The District Forum allowed the complaint and passed the following orders, directing the OPs to :-

    I. To complete the project and deliver possession of the flats/DU to the complainant allotted to him vide allotment letter (Annexure C-2) at the earliest & further to pay interest @ 9% p.a. on the entire deposit made by the complainant against the flat/DU prior to filing of the complainant w.e.f. date of filing of the complainant till the date of actual offer of possession of flats/DU.

    II. To pay a sum of 3,000/- (Three thousand) as compensation on account of deficiency in service, mental agony and harassment caused to the complainant due to act and conduct of the OPs as well as cost of litigation.

    III. Let the order be complied with within a period of one month from the date of communication of this order. A copy of this order be sent to both the parties free of costs. File be consigned to the record room after due compliance.

    8. The State Commission allowed the appeals filed by OPs filed and set aside the orders rendered by the District Forum and dismissed the complaints.

    9. We have heard the counsel for the parties and Mr. Ajmer Singh, the complainant, in person. We have also perused the written submissions filed on behalf of the complainants. First of all, they have picked up a conflict with the price of the flats. It is explained that without assigning any reasons for the increase of the cost, the amount/price of the flat was increased. Again, there was delay in respect of the project. Apart from this, the OPs kept on adding clauses arbitrarily to their advantage. The complainants ultimately ended up paying almost 61% cost escalation as compared to the tentative cost advertised due to inordinate delay, mismanagement and negligence of the OPs. The OPs did not give any substantial proof to prove the escalation of cost, the non-production of audit documents, financial statements, project accounts, contract deed with the construction company. Their plea that they were on No profit - No loss basis, and, therefore, they cannot be held liable to pay compensation for the delayed period is not worthy of credence. Sh. Ajmer Singh also cited authority reported in Lt.Col. B.L. Gupta Vs. MD, AWHO, 1994 (3) CPJ (NC) 40.

    10. All these arguments are bereft of merit. The Agreement itself stipulates in clear, specific and unequivocal terms that the price was tentative. During those years, the price of land and price of construction material stood increased by leaps and bounds. The real cause of enhancement was that HUDA had demanded a further sum of 18.58 crores because the compensation for land acquisition stood enhanced. The allottees were regularly apprised of the status of the project, development, increase in cost, etc. There laid no rub in withdrawing from the said project in case the cost was increased. No such application was moved by the complainants. The Government, the Society and the Institutions have to protect the interests of both, viz., Army and farmers.

    11. They agreed to pay the increased amount. No protest was raised at the proper time. clauses 38, 39 & 40 of the Agreement Read, as under :- Booking Letters

    38. The Booking Letter will indicate the tentative cost of dwelling units. The exact cost of the dwelling unit will be indicated through the statement of account on allotment of the specific unit. Final cost of same type of units in same general area may vary due to price differential on account of compound areas for ground floor, terraces / balconies for upper floors as also preferential locations like corner plots or flats overlooking gardens, etc., or any other inter-se benefits. Financing Cost

    39. Financing cost will be charged as applicable at the percentage to be decided by the Executive Committee from time to time. Changes in Payment Schedule :

    40. Though every effort will be made to indicate the price of dwelling units as accurately as possible but due to market trends and general escalation in the prices, the final cost may vary. In that case, the difference may be recovered / refunded through a separate intimation. Adjustment in payment schedule may be necessitated, commensurate with the progress of construction.

    12. There is no inkling in evidence for pre-mature withdrawals and termination as per Chapter No.5 of the Agreement. It, therefore, appears that all the objections were raised merely for the sake of cavil. The objections regarding rise in prices are therefore eschewed out of consideration.

    13. The most important question is that there was delay of five years in giving possession of the flats. While arguing this case, the counsel for the OPs has listed three reasons for the said delay. Firstly, there was change of design, secondly, there was ban in mining, and thirdly, HUDA did not give the electricity connection as agreed between HUDA and OPs. The learned counsel also drew our attention towards clause 74 of the Agreement, which runs as follows :- Delay in handing over of the Dwelling Unit:

    74. No compensation will be paid by AWHO to the allottee in case handing over of a dwelling unit is delayed for the reasons beyond the control of AWHO.

    14. Sanction of Design :- The counsel for the petitioner has invited our attention towards letter dated 18.03.2008, which is reproduced as under :- Army Welfare Housing Organisation Dir (Arch.-1) South Hutments, Kashmir House Rajaji Marg, New Delhi 110 001 CA NO AWHO /PANCHKULA/16/2007 CONSTRUCTION OF RESIDENTIAL ACCOMMODATION FOR ARMY WELFARE HOUSING ORGANISATION ON PLOT NOL GH-AWHO SECTOR-27, PANCHKULA (HARYANA ). Further to this office letter No.F/03002/151/ PD/229 dated 14 March 2008.th The structural design of raft foundation for Blocks No. B1, B2 and B3 designed by the structural consultant of the Architect and vetted by CCE, PEC Chandigarh is recommended for approval for execution. Request accord priority. (JK Virwani) Col. Project Director.

    15. It was argued that after the sanction of the design, the construction was started.

    16. We find force in this argument, in a measure. It is not explained why there was change of design. That is a unilateral decision taken by the OPs. There is not even an iota of evidence that consent of the OPs was also taken. The allottees were not taken in confidence. The case of the petitioner pertains to the year 2005-06. The OPs took two years in approving the design. Day-to-day delay was never explained. This Commission has to reckon with reality. The OPs have been economical with truth. When the fate of so many persons was involved, all the army personnel had spent their hard-earned whole-life money, therefore, the OPs should not have acted like a fish, but they needed a bicycle to expedite the matter. The said wastage of two years time is dictatorial, arbitrary, unjust and smacks of arrogance. It must be borne in mind that the allottees left no stone unturned in protecting our lives at the risk of their own.

    17. Secondly, there was ban on mining. Counsel for the OPs invited our attention towards the order passed by the Honble High Court of Punjab & Haryana. This is a Civil Misc. No. 10545 of 2011, in CWP No. 4758 of 2008. This order was passed on 05.08.2011. The counsel for the OPs has tried to mis-interpret this order. Its relevant para, runs as follows :- This application moved by the State of Haryana seeks extension of time for implementation of the directions issued by this Court vide orders dated 15.05.2009 and 04.09.2009 and to allow the mining activities during the interregnum on the conditions imposed by us vide the subsequent order dated 04.03.2011 passed in Civil Misc. No. 20624 of 2010. Its concluded para No.8, runs as follows:- (8) We find from the record that the time granted by us till 31.07.2011 to the State of Haryana vide order dated 04.03.2011 was actually not availed by the State Authorities on account of the ad-interim stay order granted by the Honble Supreme Court soon thereafter on 18.03.2011 and it continued to operate till the dismissal of the SLP on 15.07.2011. In these circumstances and when the prayer in this application is merely for extension of period for short term mining for the reasons beyond the control of the State Government, we extend the time 31.12.2011 on the same terms and conditions as contained in our order dated 04.03.2011.

    18. It is, thus, clear that the Supreme Court had allowed the mining activities during the interregnum on the condition imposed by the Honble Court. By no stretch of imagination, it can be held that there was mining ban which started from the year 2008.

    19. However, the Apex Court in Deepak Kumar vs. State of Haryana, SLP (C ) No. reveals that there was ban on mining from the 19628-19629 of 2009, decided on 27.02.2012 year 2010 to 2012 only. The OPs have failed to explain the day-to-day delay for the period from 2006 to 2010. The written submissions filed by the Lt. Col. Ajmer Singh clearly goes to show that the construction process of the project as on third April, 2010 was 27% against 28%, while the allottees had already paid 78% of the tentative cost of the Dwelling Unit, as per C-17 (Colly) and C-3. If there was some delay on the part of the contractor, the OPs should have taken action against him, vide penalty clause. Ban on the mining was done in March, 2010. Had the OPSs constructed the flats, till 2008 or at the most, by March, 2010, no problem would have cropped up. Counsel for the OPs contended that due to ban on mining, the OPs could not get sand, bricks and other construction materials. Have the flats been constructed till March, 2010, this argument would have paled into insignificance. Undoubtedly, there was delay of two years for mining ban.

    20. The OPs could claim benefit of two years from March, 2010, till middle of 2012. Had the flats been constructed in time, the petitioner would have got 20% rebate. As per the document, Annexure R-15, wherein beneficial clause 2(i) is mentioned, is reproduced below : However, if the society/organization completes the construction within three (3) years of the date of offer of possession as mentioned above, 20% rebate on price of land would be given and would be adjusted towards the future installments.

    21. Again, no proof has been produced that there were torrential rains during the above said period which obstructed the completion of the construction. Succinctly stated, the OPs can claim benefit of two years, out of five years delay.

    22. The third ground of delay is stated to be because of the attitude of HUDA in respect of non-rendering of electricity connection. There is an agreement between HUDA and the complainant, dated 18.07.2006, wherein, under clause 5 of the said agreement, it was held as under :- HUDA will provide only 11 KV line around the periphery of each group housing site and further provision for providing transformer of required capacity, 11 KV cable, metering equipment and other allied accessories will have to be made by each Group Housing Society/Organisation itself as per its load requirement within its premises at its own cost and as per the standards/ specification laid down by HSEB(HVPNL/ HPGCL).

    23. However, vide letter dated 07.10.2011, at the eleventh hour, HUDA refused to give electricity and asked the OPs to have their own arrangement for electricity. From 08.12.2011, electricity was provided to the flat owners in July, 2013. They got the possession of the premises in July, 2013, after a delay of more than one-and-a-half years, from 08.12.2011.

    24. Counsel for the petitioner explained that electricity was to be provided on time. This is an indisputable fact that the complainants have been regularly paying the installments as and when demanded by the OPs against the Dwelling Units. In December, 2011, HUDA demanded ELC, amounting to 18.58 crores. The same was paid within 30 days. However, the petitioner paid the installments in the year 2013 with a delay of more than one year and the burden of default clause of interest @ 15% fell upon the allottees amounting to Rs.2.00 crores plus and thus increased the cost of dwelling unit. The burden of exclusion was again thrown upon the allottees. The installation of 50 ltrs of solar water heating system was delayed due to non-construction of the building. Last, but not the least, this is a matter between HUDA and the OPs. It is difficult to fathom, how the complainants are concerned with that. If the OPs have got any grouse against the HUDA, there lies no impediment in suing it and claim compensation for their omission to do the needful.

    25. It may also be mentioned here that the complainants were arguing that the flats are defective to some extent. No Architects certificate was obtained. Therefore, we advise the OPs to pay heed to their complaints to rectify the defects rather to create another litigation unnecessarily. The complainants are army persons. They have served the whole nation and their complaints should be heard keeping the heart in the right place.

    26. In the result, we find that the action of the OPs is below the belt to some extent. The booking letter dated 11.08.2006 issued in favour of the complainants indicating that proposed date of completion is three years, subject to acceptance of the tenders as the Tender is again, yet to commence. The possession was given to the complainants in July, 2013. There is total delay of seven years. Out of these three years, the prescribed period, plus two years of mining ban, stand adjusted. There is delay of two years only, out of which, we give grace period of six months. The OPs are guilty of constructing the flats by a period of one-and-a-half years. The people are exasperated by unnecessary delays. Due to delay, the complainants also, could not get the rebate detailed above.

    27. However, before giving our final say, it is pertinent to mention here that the Revision Petition Nos. 2206/2014, 2207/2014, 2208/2014, 2209/2014, 2210/2014, 2211/2014, and 2212/2014 have been filed with a delay of 2 days each, for which applications for condonation of delay have been filed. For the reasons stated in the applications for condonation of delay, the said delay is hereby condoned.

    28. Keeping in view the facts and circumstances stated above, we partly allow the revision petitions, filed by the complainants and set aside the order of the State Commission. The complainants are granted interest @ 15% p.a., for a period of one-and-a-half years on the amounts deposited by them, from the date(s) of respective deposit(s), payable by the OPs, within a period of 90 days from the date of receipt of copy of this order, otherwise, after the expiry of said 90 days, the rate of interest shall stand enhanced to 18% p.a., w.e.f. expiry of above said 90 days, till its realization. The revision petitions stand disposed of. ......................J J.M. MALIK PRESIDING MEMBER ...................... DR. S.M. KANTIKAR MEMBER

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