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Citation Codes
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Case Number
Attorney(S)
  • For the Complainant : Mr. S.B. Prabhavalkar, Advocate
  • For the Opp. Party : Mr. Samrat K. Nigam, Advocate Ms. Ankita Mahajan, Advocate
Judges
  • V.K. Jain, Presiding Member
  • Dr. B.C. Gupta, Member
Acts
  • provisions of Section 13(3B) of the Consumer Protection Act
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Cites
Cited by
Citation Codes
Equivalent Citations
citation codes
Case Number
Attorney(S)
  • For the Complainant : Mr. S.B. Prabhavalkar, Advocate
  • For the Opp. Party : Mr. Samrat K. Nigam, Advocate Ms. Ankita Mahajan, Advocate
Judges
  • V.K. Jain, Presiding Member
  • Dr. B.C. Gupta, Member
Acts
  • provisions of Section 13(3B) of the Consumer Protection Act
See more information ...
Smart Summary

Structured Summary of the Opinion — Hon'ble Mr. Justice V.K. Jain, Presiding Member (Oral)

Factual and Procedural Background

Two separate consumer complaints (CC No. 207/2014 and CC No. 94/2015) were filed by purchasers who had booked residential flats in a project called "Rupji Arena" being developed in Lower Parel, Mumbai.

CC No. 207/2014: The complainant booked Flat No. 1901 (440 sq. ft. carpet area). Parties executed an agreement dated 14.12.2010 with a total consideration of Rs. 1,08,00,000/-. The complainant paid Rs. 10,455,600/- (over 95% of the total cost) between October 2010 and 15.03.2013. Clause 10 of the agreement provided that possession would be given by 30.06.2013, subject to full payment. On 10.06.2013 the developer cancelled the agreement alleging the complainant damaged office furniture and invoked clause 33. The complainant protested and filed the complaint seeking, among other reliefs, possession, alternatives for substitution or refund with interest, injunction under Section 13(3B) of the Consumer Protection Act, damages, and costs.

CC No. 94/2015: The complainant booked Flat No. 2201 (440 sq. ft. carpet area) for Rs. 1,32,00,000/- and executed an agreement dated 24.01.2013. Possession was to be delivered by 31.12.2013. The complainant paid Rs. 1,31,15,000/-. By letter dated 01.08.2014 the developer demanded Rs. 373,491/- as the purchaser's share of a premium/charges allegedly demanded by the Municipal Corporation of Greater Mumbai; the complainant paid Rs. 1,25,000/- and did not pay the balance. The developer terminated the sale agreement invoking clause 21. The complainant protested and filed a complaint seeking possession, injunction under Section 13(3B), damages and costs.

Both complaints were defended by the opposite party (developer). In CC No. 207/2014 the developer resisted but on instructions offered to revoke the cancellation and hand over possession subject to the payment of outstanding dues. In CC No. 94/2015 the developer stated it had no difficulty in handing over possession subject to payment of the premium/charges demanded vide the 01.08.2014 letter and interest thereon.

Legal Issues Presented

  1. Whether the additional demand by the developer towards Bombay Municipal Corporation (BMC) premium/charges (and other purported pre- or post-agreement charges) is payable by the purchasers under the sale agreements (i.e., interpretation and applicability of clause 20).
  2. Whether the purchasers are liable to pay penalty/interest for delayed payments as per clause 8 of the sale agreement and, if so, the quantum payable.
  3. Whether the cancellation/termination of the agreements by the developer was effective and if the developer must hand over possession (or offer alternatives) to the complainants.
  4. If there is delay in delivery of possession, what relief (compensation/interest) should be awarded to the complainants and what timetable should be fixed for handing over possession.
  5. Whether injunctive relief under Section 13(3B) of the Consumer Protection Act or other reliefs claimed (damages and costs) should be granted.

Arguments of the Parties

Complainants' Arguments

  • The developers are guilty of deficiency in service and wrongful cancellation/termination; the complainants sought directions for handing over possession of their respective flats (Flat No. 1901 and Flat No. 2201) or, alternatively, substitution of a flat or refund of amounts with interest.
  • They sought an injunction under Section 13(3B) of the Consumer Protection Act to restrain the developer from creating third-party interests in the booked flats.
  • They sought damages for mental agony and costs of litigation.
  • Specifically, in CC No. 207/2014 the complainant disputed only the demand towards the Bombay Municipal Corporation premium and the penalty under clause 8; other charges demanded were not disputed. (This limits the thorny points for adjudication.)

Opposite Party's (Developer's) Arguments / Position

  • The developer resisted both complaints on various grounds (not all detailed in the opinion), and made specific monetary demands from the complainants in CC No. 207/2014 (a list of contractual and regulatory items is recorded in the order).
  • In CC No. 207/2014 the developer offered, on instructions, to revoke the cancellation and hand over possession subject to payment of outstanding dues specified in their reply affidavit.
  • In CC No. 94/2015 the developer stated it had no difficulty in handing over possession provided the complainant pays the premium/charges/security deposits demanded by letter dated 01.08.2014 together with interest on that amount.

Table of Precedents Cited

No precedents were cited in the provided opinion.

Court's Reasoning and Analysis

The court proceeded by identifying and resolving the principal contested contractual points recorded in the complaints and defended by the developer. The analysis followed these main steps:

  1. Interpretation of Clause 20 of the sale agreement:

    Clause text (as reproduced in the opinion): purchasers must pay any amount by way of premium/charges/security deposits etc. if demanded by the Municipal Corporation of Greater Mumbai and/or BEST and/or State Government before granting connections, or by way of betterment charges/development taxes, provided those demands are made after execution of the sale agreement.

    The court interpreted clause 20 to mean that the purchaser is liable only for demands made by the Municipal Corporation/BEST/State Government after execution of the sale agreement. Amounts demanded and/or paid prior to execution of the agreement fall outside clause 20 and are deemed to be part of the sale consideration already negotiated between the parties.

  2. Application of that interpretation to the BMC premium demand:

    The court found there was no evidence before it that any premium/charge/security deposit was demanded by the Municipal Corporation or BEST or the State Government from the developer after the sale agreement was executed. In the absence of proof of any such post-execution demand, the court held that the developer’s additional demand towards BMC premium/charges was unsustainable in both CC No. 207/2014 and CC No. 94/2015.

  3. Penalty/interest under clause 8:

    The court accepted the contractual principle (as set out in the parties' agreement) that where there was delay in payment by a purchaser, the purchaser is liable to pay the agreed interest/penalty. The agreements provided for interest at 21% per annum on delayed payments. The court observed that the complainants had deprived the developer of the use of the delayed amounts from their respective due dates, and therefore the agreed interest must be paid.

    Application: The developer's computation showed Rs. 259,858/- due from the complainants in CC No. 207/2014 by way of penalty/interest. The court directed that the complainant in CC No. 207/2014 is required to make that payment.

  4. Possession timetable and relief for delay:

    The developer informed the court (on instructions) that construction was likely to be completed by end of May 2016 but that obtaining the occupancy certificate would require more time and would not be possible before October 2016. Given this, the court framed specific directions to resolve the outstanding disputes and to ensure possession is delivered within a fixed period.

    The court directed: (a) The complainant in CC No. 207/2014 is liable to pay the required outstanding amount to the developer upon receipt of intimation that construction is complete and occupancy certificate has been applied for; (b) The complainant in CC No. 94/2015 is not liable to pay any additional amount to the developer; (c) The developer shall complete construction, obtain the occupancy certificate and deliver possession immediately after obtaining the occupancy certificate and in any case not later than 31.10.2016.

  5. Compensation for delay (interest as compensation) and adjustments:

    The court awarded compensation to the complainants by directing the developer to pay simple interest at 12% per annum on the entire amounts paid by the complainants from the agreed date of possession until the date possession is actually delivered after obtaining the occupancy certificate. The compensation is payable at the time of handing over possession.

    The court also allowed the developer the right to adjust (a) from the compensation payable to the complainant in CC No. 207/2014 the amount which that complainant is required to pay to the developer under the order (i.e., the penalty/interest due), and (b) any contractual amount due from the complainant in CC No. 94/2015 can be adjusted by the developer out of the compensation payable to that complainant.

  6. Costs:

    The court awarded Rs. 10,000/- each as the cost of litigation in both complaints in favour of the complainants.

Holding and Implications

COMPLAINTS DISPOSED OF WITH DIRECTIONS

Direct holdings and immediate consequences recorded by the court:

  • The developer's claim for additional premium/charges allegedly paid to the Bombay Municipal Corporation is not sustainable in either CC No. 207/2014 or CC No. 94/2015, due to lack of evidence of any such demand after execution of the respective sale agreements and the contractual scope of clause 20.
  • The complainant in CC No. 207/2014 is liable to pay penalty/interest of Rs. 259,858/- (computed by the developer) for delayed payments as per clause 8 (the agreement provided for interest at 21% per annum on delayed payments) and must remit that amount as directed.
  • The complainant in CC No. 94/2015 is not liable to pay any additional amount to the developer under the facts and record before the court.
  • The developer must complete construction in all respects, obtain the occupancy certificate and deliver possession of the booked flats to the complainants immediately after obtaining the occupancy certificate and in any case not later than 31.10.2016.
  • The developer must pay compensation to each complainant in the form of simple interest at 12% per annum on the entire amount paid by each complainant from the agreed date of possession until actual delivery of possession; such compensation is payable at the time the possession is handed over.
  • The developer may adjust from the compensation payable to the complainant in CC No. 207/2014 the amount which that complainant is ordered to pay under this order. Any contractual amount due from the complainant in CC No. 94/2015 may be adjusted by the developer out of the compensation payable to that complainant.
  • The court awarded Rs. 10,000/- each as litigation costs to the complainants in both complaints.

Broader implications: The opinion applies the contractual interpretation of clause 20 to hold that only post-execution statutory demands fall on the purchaser under that clause and that pre-execution demands (or amounts already subsumed in the sale consideration) are not recoverable separately from purchasers under clause 20. The decision is narrowly expressed and tied to the facts and documentary record; the opinion does not purport to lay down a new general precedent beyond the interpretation applied here.

No case law precedents were cited in this opinion; statutory reference to Section 13(3B) of the Consumer Protection Act was recorded among the reliefs sought but the court's directions focused on contractual interpretation, payment obligations and timelines for possession and compensation.

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    Vijay Sakharam Pawar v. Rupji Constructions

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

    1. The complainant in CC No. 207/2014 booked a residential flat with the opposite party being flat no. 1901 measuring 440 sq. ft. of carpet area in a project known as Rupji Arena, which the opposite party was developing in Lower Parel, Mumbai. The parties entered into an agreement dated 14.12.2010, incorporating their respective obligations in respect of the aforesaid transaction. The total consideration of the flat was agreed at Rs. 1,08,00,000/-. The complainant paid Rs. 10455600/- comprising more than 95% of the total cost of the flat, to the opposite party, between October 2010 to 15.03.2013. As per clause 10 of the aforesaid agreement, subject to the purchaser making full payment due under the said agreement, the opposite party was to give possession of the flat to the complainant by 30.06.2013.

    2. Vide letter dated 10.06.2013, the opposite party cancelled the agreement dated 14.12.2010 on the ground that while visiting its office, the complainant had damaged the office sofa and chair on which he was sitting by putting blade marks on them. While doing so, the opposite party claimed to be exercising the power conferred upon it by clause 33 of agreement to sale dated 14.12.2010. The complainant protested against the aforesaid cancellation and then he approached this Commission by way of this complaint seeking the following reliefs: (a) That this Honble Forum be pleased to declare that the opposite party is guilty of deficiency in service and direct the opposite party to rectify the defects in its services as builder and developer with directions to the opposite party to hand over possession of flat being Flat No. 1901, admeasuring 440 sq. ft. carpet area, equivalent to 40.83 sq. mtrs. being flat no. 1901 on the 19 floor of the proposed tower to be constructed onth the said project known as Rupji Arena or in such reasonable time this Honble Commission may deem fit and proper by accepting balance consideration of Rs. 3,55,500/-. (b) The alternative to the above and in the event this Honble Commission comes to the conclusion that it is not possible for the opposite parties to handover possession of the same, for any reasons whatsoever, then in that event this Honble Commission be pleased to direct the opposite party to execute agreement in respect of any other flat of the same dimensions in the said project and handover possession of the same by obtaining Occupation Certificate and Building Certificate from the concerned authorities against receipt of balance consideration of Rs. 3,55,500/-. (c) In the alternative to the above and in the event of this Honble Commission comes to the conclusion that it is not possible for the opposite party to handover possession of flat as demanded vide paragraph 5 and 6 of the above complaint then in that event this Honble Commission be pleased to direct the opposite party to pay to the complainant an amount of Rs. 1,04,55,600/- together with 21% interest p.a. from the date of respective payments till realization of the complainants claim to enable the complainant to acquire suitable residential premises elsewhere and to hand over quiet, vacant and peaceful possession of the said flat no. 1901, admeasuring 440 sq. ft. carpet area, equivalent to 40.83 sq. mtrs. being flat no. 1901 on the 19 floor of theth proposed tower to be constructed on the said project known as Rupji Arena, by obtaining Occupation Certificate and Building Certificate from the concerned authorities against receipt of balance consideration; (d) That pending the hearing and final disposal of the above complaint, this Honble Forum be pleased to invoke the provisions of Section 13(3B) of the Consumer Protection Act and grant injunction restraining the opposite parties, its partners, Directors, servants and agents and/or any other person or persons claiming by under or through it from creating any third party interest in respect of the said flat no. 1901, admeasuring 440 sq. ft. carpet area, equivalent to 40.83 sq. mtrs. being flat no. 1901 on the 19 floor of the proposed tower to be constructed on the said project known asth Rupji Arena earmarked for the complainant under Registered Agreement dated 14.12.2011; (e) That this Honble Forum be pleased to direct the opposite party to pay damages of Rs. 50,00,000/- to the complainants on account of mental torture and mental agony suffered by him and also on account of deficiency in service, more particularly set out in the particulars of claim at Exhibit QQ hereto; (f) For costs of Rs. 1,00,000/- towards prosecuting the above complaint be provided for.

    3. The complaint has been resisted by the opposite party on several grounds but the learned counsel for the opposite party states on instructions that they are ready to revoke cancellation and hand over the possession of the flat to the complainant subject to payment of outstanding dues stated in para 7 of the reply affidavit filed by them.

    4. The complainant in CC No. 94/2015 also booked a residential flat with the opposite party being flat no. 2201 admeasuring 440 sq. ft. of carpet area in the aforesaid project known as Rupji Arena, for a total consideration of Rs. 1,32,00,000/- and the parties entered into an agreement dated 24.01.2013, incorporating their respective obligations in respect of the aforesaid transaction. As per clause 10 of the aforesaid agreement, the possession was to be delivered to the complainant by 31.12.2013. The aforesaid complainant made a total payment of Rs. 1,31,15,000/- to the opposite party. Vide letter dated 01.08.2014. The opposite party demanded a sum of Rs. 373491/- from the aforesaid complainant towards her contribution in the premium/charges alleged to have been demanded from the opposite party by Bombay Municipal Corporation. The complainant made payment of Rs. 1,25,000/- out of the aforesaid amount but did not make the balance payment. The opposite party then terminated the sale agreement invoking clause 21 of the said agreement. The complainants protested against the said termination and then approached this Commission by way of this complaint seeking the following reliefs: (a) That this Honble Forum be pleased to declare that the opposite party is guilty of deficiency in service and direct the opposite party to rectify the defects in its services as builder and developer with directions to the opposite party to hand over possession of flat being Flat No. 2201, admeasuring 440 sq. ft. carpet area, equivalent to 40.88 sq. mtrs. being flat no. 1901 on the 22 floor of the proposed tower to be constructed onnd the said project known as Rupji Arena or in such reasonable time this Honble Commission may deem fit and proper by accepting balance consideration of Rs. 85,000/-. (b) That pending the hearing and final disposal of the above complaint, this Honble Forum be pleased to invoke the provisions of Section 13(3B) of the Consumer Protection Act and grant injunction restraining the opposite parties, its partners, Directors, servants and agents and/or any other person or persons claiming by under or through it from creating any third party interest in respect of the said flat no. 2201, admeasuring 440 sq. ft. carpet area, equivalent to 40.88 sq. mtrs., on the 22 floor ofnd the proposed tower to be constructed on the said project known as Rupji Arena earmarked for the complainant under Registered Agreement dated 23.01.2013; (c) That this Honble Forum be pleased to direct the opposite party to pay damages of Rs. 50,00,000/- to the complainants on account of mental torture and mental agony suffered by him and also on account of deficiency in service, more particularly set out in the particulars of claim at Exhibit O hereto; (d) For costs of Rs. 10,00,000/- towards prosecuting the above complaint be provided for.

    5. CC No. 94/2015 was also opposed on several grounds but the learned counsel for the opposite party states on instructions that they have no difficulty in handing over the possession of the flat to the complainants subject to the premium and/or charges/security deposits etc. demanded from them vide letter dated 01.08.2014, alongwith interest on that amount.

    6. In CC No. 207/2014, the following amounts have been demanded from the complainant: (a) Dues as per agreement Rs. 3,44,400/- (b) BMC Premium Rs. 3,73,495/- (c) Service Tax Rs. 2,05,273/- (d) MVAT Rs. 1,11,735/- (e) Legal Charges Rs. 15,000/- (f) Shares Rs. 251/- (g) Registration of Society Rs. 1,251/- (h) Proportionate share of taxes Rs. 19,800/-

    (i) Electricity Meter Deposit Rs. 8,000/- (j) Penalty as per clause no. 8 Rs. 2,67,913/-

    7. The learned counsel for the complainant states that he is disputing only the demand towards Bombay Municipal Corporation premium and penalty as per clause no. 8 of the agreement and is not disputing the remaining charges demanded by the opposite party. Therefore, we are required to examine the correctness only of the aforesaid two demands.

    8. Clause 20 of the sale agreement reads as under:

    20. It is agreed that in case, any amount by way of premium and/or charges, security deposits, etc. are demanded by the Municipal Corporation of Greater Mumbai and/or the Bombay Electricity Supply and Transport Undertaking and/or State Government before granting water or electric or drainage connections or as and by way of betterment charges or development taxes or on any other account or any payment of similar nature becoming payable by the developers the same shall be paid by the purchaser/s or reimbursed by the purchaser/s to the developers in case already paid by the developers. After separate meters are provided for the individual premises, the purchaser/s shall pay the charges for electricity and/or water according to the readings shown by the meters fixed for the said premises. It is agreed that until the separate water and/or electric meters are provided in the said premises, the purchaser/s shall pay such amount in respect of charges for electricity and water consumed as may be determined by the developers without any objection. In our opinion, the aforesaid clause requires the purchaser to pay only such amount if any, which was demanded by the Municipal Corporation of Greater Mumbai and/or the Bombay Electricity Supply & Transport Undertaking and/or State Government after execution of the sale agreement. The aforesaid clause does not include in its ambit any amount demanded and/or paid by way of premium and/or charges, security deposits etc. before execution of the sale agreement and the share of the purchaser in such premium and/or charges/deposits is supposed to have been included in the sale consideration agreed between the parties. In other words, the aforesaid clause relates to future demands if any by Municipal Corporation of Greater Mumbai and/or BEST/State Government and not to any past demands irrespective of whether paid or not paid by the builder.

    9. There is no evidence before us to show that any amount by way of premium/charges, security deposits etc. was demanded by Municipal Corporation of Greater Mumbai and/or the Bombay Electricity Supply & Transport Undertaking and/or State Government, from the opposite party, after execution of the sale agreement between the parties to the complainant. In the absence of proof of any such demand post execution of the sale agreement, we are unable to uphold the aforesaid demand made by the opposite party. Consequently, we hold that the amount demanded by the opposite party towards additional premium/charges alleged to have been paid to Bombay Municipal Corporation is not sustainable either in CC No. 207/2014 or in CC No. 94/2015.

    10. As regards the demand of penalty/interest in terms of clause 8 of the sale agreement, we are of the considered view that wherever there was delay on the part of the complainant in making payment of the sale consideration to the opposite party, they must necessarily pay interest at the rate agreed by them in the sale agreement. Since they have agreed to pay interest @ 21% per annum on the delayed payment, the interest so calculated, must necessarily be paid by them since they have deprived the opposite party of the use of that amount with effect from the due date. A perusal of the computation filed by the opposite party shows that a sum of Rs. 259858/- is due from the complainants towards penalty/interest on the delayed payment. The complainant in CC No. 207/2014 is required to make the aforesaid payment to the opposite party.

    11. The next question which arises for our consideration is as to by which date the possession of the flats should be delivered to the complainants. The learned counsel for the opposite party states on instructions that though the construction is likely to be completed by the end of May 2016, they will need some more time to obtain the occupancy certificate and it will not be possible for them to obtain the said occupancy certificate before October 2016. In these circumstances, we dispose of these complaints with the following directions: (1) The complainants in CC No. 207/2014 will be liable to pay to the opposite party, on receipt of intimation from the opposite party that the construction is complete in all respects and occupancy certificate has been applied for. (2) The complainant in CC No. 94/2014 is not liable to pay any additional amount to the opposite party. (3) The opposite party shall complete the construction in all respects, obtain the occupancy certificate and deliver possession of the flats booked by the complainants to them immediately after obtaining the occupancy certificate. This entire exercise will be completed at the earliest possible and in any case, not later than 31.10.2016. (4) The opposite party shall pay compensation in the form of simple interest @ 12% per annum, on the entire amount paid to it by the complainants from the agreed date of possession till the date the possession is actually delivered to the complainants in compliance of this order after obtaining the occupancy certificate. The opposite party shall be entitled to adjust from the compensation payable to the complainant in CC No. 207/2014, the amount which the said complainant is required to pay to it in terms of this order. The aforesaid compensation shall be paid at the time of handing over possession of the flats to the complainants. (5) The opposite party shall pay Rs. 10,000/- each as cost of litigation in both the complaints. (6) If any contractual amount is due from the complainant in CC No. 94/2015 to the opposite party, that amount can be adjusted by the opposite party out of the compensation payable to the complainants. ......................J

    V.K. JAIN PRESIDING MEMBER ...................... DR. B.C. GUPTA MEMBER

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    Vijay Sakharam Pawar v. Rupji Constructions
    (Jan 20, 2016)